Why EA Investors Should Be Paying Attention to These 3 Blockbuster Video Games

A closer look at the games that will make or break Electronic Arts' year.

Aug 28, 2014 at 10:53AM

To the disappointment of gamers and investors, Electronic Arts' (NASDAQ:EA) announced last month that its Battlefield Hardline game won't be released in late October as originally planned. Instead, the first-person shooter will launch in "early 2015," EA said. 

That move probably sparked a round of high-fives over at Activision Blizzard (NASDAQ:ATVI), whose latest Call of Duty title now has an even easier path toward dominating the 2014 sales charts.

With one of EA's biggest games sitting out this holiday season, the stakes will be higher for its remaining blockbuster titles. With that in mind, let's look at the prospects for Madden NFL 15, Dragon Age: Inquisition, and The Sims 4, which together will mean the difference between a good year and a great one for EA.

Madden NFL 15: Released on Aug. 26


Source: EA.

Barreling toward its third decade, the Madden franchise still manages to put up big numbers for EA every year. Last summer, the title sold 1 million copies in its first week and became August's best-selling game despite launching in the last few days of the month. 

Success with Madden will be even more important this year, considering that it's the first in which EA Sports doesn't have an NCAA college football title to depend on. Still, NFL 15 has racked up some positive early reviews, suggesting that it has a good shot at improving on 2013's results. It notched an overall 81 score out of 100 at Metacritic, with gaming site IGN, as just one example, calling this installment "one of the best in recent memory." In addition to raw unit sales numbers, investors will want to pay attention to EA's add-on revenue for the game, which is growing into a major portion of its sales and profit contributions.

Dragon Age: Inquisition: Nov. 18 

Dragon Age

Dragon Age: Inquisition is developer BioWare's biggest game yet. Source: EA

While Madden NFL 15 is a safe bet for solid incremental growth, Dragon Age: Inquisition has some decent breakout potential. After all, it has been in the works for years and is developer BioWare's biggest and most ambitious game yet. 

Inquisition has attracted tons of critical praise, most notably taking home 25 awards at this year's E3 conference, including Best Role Playing Game. The good news for investors is that this title promises to deliver more profit directly to EA's bottom line. That's because, in contrast to the Madden NFL franchise, EA owns the Dragon Age brand outright, so it doesn't come with those pesky profit-pinching licensing fees. 

The Sims 4: Sept. 2


Source: EA.

Another wholly owned EA brand, The Sims is one of the industry's biggest franchises, having sold over 150 million units in the last 11 years. Simple game play and a broad reach have made it a strong contributor to EA's results even though the last major chapter was released way back in 2009. Of course, EA hasn't kept Sims fans in the dark for all of that time. It has published dozens of expansion packs, add-ons, and spinoffs that have kept the brand going over the last five years. 

The prior iteration, The Sims 3, sold almost 4 million units in its first month of availability and became one of the most popular PC games to date. There's no reason to think the new chapter won't, over time, see a similar level of success.

Foolish wrap-up
Thanks to the projected contributions from these titles, EA expects its business next quarter to improve substantially over the prior-year period. In fact, gross profit margin should jump to 65% from last year's 62% as the Sims and Dragon Age brands chip in more toward EA's bottom line, at least taking some of the sting away from that frustrating Battlefield Hardline delay.

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Demitrios Kalogeropoulos owns shares of Activision Blizzard. The Motley Fool recommends Activision Blizzard. The Motley Fool owns shares of Activision Blizzard. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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