Another year, another football blockbuster out of Electronic Arts (NASDAQ:ERTS). In its first week on retailer shelves, EA's Madden 07 has moved more than two million copies. That is a 12% improvement over the 1.8 million units that Madden 06 sold in its first seven days on the market. Last year's installment went on to ultimately sell a whopping 6.5 million copies.
Now entering its seventeenth season, Madden is the ideal video game franchise. Because NFL rosters update every year with incoming rookies, trades, and free agent signings, gamers gravitate to buy the annual updates even if the gaming enhancements are minor.
How sticky is the "Maddenoliday" ritual? Let's put it this way: it's strong enough to buck the industry's sluggish trend. Leading software publishers like EA, Take-Two (NASDAQ:TTWO), and Activision (NASDAQ:ATVI) have all warned of weakness in recent months as gamers wait for the PlayStation 3 and oddly named Wii to hit the market later this year before loading up on new games.
The one exception to the malaise has been retailer GameStop (NYSE:GME), though the strength there is tied to its synergistic merger with Electronics Boutique and the popularity of selling used games, which have proven to be a high margin business for GameStop at the expense of the industry itself.
For EA, the perpetual nature of its John Madden football franchise is what is helping it here. The new consoles aren't due out for a few months and by then the football season is tired, and with that the appetite for Madden's gridiron game. Gamers have no problem buying Madden 07 for their PlayStation 2 or GameCube, knowing that their next purchase will be Madden 08 on the next generation machines.
Maybe the industry can learn from this. Maybe hit franchises like Take-Two's Grand Theft Auto or Activision's True Crime need to revisit naming their installments after cities and commit to annual updates. I'll be the first to admit that Grand Theft Auto 2008 doesn't have a lot of zing to it, but it may come in handy in transitory years like this one.
GameStop, Electronic Arts, and Activision have been recommended to Motley Fool Stock Advisor newsletter subscribers.
Longtime Fool contributor Rick Munarriz loves playing video games, but he doesn't own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. T he Fool has a disclosure policy.
