Running a video game company isn't all fun and games. Electronic Arts (NASDAQ:ERTS) just reported sordid third-quarter results and a bleak outlook on the future, sending the stock down by 8% overnight.

A year ago, EA issued guidance for fiscal 2010 well below Wall Street estimates and then revised downward twice, and last night's report pointed even further south. Revenue fell 23% year-over-year to $1.35 billion, while non-GAAP earnings came in at $0.33 per share -- 41% below the year-ago period.

CEO John Riccitiello noted that EA "missed on the top line, not as much as the sector missed, but we missed." EA's sales mix is sliding away from highly profitable packaged titles of the kind you'll find on store shelves at Wal-Mart (NYSE:WMT) or Target (NYSE:TGT) as cheaper downloads and online games become the format du jour.

That's not all bad, though. Digital downloads now represent about 10% of EA's sales. This includes titles for handheld gaming systems like the Sony (NYSE:SNE) PSP, but also Facebook games and titles written for smartphone-style devices like the Apple (NASDAQ:AAPL) iPhone or iPod Touch. EA claims to be a leader in the portable market, so I guess the iPad launch can't come fast enough for these guys. A bigger gaming screen could make EA titles like Dragon's Lair or Madden NFL look much better than they already do.

Reshuffling the deck might be exactly what Electronic Arts needs today. It's hard to find a sector rival that hasn't beaten EA as an investment over the past year, and chief rival Activision Blizzard (NASDAQ:ATVI) has stomped EA's stock chart to bits over one-year and five-year investing horizons.

But like I said, EA is reinventing itself as a mobile gaming specialist. That could be what the company needs to ignite a turnaround; the stock is still too expensive based on EA's current earnings power (which is nearly nonexistent), but relatively cheap on a price-to-sales basis. If you believe in a mostly download business model, then buying EA today could be rewarding in two or three years.

Do you have that kind of faith and patience, though? Discuss in the comment box below.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Wal-Mart Stores is a Motley Fool Inside Value recommendation. Apple, Activision Blizzard, and Electronic Arts are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a synthetic long position on Activision Blizzard. The Fool owns shares of Activision Blizzard. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.