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Maybe We're Not Mad About Madden

By Rick Munarriz - Sep 6, 2013 at 8:05PM

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EA posts disappointing sales metrics for its iconic football game.

Electronic Arts (EA -0.86%) better hope that the launch of Madden 25 is a lot like the NFL season's debut last night, with a bumpy start capped off with a flurry of scoring.

Shares of the country's second-largest video game company slipped after announcing that it sold more than a million copies of the game during its first week on the market. That may not seem so bad, but EA was bragging about selling more than 1.65 million copies during the first seven days last year.

Yes, that's pretty bad. 

It was actually easy to see this coming. Forget the fact that console and software sales, in general, have been falling for the past four years. That hasn't slowed marquee franchises, and EA saw an 8% spike in first-week sales last year for Madden 13

The real problem here is November's arrival of the PS4 and Xbox One. They're not cheap, so gamers are saving up for the systems. They are also based on new chip architecture, making them organically incompatible with older games. If gridiron fans had a season to sit out, this one would be it. 

This is naturally also bad news for GameStop (GME -0.73%). The leading video game retailer saw its shares move lower after initially opening higher.

GameStop was expecting big things for this quarter, targeting an 11% to 15% spike in comps after posting nine straight periods of declining comparable-store sales. It remains to be seen how Madden 25's slow start will factor into that guidance.  

It will also be interesting to see if the weakness carries over to this month's biggest release: Take-Two Interactive's (TTWO -2.19%) Grand Theft Auto V. This is the game that ultimately inspired GameStop to forecast a turnaround at the store level; but what if the same trends that are eating at Madden 25 begin feasting here?

Investors aren't taking chances. Take-Two joined GameStop and EA in selling off a few minutes into the trading day. 

This could be an opportunity for potential Take-Two investors, since Grand Theft Auto V is likely to hold up far better than EA's football game. It will naturally have a longer shelf life than the Madden franchise, which loses its appeal as the actual NFL season wears on.

Peyton Manning wound up heaving a record seven touchdown passes last night. EA better hope that it can light up the scoreboard, too.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Take-Two Interactive . The Motley Fool owns shares of GameStop. 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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Stocks Mentioned

Electronic Arts Inc. Stock Quote
Electronic Arts Inc.
$133.95 (-0.86%) $-1.16
Take-Two Interactive Software, Inc. Stock Quote
Take-Two Interactive Software, Inc.
$133.60 (-2.19%) $-2.99
GameStop Corp. Stock Quote
GameStop Corp.
$41.88 (-0.73%) $0.31

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