As the next generation of video game consoles starts to settle in, the rush and excitement of launch day has definitely faded. Microsoft's Xbox One and Sony's PlayStation 4 have each sold well, but both are now in stock at most retailers.
Third-party video game publishers like Activision-Blizzard (NASDAQ: ATVI), Electronic Arts ( EA 2.19% ), and Take-Two Interactive Software ( TTWO 2.73% ) are now in a dash to unleash the next wave of blockbuster titles built from the ground up specifically for the new consoles. Electronic Arts looks to have an early lead, however, as several high profile releases loom on the horizon. This could bring the struggling company back to growth.
New release lineup
Electronic Arts' bread and butter sports franchises are all expected to have new showings in calendar year 2104, including the venerable Madden football series and the well-reviewed FIFA soccer series. Rumors have also been circulating that Electronic Arts is considering releasing another installment of the first-person shooter "Battlefield" franchise (which compete directly with Activision-Blizzard's popular "Call of Duty" series) in 2014.
The rumor was first floated around when Electronic Arts announced in January that it was withdrawing all funding for its first-person shooter series Medal of Honor. This indicates that the company wants to focus on the more popular and well-received "Battlefield" franchise going forward, possibly even annualizing it in the future.
Electronic Arts also has the eagerly anticipated multiplayer suite Titanfall, which was released on March 11. The game is available on Microsoft's Xbox 360 and Xbox One consoles, as well as PC. The large hope for Titanfall is that it can go on to become a generational hit like the "Halo" series has become over the years.
Yusuf Medhi, chief marketing and strategy officer for devices and studios at Microsoft, succinctly explained, "It's hard to understand how incredibly important Titanfall is for Xbox."
The game is probably even more important to Electronic Arts, though, considering that the revenues generated by the game would have a more substantial impact on the smaller developer than on technology conglomerate Microsoft. A game of "Halo"-sized proportions, however unlikely that is to happen for Titanfall, would be a huge event for Electronic Arts and the company's shareholders.
Already-confirmed games like the sequel to Mirror's Edge and Star Wars Battlefront also have the potential to be huge winners for Electronic Arts going forward. The next installment of the Mass Effect series promises to be noteworthy for the company as well.
Besides new consoles, Electronic Arts is also catering to the previous generation of consoles by releasing a 2014 World Cup edition of the popular soccer series, similar to the company's 2010 World Cup game. The game, expected to release in April of this year shortly before the World Cup in Brazil in June, will be available on both the PlayStation 3 and Xbox 360.
In addition to a robust development pipeline, Electronic Arts shareholders also stand to benefit from its well-rounded portfolio of games. The company has blockbuster titles in every meaningful category, including sports and racing, action and shooting, and strategy and role-playing games.
Although Activision Blizzard's portfolio of games is very impressive as well, the company simply does not have as much diversity in its brands and is more dependent on a few larger names like Call of Duty, World of Warcraft and Diablo.
Take-Two Interactive is an interesting and well-positioned competitor as well. However, the company's focus on mega blockbuster games like Grand Theft Auto V, which required years of development time, means that Take-Two's growth will always be tied directly to the constantly shifting release dates of its heavy hitters. This in turn means shareholders often are not provided clear visibility with regard to revenue and earnings projections.
The following is a breakdown of all three companies' projected growth in 2014:
|Company||Revenue Growth||EPS Growth|
As the next generation of video games begins its first full calendar year, third-party game publishers in general are positioned to do well. As more consumers begin to adopt the new consoles, the demand for high-quality games will only grow. Activision-Blizzard, Electronic Arts, and Take-Two all excel at creating high quality games.
Activision-Blizzard is the safest choice in the space by far. However, Electronic Arts has the strongest content lineup currently and has shown an ability to deliver new releases at consistent intervals. As such, the company remains an interesting way to capitalize on the growing demand for new games.