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Watch Out Investors, 'Titanfall' Is Here!

By Callum Turcan – Mar 17, 2014 at 5:23AM

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One of the most anticipated next-gen games was just released, and it's only for the Xbox and PC.

When Sony and Microsoft (MSFT -1.49%) began rolling out their next-generation consoles, very few games were able to truly utilize the full capacity of these new machines. Luckily for gamers like me, Electronic Arts (EA -0.33%) just launched its new franchise with blockbuster potential, Titanfall. On March 11, gamers who owned a PC, Xbox 360 or Xbox One began building their mech and charged forth onto the battlefield.

Synergy is clearly the way to go
Due to a deal between Microsoft and Electronic Arts, Titanfall will only be available on Windows-based products such as the Xbox One. In order for Microsoft to truly capitalize on the exclusivity deal with Electronic Arts, it decided to release an Xbox One bundle that comes with Titanfall. For the same price as an ordinary Xbox One ($499), gamers can purchase a Titanfall Xbox One bundle that comes with a copy of Titanfall (a $59.99 value) and a free month of Gold Xbox Live membership. 

This deal is a no-brainer; every consumer looking to purchase an Xbox One is clearly going to go for the one that also comes with this year's most anticipated title. Microsoft also benefits, as it's Xbox One is able to offer a stronger selling point over Sony's PS4 due to the rave reviews Titanfall has received. This could allow Microsoft to start catching up to Sony.

To fully experience all that Titanfall has to offer, gamers need to be able to play online. In order to do so, gamers must purchase an Xbox Live Gold subscription, which costs $60 a year. By adding the one month Xbox Live teaser trial in each Xbox One sale, Microsoft can steadily grow the number of Xbox Live subscribers and generate new revenue streams that could bring in cash for years.

Don't forget EA
Even as the console war rages on, Electronic Arts remains focused on creating the next big franchise. To test out Titanfall's gameplay and server capacity, Electronic Arts released a brief beta version of Titanfall. Roughly 2 million gamers tested out the game, according to Respawn Entertainment's community manager Abbie Heppe. Respawn Entertainment is a video game development company founded by Jason West and Vince Zampella, both of whom used to work on the "Call of Duty" franchise.

The biggest take way from Respawn's statement is that there was plenty of built up demand for Titanfall, which should fuel strong initial sales and give the new franchise momentum to take down the established players. Beyond just the initial sale of the game, Electronic Arts is going to offer free game updates and downloadable content packages (DLC) for Titanfall. Updates will keep the fan base engaged, while the DLC packages will bring in additional, high-margin revenue. While the details haven't been officially finalized, it looks to be like that there will be three different DLC packages. All three packages can be purchased at a $5 discount for $25 through a season pass, versus an assumed price of $10 per DLC.

Keep in mind that Microsoft will take a cut of each DLC purchase, so both parties stand to gain by expanding on existing games.

Foolish conclusion
Activision's "Call of Duty" franchise dominated the first-person shooter space for years, but now times are changing. With rave reviews calling Titanfall the next big thing and millions who tried out the beta (which includes me) walking away excited about the launch, Titanfall's potential is rapidly growing. While shareholders can only speculate at this point on how many Titanfall copies were sold,  Electronic Arts may have finally found the blockbuster it needs to bring down "Call of Duty," all while Microsoft aggressively tries to beat back against Sony. 

Callum Turcan owns June 21 $30 call options for Electronic Arts. The Motley Fool owns shares of Microsoft. 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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