Video game publisher Electronic Arts (NASDAQ:ERTS) is driven by franchises, as many companies tied to entertainment obviously are; a successful product series to such a concern is like oxygen to an aerobic organism. The company released the latest upgrade to its immensely triumphant football flagship, Madden 2005, last month for platforms such as Sony's (NYSE:SNE) PlayStation 2, Microsoft's (NASDAQ:MSFT) Xbox, and the Nintendo GameCube; sales were strong right from the start. Unquestionably, the game will become one of the dominant presents sitting at the base of a plethora of trees during the yuletide season.
Add the following title to the gift-giving spirit: The Sims 2 for PC. Hey, why live an actual life when you can vicariously experience one through a bunch of animated pixel-people walking around on your computer screen? Cynical though that statement sounds, there is an enormous fan base out there for this game, and I can't see how the new version won't be a significant net-earnings catalyst.
Check out the company's press release, and you'll see an interesting statistic. More than 36 million units have been sold for software related to The Sims -- this includes the main program that is initially purchased, plus all the expansion packs a user can pick up to add more levels of playability for the computer people. This is an excellent business model for Electronic Arts; why stop at just one purchase? By adding the ability of expansion to the gaming experience, the company effectively extends the appeal of the franchise and keeps users interested -- as well as keeping them in shape by making them repeatedly reach for their wallets (and pocketbooks, as many females tend to like all things Sims).
Another thing the company decided to do is release two versions: One is a special DVD edition that has some value-added features such as outtakes and minigames. Both versions cost the same amount, so mining the sales dynamics of both products will serve as something of a controlled experiment for purposes of determining how buyers respond to such incentives (the Madden game also had a companion special edition, although the price point was higher).
On an anecdotal basis, I know The Sims 2 is flying off the shelves, and I know that parents are feverishly calling stores to ask for copies to be held until they can make it down to the point of sale. Limited anecdotal evidence is, of course, limited in its value, but I think Electronic Arts will be minting some cash this holiday season.
For more video game coverage, here are some additional Takes:
- Atari (NASDAQ:ATAR) continues to go old school.
- Viacom's (NYSE:VIA) Redstone loves Midway.
- Activision (NASDAQ:ATVI) had a great summer.
Both Activision and Electronic Arts are Motley Fool Stock Advisor recommendations. To learn more, subscribe without risk for six months.
Fool contributor Steven Mallas owns none of the companies mentioned.
