Sports Games Still Key for Electronic Arts

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Electronic Arts (NASDAQ:ERTS) built an empire on the strength of its licensed professional sports video games — Madden NFL, FIFA, even the hard-on-its-luck Tiger Woods PGA games made that company a titan.

However, the reality is EA’s shares now trade at about one-third their level from late 2008. But don’t blame the sports game licenses, which are a must to lead EA’s stock back to its glory-days levels.

The company recently reunited with Major League Baseball, a license it lost to Take-Two (NASDAQ:TTWO) back in 2005, and their first release together holds the key to a stock revival. But it’s not a traditional video game, it’s a Facebook time-waster called World Series Superstars.

The odds are good it will be a hit. The game debuted on Facebook on Thursday to coincide with baseball’s Opening Day, and it has all of the hallmarks of a social-game addiction waiting to happen. As with Zynga’s infamous Farmville, World Series Superstars is all about exploiting obsessive cultivation habits (in this case managing a team) while competing and communicating with Facebook friends.

It’s free to play, thanks to the in-game advertising that will provide EA, Facebook, and MLB with a steady stream of revenue, not to mention access to precious game-player data.

As All Things Digital’s Tricia Duryee noted on Wednesday, World Series Superstars, as well as EA’s other pro sports licensed titles on Facebook, including Sports PGA Golf Challenge, FIFA Superstars, and Madden Superstars, all demonstrate the vital importance of branded game content on Facebook. Social and mobile game developers have already helped the entertainment and sports industries make the shift from releasing more expensive licensed gaming products on home consoles like Microsoft’s (NASDAQ:MSFT) Xbox and Sony’s (NYSE:SNE) Playstation 3 to platforms like Facebook that offer players access through multiple outlets (i.e. phones, PCs, etc.)

Social games will be more than just important to EA’s business model going forward — they will be the foundation of the company’s business in a few years time, provided the industry continues to grow the way it has. EA put a great deal of money into developing original intellectual properties for home consoles and PCs starting in 2007, and while that effort produced a number of critical successes, underperforming original titles and the high cost of console game development saw the company eclipsed by Activision Blizzard (NASDAQ:ATVI) and Ubisoft as the publisher to beat. In other words, the economic crash of 2008 wasn’t the only thing that led to EA’s shares plummeting to its current range.

Bringing EA’s sports game legacy to mobile and social platforms will go a long way towards rehabilitating that stock, and World Series Superstars is a start.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.


Article printed from InvestorPlace Media, https://investorplace.com/2011/04/sports-games-still-key-for-electronic-arts/.

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