Most people had much to celebrate Monday: The heat wave broke and NFL Commissioner Roger Goodell confirmed football would be back for the 2012-13 season. Fans get their games, and the U.S. economy gets a guarantee that one of its most powerful engines will run smoothly into the next year. Investors had plenty to celebrate, as well, particularly shareholders in video game publisher Electronic Arts (NASDAQ:ERTS).
As the sole developer of video games bearing the NFL brand and maker of the immensely popular, profitable Madden NFL series, EA was worried. It was worried it would be releasing its latest entry into a market devoid of the football marketing and consumer fervor that spurs sales year in and year out. It was worried that Madden NFL 12 would take an $90 million hit without the support of a proper season. Wedbush Morgan analyst Michael Pachter predicted that, in the event of a lockout, EA would see Madden sales fall as much 50% year-on-year.
All’s well, though. Madden NFL 12 will hit the market Aug. 30, slightly later than usual, but in a prime window to capture consumers free of other major video game releases due out in October and November, such as Activision Blizzard‘s (NASDAQ:ATVI) Call of Duty: Modern Warfare 3 and Take-Two‘s (NASDAQ:TTWO) NBA 2K 2012.
That the game is releasing as soon as it is means the boxed product likely won’t precisely reflect current team rosters. Although the 2012 rookie draft was taken into consideration in Madden 12‘s development, it has been impossible for EA to account for free agent signings with the season in question. Even then, however, EA has plans to satiate its core audience. The company began updating a free feature on its website called the “Free Agent Forecast,” following all signings up to the beginning of the season. EA likely will deliver a complete roster update for the game by the time the season officially kicks off, one week after Madden 12‘s release.
The game is on its way and has the full might of a proper football season behind it. EA is trading around $24, close to its 52-week high of $25. The threat of a lockout resulted in EA’s exclusive rights to the NFL license getting an extension into 2013. So everything is great, right?
Not necessarily.
Even with all of its ducks in a row, EA still doesn’t seem to have a plan in place to remedy the biggest problem in its Madden business: lack of growth. First-month Madden sales have been in decline since 2005, when the series peaked with 2.5 million sales across all gaming platforms. It sold below 2 million copies in its first month in both 2009 and 2010. The lockout was just one of EA’s worries with the series in 2011. The other is how it’s going to find new fans.
Although the Madden brand has found some vitality in new markets like Facebook gaming, its core business on Microsoft‘s (NASDAQ:MSFT) Xbox 360 and Sony‘s (NYSE:SNE) PlayStation 3 is largely the same as it’s always been, addressing the same audience as always. There’s potential for growth this year thanks to the booming sales of the Xbox — Microsoft’s success in the second quarter means that there are 14 million potential new Madden players out there. EA’s time to capitalize on that potential market is limited, though. Football is back, but it’s unclear if Madden‘s sales will be, as well.
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.
