Zacks_Analysts' Blog : ERTS Launches Digital NBA Game - Analyst Blog

Video game developer and publisher, Electronic Arts Inc. (ERTS) announced that a new digital version of NBA JAM will be available for download from October, 2011.

The new NBA JAM: On Fire Edition will be compatible with Sony Corp.’s (SNE) PlayStation 3 and Microsoft Corp.’s (MSFT) Xbox 360 systems. The game will be available on the PlayStation Network and Xbox LIVE Arcade.

The NBA JAM: On Fire Edition has a number of new exciting features and enhancements, including advanced artificial intelligence (AI), previously used in the Electronic Arts Fight Night Franchise.

NBA JAM digital version not only allows gamers to play solo but also provides multi-player mode where one can team up with friends in order to take part in the online competition.

Gamers have the option of joining road trips, a distinctive feature of the game, where they can team up with friends and compete against NBA superstars from the 30 NBA Teams.

Apart from other enhancements, which include JAM challenges, secret teams and unlockable characters, NBA JAM also allows gamers to swap players. 

EA announced that the next NBA simulation title will be released in the fall of 2012. EA said that the game is being developed at its Tiburon Studio, makers of the Madden NFL series.

This is a welcome move for NBA fans, after EA canceled the release of NBA Elite 11 in October 2010. EA’s bottom line is expected to have a negative impact of 5 cents (approximately $60.0 million) for fiscal 2011 due to this title cancellation.

Moreover, the company lost significant market share, as its nearest rival Take-Two Interactive Software Inc.’s (TTWO) NBA 2K11 was placed among the top 10 games and sold more than 4.0 million units worldwide. We believe the release of the new game will boost top-line growth for 2012.

In separate news, EA’s division EA Play Label announced that The Sims 3 Generations Expansion pack for PC and Apple Inc.’s (AAPL) Macintosh (Mac), is in development process and will be shipped globally in spring 2011.

The Sims 3 was the best selling PC game in 2009, according to NPD. Developed by The Sims Studio, The Sims 3 Generations for PC/Mac is rated ‘T’ for Teen by the ESRB, 12+ by PEGI, and 6+ by the USK.

EA has earned a name for developing and publishing quality games in the last few years. The Sims 3 Generations is of the same genre and will gain significant customer response going forward.

Recommendation

EA remains focused on delivering quality titles, which we believe will drive significant top-line growth going forward. In December, 2010, Electronic Arts released Mass Effect 2 for PlayStation 3, which earned a rating of 95. In January 2011, Electronic Arts released Dead Space 2 with a 91 rating and sold approximately 2 million units.

In calendar year 2010, EA launched five games – FIFA 11, Medal of Honor, Madden NFL 11, Need for Speed Hot Pursuit and Battlefield: Bad Company 2 – each of which sold more than five million units.

We believe the company’s impressive product pipeline guarantees market share gains over the long term.

However, weakness in the overall packaged-goods sector, compounded by intense competition from Activision Blizzard Inc. (ATVI) and Take-Two Interactive, will hurt profitability in the long term.

We remain Neutral on Electronic Arts on a long-term basis (6-12 months).

Currently, Electronic Arts has a Zacks #3 Rank, which implies a Hold rating over the short term.