Beta Version of EA's Latest Launched

Electronic Arts Inc.’s ( EA - Analyst Report ) free-to-play division, Phenomic, recently announced the availability of the free beta version of Command & Conquer Tiberium Alliances. The free-to-play game is the latest version of the yester-year classic franchise Command & Conquer.

In December last year, EA’s BioWare division announced the revival of this popular franchise through a new installment of Command & Conquer: Generals 2, a sequel to the 2003 release of Command & Conquer: Generals. Command & Conquer: Generals 2 is expected to release in 2013 and will be exclusively available on PCs.

Gamers with an origin account can play the beta version of the latest installment for free. The massively multiplayer online (MMO) real time strategic (RTS) game challenges gamers to embark on a journey for world domination. In the course of the game, you have to ally with other players, produce and collect valuable resources and also fight battles to conquer and command new territories.

Presently, gamers can play the beta version from any web browser. Going forward, with the support of EA’s cloud-based platform Origin, gamers will be able to play the game from their mobile devices and tablets. Command & Conquer Tiberium Alliances is EA’s first MMO RTS game. In an RTS game, players have to maneuver units to secure areas of the map and/or destroy their opponents' assets within a very short span of time.

Free-to-play games, popularly known as freemium games, have become a rage among gamers. Although gamers access the game for free, developers and publishers earn revenues through the sales of in-game items and advertisement. The freemium model has gained further momentum with the increasing popularity of social games, co-operative games and mobile games.

According to research firm IBISWorld, social gaming is expected to reach $11.3 billion by 2016. According to market intelligence firm In-Stat, the worldwide market for virtual goods was worth $9.0 billion in 2011 and is expected to touch the $15.0 billion mark by 2014. As per Juniper Research, revenues from purchases of virtual goods totaled $2.1 billion in 2011 and are expected to grow to $4.8 billion by 2016.

According ABI research, mobile gaming is expected to generate $16.0 billion in revenues by 2016, a massive increase from approximately $5.0 billion reported in 2011. It is believed that the social gaming market will further benefit from increased usage of smartphones and tablets going forward.

In this evolving scenario, EA has been focusing on building its social free-to-play portfolio to counter strong competition from the likes of Zynga Inc. ( ZNGA - Snapshot Report ) and also to offset declining sales of its core packaging division. Over the last few quarters, EA has been launching some of its popular franchises such as the “The Sims” in the social and mobile gaming arena. We expect that EA will continue to release social and mobile versions of its popular games going forward in order to gain market share over the long term.

EA also made significant acquisitions such as Klick, PopCap games and Playfish over the last couple of years to bolster its presence in the social and mobile gaming market. The company has an important partnership with Facebook, which has helped it fight significant competition from Zynga.

We have a Neutral recommendation on Electronic Arts over the long term (for the next 6 to 12 months). Currently, Electronic Arts has a Zacks #3 Rank, which implies a Hold rating in the short term.