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EA Launches Fuse

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Electronic Arts (EA - Free Report) and Insomniac Games announced the availability of their new game Fuse in North American stores. The game is also available for download from EA’s online distribution platform Origin. In Europe, the game is set to release on May 31.

Fuse, which features a co-op mode, allows players to play any of the four characters – Dalton Brooks, Izzy Sinclair, Jacob Kimble and Naya Deveraux – to fight the alien energy source called Fuse.

Fuse offers a LEAP feature, which allows gamers to switch to any of the four characters during the game to accomplish the mission of destroying Raven, a rogue paramilitary organization.

Although co-published with Insomniac, Fuse is EA’s only original game title for fiscal year 2014.  EA is slated to release 11 games during the year, of which 10 are sequels and updates to major franchises such as FIFA, Madden NFL, NHL, NBA, Battlefield and Sims.

Major game publishers such as EA and Activision (ATVI - Free Report) have been criticized by gamers for the lack of new game titles in their portfolio. Their overdependence on sequels of matured franchises has been one of the primary reasons behind gloomy retail sales in recent times.

Except Activision’s Call of Duty, none of the other franchises from these two major publishers has tasted phenomenal success in recent times. EA’s top-line performance has suffered mostly from below par sales of the latest installments of Medal of Honor, Crysis and Dead Space.   

In such a scenario, we believe that Fuse is an important addition to EA’s portfolio. However, Fuse is currently available on old consoles from Microsoft (MSFT - Free Report) and Sony (SNE - Free Report) and EA did not specify whether the game will be compatible with new consoles such as Xbox One and PlayStation 4.

We believe that this uncertainty coupled with the overall gloomy retail gaming environment and significant competition from free-to-play games may hurt sales in the near term.

Nevertheless, we believe that EA’s strong digital portfolio and continuing growth in the free-to-play and online segment will drive top-line growth going forward. Moreover, EA’s efforts to optimize costs through overhead reductions will be beneficial going forward.

Currently, EA has a Zacks Rank #2 (Buy).

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