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EA's Plants vs.Zombies 2 Off to a Good Start

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Video game maker Electronic Arts (EA - Free Report) seems to have hit the bull’s eye with the launch of Plant vs. Zombies 2. Following the launch, EA offered gamers a glimpse of the new console version of the game that would be available on Xbox One next spring.

EA had been banking on the new free-to-play game, hoping to rake in profits through in-game transactions instead of paid downloads. Recent statistics provided by the company at the Gamescon conference indicate that EA is seeing strong demand, with the game being downloaded more than 16 million times on the iPhone and iPad within a week’s time and gamers spending well over 25 million hours playing. This apart, it is also the “top grossing” iPad app on Apple’s App Store and ranks #19 on the list of the top grossing titles for iPhone.

PopCap Games, a unit of EA, recently launched “Plants vs. Zombies 2″ for the iPhone and iPad. This game was initially launched on the PC platform in 2009 and got a boost with the launch of the first iPad in 2010.

A couple of months back, Microsoft Corp. (MSFT - Free Report) and Sony Corp. (SNE - Free Report) revealed their next generation gaming machines at the Electronic Entertainment Expo in Los Angeles. This influenced game makers such as EA, Ubisoft Entertainment SA (UBI), Activision Blizzard Inc. (ATVI - Free Report) and others to display their holiday line-ups.

EA, the second-largest video-game maker in the U.S. is also hopeful about its yet-to-be released shooter game “Battlefield 4,” and its soccer title “FIFA 14”, both of which are also expected to be very popular.

According to market research firm Super Data, in Jul 2013, revenues from mobile games soared 32.0% year over year to $271.0 million, which indicates consistently higher spending. King’s Candy Crush Saga and Marvel’s War of Heroes were leading apps, followed by Kabam’s The Hobbit: Kingdoms of Middle Earth.

The free-to-play subscriber base declined slightly to 45.8 million from 46.0 million in June. However, the average revenue per user (“ARPU”) was approximately $40, much higher than the $27 reported in June.

We believe that EA is well-positioned to grab this huge growth opportunity based on its innovative product pipeline and increasing user base. However, the fragmented video game industry and increasing competition are major headwinds, going forward.

Electronic Arts has a Zacks Rank #3 (Hold).

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