Electronic Arts Inc. (EA - Analyst Report) recently unveiled a new limited edition of its upcoming racing game Need For Speed: Most Wanted. Players pre-ordering the game will be eligible for a free upgrade to the limited edition.
The limited edition will offer double speed points for the first four hours of play. Players will also receive two new cars with special performance modifications. In addition, they can select any of the three pre-order bonus packs from the retailers. The three bonus packs, namely Speed pack, Strike pack and Power Pack, will allow players to have early access to cars suitable for different styles of play.
Developed by Criterion Games, Need for Speed: Most Wanted is the much-awaited sequel of the Need for Speed franchise. The new game has an additional feature known as Autolog 2, which will help gamers to challenge friends across social networks for single player or multi-player racing.
The new game is expected to release on October 30, 2012 in North America and on November 1, 2012 in Europe. Need for Speed: Most Wanted will be available on Microsoft’s (MSFT - Analyst Report) Xbox 360, Sony’s (SNE - Analyst Report) PlayStation 3 and Vita, Personal computers and for devices running on Apple’s (AAPL - Analyst Report) iOS and Google’s Android operating systems.
Going forward, we believe that the new game will drive significant revenue growth for EA given its loyal customer base. The new bonus packs are also expected to enhance the attractiveness of the game going forward. Moreover, the game will provide EA a significant competitive edge over Activision’s (ATVI - Snapshot Report) upcoming NASCAR game, which is expected to hit the stores in fall 2012.
EA has an impressive pipeline of new games scheduled to release in fiscal 2013. EA remains focused on developing and publishing quality games. We believe EA’s improving title fundamentals (higher quality and revenue per title) will boost fiscal 2013 revenues. Lower number of titles (14 only in 2013 as compared to 22 in 2012) implies an increased focus on quality that will drive revenues and margins going forward.
We believe that EA’s innovative product pipeline will boost its market share in the traditional as well as online gaming market. Moreover, EA’s strong focus on the digital segment will help it stand out even amid sluggish market conditions going forward.
With rising consumer spending on digital gaming (social, mobile, casual), we remain optimistic on EA’s growth trends over the long term. The company is opening up new fronts in social, mobile and online gaming based on its well known franchises, which is expected to boost its customer base going forward.
However, the highly fragmented video game market continues to witness increased competitive pressures, which are hurting its overall profitability. This compels us to remain Neutral on the stock over the long term.
Currently, EA has a Zacks #3 Rank, which implies a Hold rating in the near term.