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EA Releases Crysis 3

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Electronic Arts (EA - Free Report) recently announced the availability of its new first-person shooter game Crysis 3 at retail stores and in North America. The game is available on both Xbox 360 and PlayStation 3 from Microsoft (MSFT - Free Report) and Sony (SNE - Free Report) , respectively. Crysis 3 will be released in Europe on Feb 22, 2013.

Developed by Crytek, Crysis 3 is the third installment of the Crysis franchise and runs on CryEngine 3 game engine. The new game features a fascinating storyline, which brings the main protagonist Prophet back to New York City, which has been encased in a Nanodome by the CELL Corporation. Prophet fights the CELL operatives and frees the city from the clutches of CELL.

Crysis 3 offers 12 maps and 8 gameplay modes. One of the new modes is the hunter, an asymmetrical time-based mode that can be played by multiple players. The new game also contains New York Feed that shows the achievements of players and their friends and also offers tough challenges to complete. This new social mode is an added attraction of the game.

Crysis 3 is the second major action game (in early February EA released Dead Space 3) from the stables of EA in calendar year 2013. The game has garnered strong critical rating and is expected to be a major hit. We believe that with this game EA will look to provide some competition to Activision’s (ATVI - Free Report) Call of Duty: Black Ops 2, which topped the January game sales chart, according to data from NPD group.

We believe that the success of Dead Space 3 and Crysis 3 is very much important for EA, as its last released action game Medal of Honor Warfighter was a major disappointment. The weak performance of Medal of Honor negatively impacted top-line growth, which declined 28% year over year and missed the Zacks Consensus Estimate in the recently concluded third quarter.

Moreover, EA’s another major action game Battlefield 3 is aging and the next installment is reportedly set for an Oct 2013 release. In such a scenario, we believe that the performance of Dead Space 3 andCrysis 3 will decide EA’s fate in the near term.

However, we believe that EA faces a number of headwinds that include a soft video game industry performance, particularly due to weakness in retail sales amid an aging console system lifecycle. Additionally, the huge popularity of free-to-play games is also cannibalizing the higher priced packaged goods video games sales, which is a major concern in our view.

Currently, EA has a Zacks Rank #4 (Sell).

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