EA, the 'Volume Shooter' of Game Companies
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As far as publicly traded video-game companies go, Electronic Arts (NASDAQ: EA) is an Allen Iverson.
The basketball superstar -- regular-season MVP in 2000-01 -- was a "volume shooter," and therefore could not be given as much merit as some of the other greats. Players (or companies) with an above-average measure of skill combined with enough attempts will likely put up good numbers eventually … then fade into obscurity.
EA is proving this true, throwing up so many titles with so many developers that it will certainly have some memorable successes. But it is a company that lacks the focus and commitment to build a hearty fanbase.
EA joins other gaming companies whose shares are in an impressive nose dive, notably Take Two Interactive (NASDAQ: TTWO) and THQ (NASDAQOTH: THQIQ). Good or bad, Take Two and THQ have reasons for their decline, but EA has a lot to answer for.
Take Two's market standing has dipped as the company finds itself in a lull between releases of games. It has some very popular and beloved titles, such as the Grand Theft Auto series and the post-apocalyptic Borderlands. Even better is the BioShock series, a haunting first-person shooter set in an underwater city during the early 20th century. (The game is loosely based on Atlas Shrugged.) The next BioShock has been delayed, thus Take Two's stock has fallen. But the game is coming, and it will be good, and it will sell.
THQ is falling because it just doesn't put out games that sell. Hard truth. It doesn't have one game that I can see myself spending money on. In short, between innovative first-person shooters like BioShock and perennial blockbusters like Activision Blizzard’s (NASDAQ: ATVI) Call of Duty, THQ doesn’t really have a foothold. Saints Row excluded, its titles are forgettable, including WWE professional wrestling (yes, the wrestling with body oil and funny outfits) and the Warhammer 40,000: Dawn of War series, which is an inferior adaptation of a tabletop game. I don’t expect THQ to return quickly unless it can come up with something truly remarkable.
Now back to EA, which has the money, developers and marketing clout to put out incredible games consistently. But it doesn’t. EA seems to have a greater focus on gobbling up other companies, merging them with other acquisitions, then yelling, “YOU MAKE GAME NOW!”
EA dominates the market of sports games, which draw a faithful turnout year and after year to buy the new versions with updated player rosters and shinier graphics. But its decline in the market suggests those games aren't enough. It also has many other well-received series, such as Battlefield, Medal of Honor, Crysis, Dead Space, Mass Effect, Dragon Age and The Sims. But even these titles are rusty or crowded or bastardized.
The video-game industry is incredibly competitive, and EA is not exhibiting the innovation to keep fans at the controller. It pumps out games everyone has seen before then bogs them down with gimmicks. Meanwhile other companies -- public and private -- release titles that EA does not approach in quality. This is unacceptable for a company as large and as storied as EA.
With so much past success, we can all count on EA bouncing back, right? Doubtful. Until it figures out what its goal is -- making good games, or making a quick buck -- it will continue to flounder as the “volume shooter” of the video-game industry.
Taylorian has no positions in the stocks mentioned above. The Motley Fool owns shares of Activision Blizzard. Motley Fool newsletter services recommend Activision Blizzard and Take-Two Interactive . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.
