Electronic Arts Preparing for Next-Gen Console Market

Gaming aficionados have been waiting for this holiday season when both Microsoft and Sony released their next-gen consoles. XBox One and PS 4 are touted to be the biggest upgrades for the gaming console market and are being called the next-gen consoles. These machines come equipped with higher processing power and memory, making them capable of delivering faster and improved gaming action. But these consoles can be successful only if gaming publishers develop relevant games. For now, publisher Electronic Arts (NASDAQ:EA) seems to be prepared to handle this challenge.

Electronic Arts’ Financials

Electronic Arts’ Q2 revenues fell marginally from $1.08 billion a year ago to $1.04 billion this quarter. The market was looking for revenues of $0.974 billion. EPS of $0.33 was also significantly ahead of the Street’s projections of $0.12 for the quarter.

By segment, digital revenues grew 11% over the year to $348 million. Publishing and packaged goods revenues fell from $744 million a year ago to $670 million during the quarter. Mobile business remained strong and grew 19% over the year to $105 million.

For the current quarter, Electronic Arts projected revenues of $1.65 with EPS of $1.22, compared with the Street’s projections of revenues of $1.76 billion with EPS of $1.35. The company projected the year’s revenues at $4 billion with EPS of $1.25. The Street was looking for an EPS of $1.23.

EA’s Product Lineup

EA has a slew of products lined up to cater to both the next-gen consoles and the older versions of these consoles. The latest releases of their most popular games, “Battlefield 4,” “Madden NFL 25,” and “FIFA 14,” will all be available on the day of their release for these new consoles as well. The company will add to the new console gaming titles with the release of “NBA Live 14” and “Need for Speed Rivals.” Later next year, EA is planning to launch a new first-person action experience from its partnership with Respawn Entertainment, Titanfall. Within mobile also, it plans to continue to expand its existing brands of “Plants vs. Zombies 2,” “FIFA 14,” “The Simpsons” and “Real Racing.”

EA is also expanding its games to help with education opportunities. Last month, they tied up with GlassLab to release “SimCityEDU: Pollution Challenge.” This is one of their first new generation educational games that has been created as a game-based classroom tool that uses the SimCity franchise to teach students about real-world challenges. It has been developed for middle school students and focuses on encouraging them to think critically about modern-day challenges besides providing a teaching tool for educators that integrates learning and assessment with the Next Generation Science and Common Core Standards. 

EA’s stock is trading at $23.34 with a market capitalization of $7.21 billion. It touched a 52-week high of $28.13 in August 2013.