Electronic Arts time to buy? (NASDAQ:EA)

[thegreatzulu]

Afternoon!

I should first start by saying this isn't my area of knowledge, however given the amount of time my kids spend playing games I have dabbled with Activision Blizzard (figured might as well get some money back from that World of Warcraft subscription that I have to pay for.)

EA has been on my radar for some time and they have been slowly transitioning into almost an app store model of selling more to consumers once they have the product, I know this part of the business model thanks to Fifa player packs and paying cash for it.

The reason this has popped in my mind is because of the traction around their latest game, Apex Legends.

They made the news with their launch where they have already gotten 10 million users in this free to play game. It looks like the game is very similar to Fortnite which has 200 millions users and made $3bn (usd.)

That stats I've seen for fortnite are 75% of users end up spending money in the virtual store with an average amount being $85.

EA has always had great quality scores but the value and analyst prediction aren't anything to write home about, if anything it seems expensive right now.

Is this just a phase of new product excitement? I'll probably wait for the first quarter results before making a move but I was interested what you guys thought.

[westmoreland]

i suppose the main concern is that their model becomes subject to some tighter regulation, given that in some games (like fifa) they offer what amounts to gambling. while this is probably a minor risk in the wider scheme of things, it's something investors need to be aware of.

as a consumer, i hate the microtransactions. i stopped playing games because of this. it looks like it hasn't had too much impact on the number of players though most grumble about them. obviously, relying on micro transactions (printing money effectively) makes the revenues much higher quality than the model of the past which was all up front payment for a game.

they have several monopoly positions (fifa, madden), and so it is a very good business.

[starquake]

Couldn't disagree more on candidate. Apex is a good good game, and gaining traction for sure, but not sure it can save EA. It's a hybrid of many of the games in that space, but hasn't proven to compete with Fortnight on speed of change (yet) - ie, Fortnight adds a new feature/map change almost monthly. Yet to be seen if Apex can compete, as if they don't it'll get stale.

This is personally my opinion as a gamer:
EA has made massive issues in recent years of forcing add-on purchases in game, the Star Wars Battlefront 2 Jedi unlock as an example on that, and has had a terrible record on destroying great studios in acquisitions in past.

Origin as a service is awful when compared to Steam, or even Ubisoft's product.

Westwood, Bioware, Maxis etc etc - theres entire threads on this in the gaming community on the problems caused from EA. EA buy studio, eventually all the talent leaves, studio closes - rince repeat.

To me the share has too much downside, compared to upside - yes the old franchises tend to sell well historically, but the games represent nothing revolutionary. I tend to agree with some recent posts that FRONTIER developments in Cambridge as a riskier, but potentially better studio in this space, they've been very well receieved since going independant publishers, and if they can deliver another killer francise (2 in progress) they will likely have a higher upside.

[starquake]

I should summarise my post above as I think it's a potential value trap due to all the reasons posted. I won't be investing and have actively avoided this.

However, Nintendo, Square Enix, do feature in my portfolio.