Electronic Arts — A Risky Game Play, But Potentially Profitable
Digital sales on new platforms and demand for great games present big opportunities -- and challenges -- for Electronic Arts.

I really don’t play video games, even though I have kids. That’s mostly because, if I purchased a video game system, I would spend all my time playing video games. So I’m abstaining in an effort to save myself. The safer way to play video games is in the stock market, where I can potentially invest in a video game company and make money off other people’s addictions and squandered time.

That leads me to Electronic Arts (NASDAQ:ERTS). The company doesn’t just develop, market, publish and distribute its own games — it distributes games developed by other companies. It also offers online games. Some of the more notable titles and series include the Madden NFL video-game franchise, the James Bond series, Harry Potter and the Order of the Phoenix, The Sims series, and first-person shooters such as Crysis and the Medal of Honor series.

Some of you investors might not get what the whole video game thing is all about, but it’s not just Pac-Man anymore. Today, it’s about creating an entertaining, unique and immersive interactive experience. Sure, some games are just shoot-’em-ups. But for the most part, gaming companies recognize that their players are seeking something extraordinary, so they take great time, pride and care in developing each new game. It isn’t just a cynical excuse to bilk kids out of their newspaper-route money.

The business also is changing because the five-year console cycle, in which game developers take time to adapt to each new technological advance, is slowly going away.

Digital sales are the fastest-growing revenue stream on every gaming platform. It is these new platforms — the Apple (NASDAQ:AAPL) iPad and Google (NASDAQ:GOOG) Android mobile devices — that are disrupting the business of gaming. Now, gaming companies can continue to focus on their core group of customers — the console players — while shifting resources heavily into digital platforms.


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