Forget old school gaming! Times are changing: EA

By Christoph Steitz

FRANKFURT (BestGrowthStock) – The mobile revolution is forcing change in traditional gaming, the chief operating officer of Electronic Arts (ERTS.O: ) said, as games on mobile phones and social network sites become a major industry trigger.

“The days when people were just putting a CD in a console are over. The industry is changing and I think the CD can be a starting point,” John Schappert told Reuters in an interview ahead of Gamescom, Europe’s biggest video games trade fair.

“I can say that we will see very strong growth in digital gaming in the foreseeable future.”

EA earlier this month reported higher-than-expected results and confirmed its 2011 outlook, as cost cuts kicked in while sales of its flagship “FIFA” soccer game rose, but also booked a 52 percent rise in first-quarter sales in its digital business.

The company aims for fiscal 2011 revenues of $750 million in this segment — which includes downloadable game content for smartphones, consoles and social network sites — which would be a 50 percent rise compared with the last fiscal year.

This may only account for a small part of EA’s total sales outlook for non-GAAP revenue of $3.65 billion to $3.9 billion, but given growth rates in digital gaming and a slumping industry overall, EA is very bullish about this specific segment.

According to research firm iSuppli, unit shipments of game-capable mobile phones are expected to rise by a third to 1.53 billion by 2013, while units for video game consoles are seen falling by 7.5 percent to 48.2 million.


EA competes with companies such as Take-Two Interactive (TTWO.O: ), Ubisoft (UBIP.PA: ) and Activision (ATVI.O: ) in the gaming sector, catering to the $60 billion video game hardware and software industry.

Apart from digital gaming, the industry is also pinning hopes on new motion-controlled gaming systems — Microsoft’s (MSFT.O: ) Kinect and Sony Corp’s (6758.T: ) Move — that are expected to boost sales of consoles and games.

Nintendo (7974.OS: ) had revolutionized the industry through the launch of its Wii console, enabling players to control video games through movement of the whole body, not just the hands. Sony’s Move will hit stores in Europe on September 15, while the U.S. release of Microsoft’s Kinect is slated for November 4.

“I think these two products are going to be good for the industry, and also for EA as the top game publisher for the PS3 and the Xbox. We’re very bullish about it,” Schappert said.

EA, publisher of well-known franchises such as “The Sims” and “Medal of Honor,” had to make painful cost cuts to address the industry’s slump and reduced its game pipeline to 36 in its fiscal year 2011, nearly half compared with two years ago.

Schappert said that the development of one of EA’s most anticipated titles, “Star Wars: The Old Republic” — a massively multiplayer online (MMO) game and a potential rival to Activision’s “World of Warcraft” — is going well.

“I played it last week and it is stunning,” he said but refrained from giving more information. Schappert also declined to comment on media reports that Google (GOOG.O: ) was in talks with EA about the offering of games on a planned social network site that could compete with Facebook.

“I can’t talk about rumors. But we’re platform agnostic, this is our strong suit, and we get excited when the industry talks about new platforms,” Schappert said.

Forget old school gaming! Times are changing: EA