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Electronic Arts Inc. (EA) Premieres the New ‘Betrayed’ Cinematic Trailer

Electronic Arts Inc (NASDAQ:EA)

Electronic Arts Inc. has a studio by the name of BioWare™. On Friday, the latter and Lucasfilm unveiled the world premiere of the new ‘Betrayed’ cinematic trailer. This led to revealing the first look at the prequel story for the upcoming expansion. It has been named as Star Wars™: The Old Republic™ – Knights of the Eternal Throne. The new digital expansion will be available for download on December 2, free of charge (with some riders). This will be available to all subscribers of Star Wars: The Old Republic. It will also offer an exciting starting place for new players to begin their saga.

Star Wars: The Old Republic (SWTOR) is one of the few free-to-play games published by EA. It is reasonably heavy to download for a free-to-play game, running into dozens of GBs. There is a great deal of learning curve associated with the game. However, that hasn’t stopped hardcore fans of the franchise from killing time with the force at their side. Currently, SWTOR can be downloaded free of charge from the ‘Origin’ store of EA.

Electronic Arts (NASDAQ:EA)

Newer Games Coming Up at 4K Resolution

Even outside SWTOR, Seeking Alpha feels that the firm is winning in a volatile market. It has been a stalwart for those who have been holding it for nearly five months. This stock has shown outstanding performance in a volatile market and is up by nearly 20% so far this year. The belief in the name continues because it has been offering great earnings growth expectations. The writer even went on to put the firm in the same league of great firms as Amazon and Nvidia.

Sony recently held a PlayStation event where they unveiled the new PS4 Pro which is going to sport 4K graphics. EA immediately stepped up at the forum. It announced that new FIFA and Mass Effect games will support the new graphics. TV sales have been slowing in 2016. But, over 1.5 mn of the units sold have been of the 4K variety. 4K has been gaining traction with the consumer because it is a much crisper picture than the traditional 1080p. It has four times the pixels. The home entertainment market is roughly $4.6 bn which represents a 2% drop from last year. But, there is an increase in the sales of 4K units. The 4K trend is one that has legs as Sony and EA have made bets in that direction. The two firms hope that players will purchase their products.

But before the advent of 4K gaming, there were the 1080p games. Those video game sales increased by 1% from the prior year as per a report put out by NPD Group. Total sales came in at $573.4 mn and video game spending grew at an 8% clip. Leading the way this year has been the new release of Madden NFL which is produced by EA. This game has always been a moneymaker for EA. It should continue to be, as long as professional football is popular. It has become a bit ubiquitous with games on Thursday night, Sunday all day and night, and Monday night. But, Seeking Alpha’s writer doesn’t believe that the NFL is going to lose its luster anytime soon.

Electronic Arts Inc. to Stop Reporting Adjusted Sales for Games

However, compared to earlier game launches, sales figures for newer ones may not be given out in the same way. The maker of Madden NFL and FIFA video games will stop reporting adjusted sales and profit after the U.S. Securities and Exchange Commission requested the changes in a May 17 release. Before a few months, the firm had confirmed this. It wanted to discuss changes in external financial reporting. So, at that time, the Redwood City, California-based firm had held a conference call. It said that it would report adjusted numbers for the final time with quarterly results that were out on Aug. 2. The SEC request applies to a broad set of firms that report deferred revenue.

Electronic Arts Inc.  and other game firms have reported adjusted financial results alongside those that meet generally accepted accounting principles. This started since more consumers began playing games online in 2008. Under the SEC guidelines, game revenue must be recognized over as many as nine months, because they can be played for a long period of time and include the right to receive future updates. Up to now, firms also reported adjusted revenue, leaving out changes in deferred revenue. They said that better matched expenses with actual sales.

“This is only a change in external financial reporting on a prospective basis,” Chief Financial Officer Blake Jorgensen said on the conference call. “It has no effect on our business, nor how we manage our business nor the way our board of directors evaluates management and company performance.” A few weeks before the call, Colin Sebastian, an analyst with Robert W. Baird & Co., had already said in a research note that he expects video-game firms to adopt the changes. Activision Blizzard Inc. would report a new version of adjusted revenue, a spokeswoman had said. Take-Two Interactive Software Inc. had said it hadn’t announced whether it will stop reporting results both ways.

Electronic Arts Inc.  investors will still be able to estimate the revenue differences based on data the firm releases, officials said. “Only more job security for me,” said Michael Pachter, an analyst with Wedbush Securities. “No impact to earnings or cash flow.”

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