(ERTS) Electronic Arts Set to Revive Syndicate

Video game developer and publisher, Electronic Arts Inc (ERTS), popularly known as EA, recently unveiled the first-person shooter franchisee Syndicate. This is a remake of the original game by Bullfrog productions, which was last published in 1996.

The new game is expected to launch in early 2012 and will be available on Sony Corp.’s (SNE) PlayStation3, Microsoft Corp.’s (MSFT) Xbox 360 videogame and entertainment system as well as on personal computers (PC).

Syndicate has been developed by Uppsala, Sweden-based Starbreeze Studios. The science fiction story game is set in 2069 and involves three mega corporations – Eurocorp, Cayman Global and Aspari – who are engaged in a brutal war for control of the American market.

Gamers will play the role of Miles Kilo, Eurocorp’s latest agent, who goes on an epic journey to accomplish his mission. Everything is digitally connected, including the people, in the virtual world of Syndicate.

With the help of the DART 6 bio-chip technology (which is implanted in the head of the people of the virtual world of Syndicate), gamers can slow down time and breach the digital world around them to win battles using a variety of up-gradable hacking mechanics.

The game also provides a separate 4-player co-operative mode featuring nine re-imagined missions from the original Syndicate.

Our Take

We believe EA boasts a strong product pipeline for fiscal 2012 and beyond, which will drive top-line growth going forward. Further, the release of a popular franchisee such as Syndicate in early 2012 will boost its market share in our view.

EA has a strong pipeline of first-person shooter games with the most notable being the Battlefield franchisee. EA is scheduled to release its much-hyped game Battlefield 3 in October this year. However, the game is expected to face significant competition from Activision Blizzard Inc‘s (ATVI) Call of Duty: Modern Warfare 3, which is scheduled to launch in November 2011.

EA recently announced that it is set to release another first-person shooter franchisee Crysis for the first time on Xbox LIVE and PlayStation Network in October 2011. We believe the release of Crysis along with Battlefield will provide a competitive edge to EA against Activision going forward.

However, the gloomy macro environment in North America, increasing competition and weak video game results over the last 12 months compel us to remain on the sidelines.

We therefore have a Neutral recommendation on Electronic Arts over the long term (for the next 3 to 6 months). We expect some improvement over the next few months however, as Electronic Arts launches its new products. This is the reason for the Zacks #2 Rank, which implies a Buy rating in the short term.

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