EA's Waiting Game Begins

The transition from one generation of consoles to the next is always a difficult time for video game publishers. And it's certainly no exception for the biggest of all game makers, Electronic Arts(ERTS Quote - Cramer on ERTS - Stock Picks).

Amid mixed reports about the success of Sony's(SNE Quote - Cramer on SNE - Stock Picks) latest PlayStation 3 console, Redwood City, Calif.-based Electronic Arts is battling investor doubts about its ability to profit in the short term from the latest generation of consoles.

EA is likely to meet expectations when it reports third-quarter earnings after the bell on Thursday, say most analysts, but the big question centers around whether it can deliver the hits in a world where Sony may no longer lead a console market that seems more fragmented than ever.

Still, it was a strong holiday season for video game companies. Activision(ATVI Quote - Cramer on ATVI - Stock Picks) recently reported higher-than-expected earnings, while video-game retailer GameStop(GME Quote - Cramer on GME - Stock Picks) also reported sales that surpassed expectations.

The uncertainty around the demand for Sony's PS3, though, is likely to mean more for EA, which has about 30 games in development for the console, with eight to 10 games slated for launch before the end of the fiscal year in March. Historically, EA's biggest blockbusters have come from the PlayStation franchise.

As the market leader, EA's take on the availability and success of the PS3 could hold important clues for the video-game sector.

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