Priya Ganapati
REDWOOD CITY, Calif. -- Video-games publisher Electronic Arts(ERTS Quote - Cramer on ERTS - Stock Picks) unveiled plans Tuesday to release its highly anticipated Spore game in early September along with a slate of new titles for the year and some ambitious growth targets.
The news drove shares of EA up $2.19, or 4.7%, to $48.53 in recent trading. EA said at an analysts' meeting here that it plans to release Spore, a game created by Will Wright, the designer behind the company's blockbuster The Sims and SimCity franchises, on Sept. 7. Spore, which offers players the opportunity to build a world by creating creatures from the level of a cell, will release worldwide on the PC, Apple(AAPL Quote - Cramer on AAPL - Stock Picks) Mac and Nintendo DS platform. The company also showed off an impressive lineup of new games across the company's four labels or divisions including EA Games, The Sims, and EA Sports. Its big bets for the year include Mirror's Edge, a first-person action adventure game; Dead Space, a game in the horror genre; and the more light-hearted TheSimsCarnival.com site, which features casual games that can be created by users and shared across social networking platforms such as Facebook and MySpace. A new line-up of games, the focus on increasing quality and keeping costs down, should help EA achieve its goals for the next three years, said John Riccitiello, CEO of EA. Over the next three years, or by fiscal 2011, EA plans to increase its revenue to $6 billion and operating income to more than than $1.5 billion, the company said. Analysts polled by Thomson Financial are expecting revenue of $3.9 billion for the current fiscal year. It's an ambitious target and one that has never been set before in the games industry, said Riccitiello. But in a very upbeat presentation to analysts, Riccitiello seemed confident of achieving it. Among the biggest goals for the company will be to improve the critical rating for its games by focusing on bagging a Metacritic score of 80 or more on a scale of 100, said Riccitiello. Metacritic, an online game ratings aggregation site, offers an overall rating for a game based on reviews from different game publications that gamers use to judge quality and analysts use to judge sales potential for a title. "Our priorities are to increase segment share, lower costs and drive productivity, expand our digital revenue and do some smart M&A," Riccitiello told analysts. EA has seen its place as the No. 1 publisher slip in the last few months as rival Activision(ATVI Quote - Cramer on ATVI - Stock Picks) made some big gains with blockbuster titles such as Guitar Hero 3 and Call of Duty 4. With the recent Activision and Vivendi Games merger, EA faces an even greater challenge. The company hopes to steadily improve how it has fared across different segments with its new releases and bring more games to Nintendo's very successful Wii console. EA will also focus on controlling costs that have ballooned in the last three years and are eating into the company's revenue. It hopes to offshore more development and increase headcount in countries outside North America. Whether EA can maintain its position as the industry leader will depend upon how its new games fare. EA is counting heavily on Spore to become the industry's biggest blockbuster. The game, which has been years in the making, is considered a risky bet because it offers a completely new gaming challenge to players by allowing them to create their own characters and gaming world. "Spore could be a game changer for EA," says Billy Pidgeon, an analyst with IDC. "It has a lot of expectations riding on it and if it works it establishes EA again as an innovator, not only in the hardcore but also the mainstream space. I wouldn't bet against the game."
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