EA Sees a Blockbuster in Spore

Video-games publisher Electronic Arts (ERTS) has lofty expectations for Spore when the long-awaited game is released on Sept. 7.

The Redwood City, Calif. company hopes Spore will become the next Sims, the franchise that has sold more than 98 million copies worldwide since its launch in 2000 and has become so successful that it's one of the company's four business units.

Designed by Sims creator Will Wright, Spore has been in the works for nearly three years. Last May, EA decided to delay its release during the holiday season last year by nearly 12 months to allow more time for development.

Spore is an epic game that entices players to create a universe and navigate their way through it. Through different levels of play, they will get the chance to create single-cell organisms, see them turn into tribes and civilizations and then launch them into space to explore the universe.

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With such high expectations, the question now is just how big a hit will Spore be and what impact will the release have on EA's stock this year?

EA showed off the game briefly at its recent analysts meeting but hasn't offered any outlook for the game.

Four analysts polled by TheStreet.com predict sales of Spore will range from 3 million to 5 million units this year.

"I think Spore will do at least 3 million units as a packaged product, and if it's as good as it looks, it has the potential to do twice that," said Michael Pachter, an analyst with Wedbush Morgan, which does not own shares or have an investment banking relationship with EA.

At the least it could translate into $250 million annually from all sources of revenue from the game during the first four months after its September debut, said Pachter.

That's a fraction of the $4.6 billion in overall revenue that analysts expect from during EA's next fiscal year, which ends in March 2009.

A better gauge would be to look at the financial impact of EA's Sims division. In fiscal 2007, that division accounted for about $400 million of the company's $3.09 billion revenue.

Over its life time, the PC and Nintendo DS versions of Spore could sell about 7.5 million copies, predicts the simExchange, an online virtual stock market where users trade stock to forecast how games will sell.

That forecast, however, does not include sales of versions of the game for Sony's(SNE) PlayStation, Microsoft's(MSFT) Xbox 360 or Nintendo' Wii -- that EA is likely to develop.

Still, Spore is not a slam-dunk for EA investors. Some industry watchers are doubtful that the game will catch on the way Sims has.

"The avatars in the Sims games are human while with Spore you are creating these very alien-looking creatures," said Charles Onyett, editor at IGN PC, an online video-games news and reviews site.

That could hinder Spore's appeal among more casual gamers and offer a lesser degree of emotional attachment to the game.

Spore is also a very complex game, warns Onyett. "There are a lot of different styles of game play in there," he said, "and at different levels of the game it changes from an action game to real-time strategy to an online game."

Spore could also fall a victim to the expectations that EA has set up for the title, said Jesse Divnich, an analyst with The simExchange.