This column was originally published on RealMoney on Jan. 12 at 2:33 p.m. ET. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here .
It's not always easy being the 800-pound gorilla in an industry, especially if you're Electronic Arts ( ERTS). The video-game titan is arguably in the toughest strategic position among all of the publicly traded video-game software companies. The console cycle is at a volatile point, favoring smaller publishers that can benefit tremendously from just a few popular titles. Companies can no longer sit back and rely on general industry growth. As more consumers snatch up next-generation consoles over the next couple of years, the going will get even tougher. Big-name hits are now driving the business, and game-production costs are skyrocketing. Electronic Arts can't afford a major miss. If December is any indication, the company might be in for a challenge. The industry giant came up short Thursday night, when market-research firm NPD Group released December video-game sales data. According to the report, Electronic Arts' U.S. retail sales suffered an 11% year-over-year drop, with the Need for Speed: Carbon title standing out as a notably weak performer.
A Fresh Crop of Titles
One major concern I've had about Electronic Arts is that some of its franchises may be getting a bit stale. This year, investors need to play close attention to how the next editions of its franchises shape up. As I noted in a previous column , some common-sense, real-world research, such as monitoring sales charts and game reviews, can give you an edge on Wall Street. So let's take a look at some key Electronic Arts titles to watch. For the record, I am not mentioning the company's sports titles, such as Madden, because they're like little versions of Microsoft ( MSFT) Office: They change a little bit here and there but can generally be counted on for reliable sales, with some occasional minor market-share shifts. First up is Battlefield: Bad Company, due for the Xbox 360 and PlayStation 3 next year. The Battlefield series has been a big winner for Electronic Arts on the PC and, to a lesser extent, on the last-generation PlayStation 2 and Xbox consoles. However, the first-person military shooter genre is quite crowded, and competitors are beginning to emulate the Battlefield formula. It will be interesting to see whether Electronic Arts can successfully extend the life of this franchise.