AutoDesk Tools for Gears of War (ADBE) (ADSK) (AVID) (PMTC)

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Epic Games has sought the help of AutoDesk Inc.’s (ADSK) range of production-proven middleware and creative tools to create the last part of the Gears of War trilogy.

In the Gears of War 3, the developer Epic Games has used AutoDesk’s Scaleform middleware to create the user interface and has integrated it with Unreal Engine 3 (game engine developed by Epic Games) and AutoDesk FBX.

AutoDesk Scaleform combines the hardware accelerated 3D graphics technology with the productivity and workflow of Adobe Flash tools to help create a 3D user interface and a casual gaming experience. Autodesk FBX asset exchange technology facilitates complex data exchanges between several AutoDesk Digital Entertainment Creation tools such as AutoDesk 3d Max, AutoDesk MotionBuilder and Autodesk Maya software.

Gears of War 3 boasts of improved cinematic gameplay experience with new multiplayer modes and a longer storyline than its successors.

Popular videogame titles such as Prototype, Mass Effect (1and 2), HALO WARS and Crysis 2 have used AutoDesk Scaleform to build flash-based user interface tools and middle ware.

In our view, the company’s improvements and innovations in 3D design technology and product portfolio provides a competitive edge. Moreover, AutoDesk’s expanding product portfolio and broadening industry and geographic reach will help it sustain its longer-term growth strategy of providing high-volume, lower-cost CAD software. We believe this will likely drive earnings going forward.

Moreover, in recent times, AutoDesk has been aggressively acquiring companies and technological assets, which are integral to its core business. We expect the company to continue to leverage its merger and acquisition (M&A) strategy to expand its product portfolio globally.

However, foreign exchange fluctuations and competition from Adobe Systems Inc. (ADBE), Parametric Technology Corp. (PMTC) and Avid Technology Inc. (AVID) remain headwinds.

We have a Neutral recommendation on AutoDesk’s shares in the long term.

Currently, AutoDesk has a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.

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