Video game giant Electronic Arts Inc. (EA) and developer 38 Studios is set to release their second downloadable content (DLC) for Kingdoms of Amalur: Reckoning on April 17, 2012. The DLC, titled Teeth of Naros, will take gamers to the floating city of Idylla, where they will encounter a mysterious race of devoted giants, Kollossae.
Additionally, in Teeth of Naros, gamers will encounter new challenges and battle new enemies with nine new armor sets, six new shields and 18 new weapons with unique features along with three new ‘Twists of Fate’.
The downloadable content will be available on Microsoft Corp.’s (MSFT) Xbox Live for 800 points and Sony Corp.’s (SNE) PlayStation Network. Teeth of Naros can also be downloaded from EA’s Origin and Steam, a digital distribution platform, for $9.99.
Teeth of Naros would be the second DLC for Kingdoms of Amalur: Reckoning, after it launched The Legend of Dead Kel on March 20, 2012. So far, EA has always benefited from the DLCs it launched related to some of its famous franchises. The phenomenon continued through the last concluded quarter, when mobile and other handheld devices and DLC drove EA’s digital revenue growth significantly. EA’s DLC and free-to-play micro transaction content spiked 86.0% year over year to $123.0 million in the last quarter.
Electronic Entertainment Design and Research (EEDAR), a video game market research firm, estimates that given the increasing popularity among the Xbox 360 and Play Station 3 console owners, DLCs will generate $1.0 billion in sales in 2012. EA, with its famous franchises and timely content pack releases, is expected to grab a chunk of this estimated DLC sales. EA’s rival, Activision Blizzard Inc. (ATVI), which too has some of the famous franchises of the gaming industry under its kitty, would also be eyeing for a share in the billion-dollar opportunity.
Kingdoms of Amalur has already received a noteworthy response and had sold 330k units in the US in February, as reported by The NPD Group, a market research firm. Moreover the game acquired fourth position in NPD’s top ten games in the month of February.
We believe EA’s high-quality titles and a robust product pipeline along with the increasing online exposure and traction in the social and mobile gaming market are the long-term positive catalysts.
However, we remain cautious on the company due to the gloomy macro-economic environment and increasing competition from its peers. Moreover, the whole video game industry has reported dismal sales figures over the last 12 months due to weak consumer spending and troubled economic conditions.
Considering these factors, we have a Neutral recommendation on EA over the long term.
Currently, EA has a Zacks #3 Rank, which implies a ‘Hold’ rating in the short term.
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