Electronic Arts (EA) gained 2.89% over the last week despite recent mishaps and the general unattractiveness of the traditional gaming sector. The company made a poorly executed attempt to bring the classic SimCity into the digital age. While it has angered gamers, investors seem satisfied with management's objectives.
The SimCity re-release was made available online and in store for PCs. However, early adopters found that the game required an internet connection even for individual play; this quickly overloaded EA's servers causing widespread outages and user frustration.
This is in addition to public anger in Florida, where one of EA's studios receives a multimillion-dollar tax incentives from the state. The incentive was originally created to lure film and television producers to the area. But as EA moves to be more digital, can it still be regarded in the same vein as traditional entertainment companies?
EA is tailoring its strategy towards the mobile and digital distribution models that have caught fire. The Playstation 4 will be an opportunity for EA to play out its new strategies. The company plans to taper its console offerings to focus on more costly core titles at higher price points.
The company claims that users will experience improved quality. But that isn't to say add-ons and downloadable content won't be available at an extra cost to users. EA hopes to benefit from better margins especially since it has to ship out fewer actual disks.
For investors, these improved margins can translate into more shareholder value in the form of share repurchases and stock price appreciation.
The company has consistently been in line with EPS guidance and releases (marked as 'E'). News events, including SimCity hype, is also shown. EA's performance over the last 6 months:
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