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Can Upcoming FIFA 19 Turn Electronic Arts' Fortunes Around?

Zacks Equity Research
Updated

Electronic Arts EA is set to release FIFA 19 on Sep 28. The latest update of the popular football franchise will be available on PlayStation 4, Xbox One, Origin for PC and Nintendo Switch systems.

FIFA is an important growth driver for EA, given the franchise’s impressive sales track record. The FIFA franchise overall has sold more than 260 million copies worldwide to date. FIFA 18 sold more than 24 million copies in a time span of 11 months.

Moreover, FIFA Mobile app has crossed more than 193 million installs globally. FIFA Online 3 and FIFA Online 4 have become immensely popular across Asia with more than 115 million registered players and more than 15 billion sessions played.

EA launched FIFA Mobile in China in the last reported quarter and reached #1 spot on the top downloads chart for iOS in China. Engagement level was also strong on the WeChat platform.

Electronic Arts Inc. Price and Consensus

 

Electronic Arts Inc. Price and Consensus | Electronic Arts Inc. Quote

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Is FIFA 19 An Effective Replacement of Battlefield V?

EA recently delayed the release of its highly anticipated game, Battlefield V from Oct 19 to Nov 20. Notably, beta version of the Battlefield V was available on PC, Xbox One and PlayStation 4 for early access members (Sep 4) and others (Sep 6).

EA’s decision to delay the release of the game comes after it received feedback from players at Gamescom and E3. Reportedly, the company wants to make a few changes to its core gameplay and Tides of War, its new live service option.

Nevertheless, the delay creates a significant loophole in EA’s game portfolio, prior to the holiday season. Original release date of Battlefield V in October would have led to a clash with Activision’s ATVI Call of Duty: Black Ops 4 and Take Two’s TTWO Red Dead Redemption 2.

However, EA’s decision to delay the release now gives the other two games a significant upper hand. Moreover, due to the one-month delay, the company will lose significant sales, which is evident from EA’s reduced net bookings expectation from $5.55 billion to $5.2 billion for the fiscal year.

In such a scenario, FIFA 19, which will now face less competition due to Battlefield’s absence (a full-extra month), can work wonders for EA’s dwindling sales. FIFA 19’s solid content that includes the UEFA Champions League, Premier League, Bundesliga, La Liga Santander, Serie A TIM and the Chinese Super League is expected to boost player engagement levels.

Notably, the inclusion of the World Cup mode in FIFA Ultimate Team (FUT) increased engagement (80% more average viewers over last session) level and number of players (20 million) in first-quarter fiscal 2019. Higher engagement levels eventually drove digital revenues, which contributed to majority of EA’s top line (more than 84%) during the period.

Zacks Rank & a Key Pick

Currently, EA has a Zacks Rank #3 (Hold).

Glu Mobile GLUU is a better-ranked stock from the same industry, with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Glu is currently pegged at 15%.

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