As the gaming world continues to evolve, target new audiences and provide a changing experience, two of the largest companies in the industry, Activision Blizzard (ATVI) and Electronic Arts (EA), are taking distinctly alternative paths in trying to obtain a competitive advantage. Each offers investors different opportunities depending upon what kind of value one is looking for.
This past year has been difficult for EA as shares have nosedived, losing forty one percent over that period. While on the surface these figures are very discouraging, EA has taken some risks in trying to break into the social media segment of gaming and appeal to casual users. It is also has a program in development that would allow the same game to be played across multiple platforms, such as on a tablet and Smartphone.
With console manufacturers such as Microsoft (MSFT) and Sony (SNY) seeking to push the gaming industry in a direction that appeals to a wider audience, offers more diverse content, and allows users to access games across multiple platforms, it could be argued that Electronic Arts has positioned itself well heading forward and that its stock is a good buy right now after experience a drastic falloff in the past year.
Activision, in contrast to EA, has experienced steady growth over the past year and its share price currently sits above that of its rival. The company has made its bed giving dedicated gamers what they want, and have been rewarded by strong sales of time intensive and sophisticated games like “World of Warcraft” and “Call of Duty”. Both of these franchises have displayed strong sales for a number of years very popular and are likely continue to do so into the future.
Activision has established that its strength lies in investing time and intellectual capital in developing these types of niche games. This type of consistency should appeal to many investors, as should the fact that Activision offers a one-and-a-half percent dividend, something EA does not offer at all. Whether or not Activision can continue to develop and improve on its already successful products will determine whether or not the company is successful in long term.
Do you think that the forward thinking, risk-taking approach practiced by Electronic Arts will pay off as a series of new consoles are set to be released in the next year, or will Activisions steady and consistent approach continue to make it a more valuable investment? We’ve compiled information on both companies below to let you decide.
Interactive Chart: Use the Compar-O-Matic to compare analyst ratings for the stocks mentioned below:
1. Activision Blizzard, Inc. (ATVI, Earnings, Analysts, Financials): Publishes online, personal computer (PC), console, handheld, and mobile games of interactive entertainment worldwide. Market cap at $13.15B, most recent closing price at $11.83.
2. Electronic Arts Inc. (EA, Earnings, Analysts, Financials): Develops, markets, publishes, and distributes game software and content for video game consoles, personal computers, mobile phones, tablets and electronic readers, hand held game players, and the Internet. Market cap at $4.28B, most recent closing price at $13.47.
(Written by Dan Connelly)
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