Electronic Arts Inc. (EA), Microsoft Corporation (MSFT): Changing the Game of the Gaming Industry

The interim CEO and his eventual replacement will have to focus on growing and monetizing mobile gaming platforms, as well as expanding branding around already popular titles. Recent sales are down 25% across the industry, so there will be major challenges ahead.

New management will have to continue to battle Activision Blizzard (NASDAQ:ATVI), Inc. for market share and gaming competition. Activision Blizzard had the second most popular game sold over the last 6 months: Call of Duty Black Ops 2. It is also sitting on $4.4 billion in cash, making it a highly liquid and balanced company. It has the ability to make the capital expenditures necessary to expand its gaming platform.

Nearly one third of all of EA’s revenue comes from Microsoft Corporation (NASDAQ:MSFT)‘s Xbox platform. However, the Sony PlayStation 3 has overtaken the Xbox as the most popular gaming console. While this isn’t a major cause of concern for Microsoft, it is a concern for video game producers. The entertainment and devices division of Microsoft accounts for 10% of all revenue. This division includes the Windows Phone and Windows Mobile. Microsoft is expected to release a new version of the Xbox to help ignite the gaming console wars and edge Microsoft to the top.

The interim and new CEO of EA have an uphill battle. Investors have responded with support and optimism, raising the stock price 2.51% in after-hours trading. The new management will have to avoid server errors like those associated with the new SimCity launch, focus on monetizing mobile and casual gaming platforms, and give gamers the products they want. If the company can get on this track, expect a nice comeback and a decent return. If not, look for a stock price below $18.00 per share in the next few months.

The article Changing the Game of the Gaming Industry originally appeared on Fool.com and is written by Austin Higgins.

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