Electronic Arts Inc. (EA), Microsoft Corporation (MSFT): Should Investors Worry About Always-On DRM?

A vocal minority

However, in truth, the opposition to DRM may just be the cries of a small, yet extremely vocal, minority. Despite its early failings, SimCity has sold exceptionally well — surpassing over 1.1 million sales in the first two weeks.

Activision Blizzard, Inc. (NASDAQ:ATVI)’s Diablo III was plagued by similar (though not nearly as severe) issues following its release. The game went on to be a mega-hit, setting an early sales record, and ultimately selling over 10 million copies.

In fact, most of Activision’s biggest games derive their value from the Internet. World of Warcraft, for example, is a massively-multiplayer online game, and exists only on the company’s servers. Despite this, the game has been a cash-cow for Activision since it acquired Blizzard in 2007, with its nearly 10 million subscribers forking over a monthly fee around $15.

Its Call of Duty franchise, too, is largely an online multi-player phenomenon. Although the game has an offline single-player mode, the online multi-player keeps the franchise’s fans buying the latest edition every year.

Electronic Arts Inc. (NASDAQ:EA)’s struggles with DRM might be better evidence of the company’s own issues than an industry-wide concern. Activision’s stock is up nearly 70% since the beginning of 2007, and analysts at Sterne Agee remain bullish with a $17 price target.

Ignore the DRM cries

Previously, I’ve written that I’m leery of all video game-related investments. Investment history is littered with the corpses of failed video game companies.

That said, investors should pay no attention to DRM-related complaints. Despite the backlash, sales of the games employing the tactic have done well, while the upside to the strategy (eliminating piracy) could boost the bottom line of developers.

The article Should Investors Worry About Always-On DRM? originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

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