Will Electronic Arts Inc. (EA) Benefit From Hasbro, Inc. (HAS) Deal?

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On Tuesday, both Hasbro, Inc. (NASDAQ:HAS) and Electronic Arts Inc. (NASDAQ:EA) stock rose slightly after the companies announced a new four-year agreement, under which Electronic Arts Inc. (NASDAQ:EA) will develop mobile games based on several of Hasbro, Inc. (NASDAQ:HAS)’s most popular gaming brands.

The deal, which extends the scope and length of an existing six-year agreement, will include new mobile versions of Hasbro, Inc. (NASDAQ:HAS)‘s Monopoly, Scrabble, The Game of Life, Battleship, Boggle, Clue, Risk, and Yahtzee.

Electronic Arts Inc. (NASDAQ:EA)

For those of you keeping track, this is the second third-party content licensing agreement announced by Electronic Arts Inc. (NASDAQ:EA) in as many months. If you recall, the last was unveiled in early May detailing a multiyear partnership with The Walt Disney Company (NYSE:DIS), through which the House of Mouse granted Electronic Arts Inc. (NASDAQ:EA) exclusive rights to develop and publish new games based on Star Wars characters and storylines “for a core gaming audience.”

In contrast to this week’s Hasbro, Inc. (NASDAQ:HAS) deal, however, The Walt Disney Company (NYSE:DIS) opted to retain the rights to develop new titles within the mobile, social, tablet, and online game categories.

Is this a bad thing?
But while our initial inclination might be to applaud Electronic Arts Inc. (NASDAQ:EA)’ efforts in grabbing this low-hanging fruit, I can’t help but doubt whether this will actually be good for Electronic Arts Inc. (NASDAQ:EA) stock.

On one hand, these deals are great for companies like The Walt Disney Company (NYSE:DIS) and Hasbro, Inc. (NASDAQ:HAS) because it gives them a low-overhead way of leveraging wildly popular brands they already own. At the same time, it also negates the risk of spending big bucks to develop and publish big-name games that may or may not turn out to be a flop with consumers.

On the other hand, considering Electronic Arts stock has fallen more than 45% over the past six years since the initial Hasbro, Inc. (NASDAQ:HAS) deal was put in place, it’s fairly obvious that licensing third-party content hasn’t exactly helped the company’s own brand prowess.

Then again, that doesn’t mean these deals were directly responsible for Electronic Arts’ fall from grace.

After all, as I wrote in April, voters at Consumerist.com have named Electronic Arts the “Worst Company in America” for each of the past two years (at least among consumer-facing businesses), largely thanks to stale storylines, halfhearted sequels, subpar product support, and games that seemed to be rushed to production.

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