And with their new in-game micro-purchase model, the revenue streams from these games have never been stronger and steadier. These titles, which EA has exclusive rights to sell, include:Įlectronic Arts has a monopoly on these titles, as they have the exclusive rights to produce and sell them. In today's world, video games are often sold at lower prices or, in some instances, they are completely free to start then, in-game "micro-purchases" are made that allow players to unlock different aspects of the game.Įlectronic Arts employs this model across their suite of blockbuster titles that have massive moats. For the first few decades of video game creation, publishers, such as Electronic Arts produced a video game, then sold it for a one-time realization of revenue. Video games recently entered into a revolutionary period of profitability due to new monetization modes known as GaaS (Games as a Service). Therefore, power, and the corresponding profits, will continue to concentrate in the hands of the aforementioned video game developers. Creating compelling content like Madden NFL or Call of Duty is incredibly challenging. My bullish thesis is that with many competitors in the gaming console arena, i.e., Xbox, PlayStation, Stadia, and PC gaming, new content produced by EA, TTWO, and ATVI is more valuable than ever. Does that mean I recommend buying all of them today? Well, you will have to follow me to find out in later articles via my financial analysis of the latter two companies. Before I dive into Electronic Arts ( NASDAQ: EA) specifically, I want to state that I am a secular bull on three primary video game companies: EA, Take-Two Interactive ( TTWO), and Activision Blizzard ( ATVI).
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