Will Disney and Star Wars save Electronic Arts?

The new partnership may help to turn around the 'worst company in America.'

By Benzinga May 7, 2013 3:17PM
Men watching television, holding beers copyright Ghislain and Marie David de Lossy, Cultura, Getty ImagesBy Louis Bedigian

Electronic Arts (EA) has become one of the most troubled companies within the game industry.


From the always-on debacle (see Benzinga) that followed SimCity to the closure of two studio (see Polygon) and hundreds of layoffs, EA is slowly losing its position as a game publishing stalwart.


In fact, EA won The Consumerist's Worst Company in America award two years in a row.


Despite these and other issues, investors have given EA their full support, raising the company's value by more than 25% this year alone. Over the last six months, EA's stock has increased by roughly 36%.



Why are investors so impressed while consumers and bloggers are typically disappointed?

Consumers care about their own individual experiences with a company, but investors look at the bottom line. For all its flaws, SimCity still managed to sell more than one million units (see LATimes) during its first two weeks of availability. It is not yet known how the game performed after the relentless complaints hit the Web, but even a sales decline may not be able to change EA's strategy. 


After receiving an endless stream of bad press, Disney (DIS) has announced that it has signed a multi-year agreement with EA to produce a series of new Star Wars games. This announcement comes roughly one month after Disney dropped a Death Star-sized bomb on LucasArts, the game development studio that George Lucas founded. Disney closed LucasArts and terminated all unannounced game projects, leaving many to wonder what would become of Star Wars' future. At the time, Disney indicated that it wanted to find a development partner to produce new Star Wars games.


EA is a logical choice for a Jedi Knights and evil Sith Lords. As the owner of BioWare (which is famous for producing the Star Wars: Knights of the Old Republic franchise, among other popular role-playing games), EA will bring a new level of prestige to Star Wars game development. By enlisting EA's help, Disney could avoid producing low-rated games that are destined for the GameStop (GME) bargain bin.


That's not to say that EA's games are flawless. Medal of Honor, for example, has taken a backseat (a very crowded, painful and almost invisible backseat) to Activision's (ATVI) Call of Duty franchise. If it weren't for the Battlefield franchise, EA would not even be able to compete in the action/war genre anymore.


Even so, EA is still a very strong company. It owns a number of key franchises, including Madden NFL, FIFA and The Sims, which will receive a brand new sequel in 2014. 


With Star Wars at its side (and likely a new Star Wars game every year once the movies begin to arrive in theaters), EA might finally be able to turn things around -- in the eyes of consumers, at least.


More from Benzinga
2Comments
May 8, 2013 9:15AM
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Star Wars carries a big risk for both companies and more, which i will be avoiding. It's all fan based and critical to the eyes of star wars fanboys. Remember what the last three movies did to lucas. Disney is granting EA rights. They have been picking apart lucasarts to reform it in their vision. I'm going out on a limb and saying alot of games will be based off the new movies and Disneys new vision. Lucasarts rose to power basing it's direction off the fans visions. When Lucas deviated and made the sequals based on what he wanted to see They destroyed him. The books based off of the authors ideas and stories not Georges are what revived Star Wars in the ninties and have led to huge success. Bioware not Lucasarts created the ideas and stories for most of the games including Knights of the Old Republic. It's the fans and their ideas that have grown Star wars over the years to the moster it is. Face it. Disney is a politically correct, happy for all company that is too used to running it's own show. Lucas new better and let the fans create Star Wars. All he did was create a Company to oversee and manage the franchise growth. Already Disney is miffing fans by rearranging the franchise in it's own image. Unless they hit an absolute home run, i call it too risky. Sure money will be made But most likely not by me.
May 8, 2013 8:18AM
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I will not go to another Disney movie or any of their disneyworlds  Didn't you see their profits the other day but they don't want to have sick days for their employees.  The CEO is paid millions upon millions of dollars.  I won't have anything to do with a Disney product, movie and/or theme park.  Wake up people.  These big businesses want profits but they want you to work for nothing and have nothing.
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