Analyst Praises EA Casual Entertainment

Colin Sebastian of Lazard Capital Markets has called the establishment of EA Casual Entertainment a “significant growth opportunity” for the company.

Intended to develop and publish titles for the burgeoning casual games market, Electronic Arts’ new division is being led by Kathy Vrabeck, the former president of Activision Publishing. Sebastian referred to this appointment as “as positive development for EA, as it brings to the company a proven industry leader and adds to the management bench strength.

“Although EA has yet to announce specific franchises and licenses to be developed and published by the casual games division, we note that the company’s highly profitable Sims or Pogo units could serve as a model for organizing development studios by genre and product rather than by geography.” Sebastian also noted that the casual game market is not only a positive resource for EA, but also for the videogame industry as a whole, which can benefit from “shorter and more efficient game development cycles.”

He also suggested the announcement may provide insight into other potential changes at EA planned by the company’s new CEO, John Riccitello. “We think casual games also provide an opportunity to improve operating leverage by shifting more development work to lower-cost studios such as EA’s Canadian operations,” he said. “We note that EA has established strong early positions in the online/mobile/handheld markets, which consist largely of casual games. Moreover, we believe the early success of Nintendo’s Wii and DS platforms suggest solid demand for casual content across multiple platforms.”