EA Seeks Big Boost From 'Sims 3'

If you didn't know that The Sims 3 hit stores Tuesday, you haven't been paying attention. Electronic Arts has pulled out all the marketing stops to advertise the newest iteration of the world's most popular PC-game franchise.Since the launch nine years ago of Sims, which lets users direct the lives of simulated people, the franchise has sold 100 million copies worldwide. That not only makes it the best-selling PC game but also the third-most-popular video game worldwide (fifth in the U.S.), regardless of platform. "Sims" is available in 22 languages.The latest version not only allows users to customize looks and other superficialities but also gives Sim characters personalities and goals: a brave, clumsy, hydrophobic snob striving for a career as a broadcaster, for example.EA's media blitz has included TV commercials on the season finales of American Idol and One Tree Hill. An outdoor campaign includes seven billboards in Times Square.EA senior director of marketing John Buchanan says the push for Sims 3 is 150 prcent bigger than the one that accompanied the 2004 launch of Sims 2.The Internet, naturally, will play a key role. On launch day, much of YouTube will be taken over by Sims, as will four Viacom Web sites: MTV.com, VH1.com, ComedyCentral.com and AddictingGames.com. And surfers have been snapping photos of promo billboards and posting them to Facebook, Twitter and MySpace."We're witnessing traditional media being turned into new media," Buchanan says. "We have a very passionate fan base."A central component of EA's innovative marketing campaign is trial experiences at TheSims3.com. SimSidekick, for example, allows users to choose a Sim character that will follow them to many sites, usually popping up in the upper-left corner and behaving differently at each URL visited. At Google, the character might appear to be searching for something.Whether the hype will translate into a higher stock price for EA, though, is debatable."It's tough to move the needle because it's really a predictable franchise," Wedbush Morgan analyst Michael Pachter says. "It's unlikely that it will sell 20 percent more or 20 percent less than expected."Pachter figures sales of the new version will exceed 3 million units this year and earn about $130 million in revenue. All that fancy marketing will cost about $18 million, he estimates, and it's money well spent. He especially liked the Idol commercial."That was big," he says. "And it was a good ad."Pachter rates EA a "buy" with a $27 price target on the stock, which closed Tuesday at $22.44.More germane to EA's share price, in Pachter's opinion, is how well the company inserts itself into Nintendo's Wii console. In that regard, it recently launched EA Sports Active, a Wii workout game targeting women and partially designed by Oprah Winfrey's fitness expert, Bob Greene. Plus, EA's Tiger Woods PGA Tour 10 will be the first game in the U.S. bundled with MotionPlus, an anticipated add-on to the Wii controller that hits retail June 8.On the other hand, Todd Mitchell of Kaufman Bros. says Sims 3 is "very material -- their cash cow," which will bring "hundreds of millions of dollars in revenue, all at a very-high-margin contribution."Mitchell calls Sims a "virtual dollhouse that will especially pop with a female demographic." He also has a "buy" recommendation on EA stock and a $25 target."The success of 'Sims' is crucial for EA's quarter because Godfather 2 sales are looking like they will be embarrassing," says Perry Rod, a money manager who focuses on digital-media investments."PC sales provide publishers with the best margins, so there will be considerable upside for the stock if it were to outperform expectations," he adds.Colin Sebastian of Lazard Capital Markets, who rates EA stock a "hold," notes that the new game plays a key part in EA's turnaround plan. "It's probably fair to say that a lot is riding on the launch as EA seeks to build back credibility among gamers and investors," he says.That lost credibility, brought about by a recent inability to control expenses while releasing unimpressive game titles, has led to the stock price being cut in half the past eight months."Sims is the most profitable video game that EA owns," Sebastian says. "The third installment is not only important for the bottom line but also in maintaining and hopefully building on the popularity of the franchise."No wonder EA's marketing team is working overtime.Source: THR.com

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EA Seeks Big Boost From 'Sims 3'

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