That’s a solid writeup. I enjoyed reading it. Thank you.
Activision gets more credit, but I prefer EA better too. The fundamentals are a lot stronger. Low levels of debt, highly profitable, low PE ratio, and, surprisingly to me, nearly $6 billion in cash reserves. For that cash reserve alone, Electronic Arts is probably one of the safest stocks to own. I’m planning to buy tomorrow.
I’d be too wary of any law changes that surround the in-game loot boxes. I imagine this is where they make most of their money - especially in FIFA Ultimate Team, Apex Legends etc. (£billions lost if they get outlawed).
Both EA and Activision blizzard are safe bets at the moment. Between them they own the Star Wars license for games (EA), FIFA, Madden, NBA (EA) Call of duty (ATVI) World of Warcraft (ATVI) and still the cash cow which is Heartstone and the upcoming Diablo Mobile game which love or hate it will make billions in the Asian markets. Not forgetting that Tencent own a large chunk of Activision Blizzard, which could cause issues for those who are vary of supporting Chinese trade.
They maybe the two most hated game distributors among gamers, but they still keep on making monthly battle passes and the same games each year and people still keep on buying them. Most of these games have moved on from loot boxes to more elaborate seasons passes, so any new law is unlikely to cause disruption.
EA has the better fundamentals in my opinion. Next to no debt.
Reminds me of a Disney like company, bringing out the same titles and customers will to still pay for them. Except with network effects. FIFA for example comes out with a new set of players each year and you still buy the upgrade to play your friends on. I believe with that attention they can extract cashflows despite the banning of loot boxes.