Market Overview

Is Electronic Arts Serious About Virtual Reality Gaming?

Electronic Arts (NASDAQ: EA) CEO Andrew Wilson recently indicated that his company is experimenting with virtual reality.

Wilson discussed the topic during a video games panel at the annual SXSW event.

His comments could be dismissed as a PR push for his company's newest game, Titanfall. Developed exclusively for Microsoft's gaming platforms (a Windows PC version is also available), Titanfall is expected to be one of the biggest games of the year.

Titanfall was not developed for virtual reality, however, and Xbox One does not currently have a VR component. Sony is expected to release a VR headset that will support its own console, PlayStation 4, but nothing official has been announced.

Related: Is Amazon's Double Helix Acquisition Proof Of A New Game Console?

A New Era of Reality

Virtual reality is still somewhat of an anomaly within the game industry. Oculus VR, the startup behind the Oculus Rift headset, has been hyping its VR tech for nearly two years. The company ran a very successful Kickstarter campaign, but it couldn't offer more than a development kit to prospective supporters. Oculus VR has made several revisions since that time, but it is still unknown when its product will be released.

Augmented reality, on the other hand, has received a number of high-profile supporters, including Google. AR differs from VR in that it enhances the real world without completely blocking it out. Whereas VR is mostly used for entertainment, training and therapy, AR could have a whole host of programs that replace a traditional computer. That's one of the reasons why Google is so intrigued by the concept.

At this rate, it seems that AR is destined to outpace virtual reality in terms of technological advancements.

But Wilson's comments have made investors wonder what might be next for the game industry. Benzinga reached out to Wedbush analyst Michael Pachter to get his take on the matter.

"I think VR will have trouble attracting content, since content has to be tailored for it and the hardware will initially have a small installed base," Pachter told Benzinga.

"This is chicken and egg, so without compelling software, the hardware base will never get large, and without a large hardware base, there will be little incentive to develop compelling software. The technology is really cool, but I have trouble seeing how it can become mainstream."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Latest Ratings for EA

DateFirmActionFromTo
Jul 2014BenchmarkDowngradesBuyHold
Jul 2014EVA DimensionsUpgradesUnderweightHold
Jul 2014S&P Capital IQUpgradesSell

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