EA has the potential to achieve strong long-term growth from a subscription-based business model.
New gaming technology such as artificial intelligence and virtual reality can also help drive growth.
The company's most popular games have a good chance of attracting and retaining subscribers.
Electronic Arts (EA) has a chance of outperforming the S&P 500 (SPY) over the long term as a result of their above average growth for most years. The company's shift to a subscription-based business model provides a good pathway for long-term growth. Subscriptions can grow and be scaled up on a global basis.
Subscription Business Model for Growth
Electronic Arts offers a game subscription plan known as EA Access for as low as $4.99 per month. There are also higher tiers which give subscribers access to more content. The subscription model with a low price point can entice gamers and potentially give EA some Netflix (NFLX) - style growth. I'm not implying that EA will experience the same growth that Netflix did over the years. However, there is a good potential for EA to grow at a strong pace under this business model.
The article is for informational purposes only (not a solicitation to buy or sell stocks). David is not a registered investment adviser. Kirk Spano is an RIA. Investors should do their own research or consult a financial adviser to determine what investments are appropriate for their individual situation. This article expresses my opinions and I cannot guarantee that the information/results will be accurate. Investing in stocks involves risk and could result in losses.
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