Tiger Woods has rediscovered his “A” game just in time for the release of his namesake video game Tuesday.
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Woods won the Arnold Palmer Invitational over the weekend, his first PGA Tour victory since his very public fall from grace. The loudest cheers in Orlando may not have come from the gallery at the Bay Hill course, but rather from down the road at the Electronic Arts (NYSE:EA) Tiburon Studios, where EA Sports’s long-running Tiger Woods PGA Tour video game is produced.
“A resurgence of Tiger winning is helpful for (EA),” says BMO Capital Markets analyst Edward Williams. “Tiger sales will likely do better today because he won, but over the long run it will only sell if the game is good.”
Wedbush Securities analyst Michael Pachter concurs, “The game is way overdue to rebound, one of the reasons it hasn’t been up year over year in the last several years is because he’s been so horrible.”
Demand slumped for the video game in 2010 as the Woods sex scandal unfolded and his golf game soured. EA stood behind Woods even as other sponsors dumped the former world No. 1 golfer.
Last year EA took a fresh approach by featuring a course as much as the chance to play like Woods. The game included Augusta National for the first time and the hallowed grounds graced the cover instead of Woods. His likeness only adorned a special edition box.
The 2011 version set sales records in the first week before tapering off. That placed the bar high for this new edition, which features rising stars Rory McIlroy (the European version) and Rickie Fowler (US edition) alongside Woods. Woods has now shared top-billing on his eponymous game for each of the past three years (McIlroy was also on the 2011 version, while Augusta’s 12th hole was the focus of the 2012 edition).
Still, Pachter, who rates EA’s stock a "buy", advises not counting out Tiger.
“We all thought he was done, but he’s still a recognizable name. As long as Tiger’s in the limelight and productive as a golfer, he’ll boost sales. They’ll probably be up 10% year over year.”
Pachter says fans shouldn’t buy shares just because of Tiger. “It’s a pretty small percentage of overall sales. The stock’s not going up because the Tiger game sells another 300,000 or 400,000 copies.”
This latest iteration also features the Tiger Legacy Challenge. It allows players to emulate Tiger’s career from two-year old child prodigy on the Mike Douglas Show to sporting the Green Jacket as multiple Masters Champion.
Williams says that’s a way to capitalize on the golfer’s storied rise to fame and perhaps skirt his outside-the-ropes escapades. “They’re trying to some extent ignore the last couple of years and focus on the quality of his golf playing and his (on-course) persona to help move the product.”
This year’s version is also notable since it will be the first to utilize the Microsoft Xbox 360’s Kinect system (it’s also available for Sony PlayStation 3’s Move gesture controller, but no longer made for Nintendo’s Wii).
Kinect’s controller-free gesture control allows players to grip an imaginary club and then fully swing. Williams says the Kinect effect should bump up sales of the game on Xbox.
“Kinect is a compelling user interface, golf lends itself well to that device. That has to be helpful.”
But the BMO analyst, who rates EA’s stock as "outperform", says the franchise’s true value has yet to be fully unlocked. “They need to figure out how to monetize it,” Williams explains. “The environment of the $60 packaged game sales is shrinking, but the properties are valuable. They need to figure out how to better monetize it on the social side.”