E3 Presentations Showcase Expected Updates and Some Surprises

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The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.

On Monday, we attended Microsoft’s (NASDAQ:MSFT) Xbox E3 2014 Media Briefing, the EA (NASDAQ:EA) World Premiere: E3 2014 Preview, Ubisoft’s (UBSFY.PK) media briefing, and the Sony (NYSE:SNE) PlayStation E3 Press Conference. Below, we have summarized the key topics discussed at each event.

Microsoft’s Xbox E3 2014 Media Briefing

Microsoft’s presentation once again marked the start of E3. The focus of this year’s 90-minute presentation was games, as opposed to the power and features of the Xbox One. As expected, Activision Blizzard’s (NASDAQ:ATVI) Call of Duty: Advanced Warfare was the first game on display. We thought that the game looked great, and it appears that the franchise is already benefitting from the recent switch to a three-year development cycle.

Other already-announced third-party titles on display included EA’s Dragon Age: Inquisition, Take-Two’s (NASDAQ:TTWO) Evolve, Ubisoft’s Assassin’s Creed Unity and Tom Clancy’s The Division, and Warner Bros.’ The Witcher 3: Wild Hunt. The biggest third-party reveal was Square Enix’s Rise of the Tomb Raider.

There were a number of Xbox exclusives on display, including Crackdown, Dance Central Spotlight, Fable Legends, Forza Horizon 2, Halo 5: Guardians, Killer Instinct’s Season 2, Project Spark, Scalebound, and Sunset Overdrive. In our view, the highlight of the show was the reveal of Halo: The Master Chief Collection, which includes Halo: Combat Evolved Anniversary, Halo 2 Anniversary, Halo 3, and Halo 4, playable on dedicated servers at 60 frames per second in 1080p.

Halo: The Master Chief Collection has 45 campaign missions, more than 100 multiplayer maps, Spartan Ops maps, and includes the Halo: Nightfall live-action digital series and beta access to Halo 5: Guardians in late 2014. The game will be available for the Xbox One and Xbox 360 at an MSRP of $59.99. Microsoft did not announce any price cuts for the Xbox 360. As previously announced, a $399 version of the Xbox One that does not include Kinect was released on Monday.

The pre-existing version of the Xbox One that comes bundled with Kinect retails for $499, a $100 premium to Sony’s PlayStation 4. Microsoft did not disclose pricing or the release date for a stand-alone next-gen Kinect sensor.

EA World Premiere: E3 2014 Preview

The EA presentation was largely in line with our expectations, although there were a few surprises. The presentation began with some early in-game footage for Star Wars: Battlefront, with additional content to be unveiled next spring. Dragon Age: Inquisition will have open world gameplay, with action and tactical approaches. Mirror’s Edge will build upon the legacy of the runners. The Sims 4 will include a greater impact from emotions. EA also provided some insight into the development of Dawngate, its multiuser online battle arena game.

EA Sports discussed areas of focus for its upcoming sports titles: EA Sports UFC (the physical toll of fighting on the body), FIFA 15 (feeling the game through improved player intelligence and memory, as well as better ball physics and in-stadium experiences, among other items), Madden NFL 15 (defense), NHL 15 (with innovations for its next-gen debut), and EA Sports PGA Tour (explorable environments with extreme fantasy courses). EA Sports did not discuss a follow-up to last year’s disappointing NBA Live 14. Noteworthy reveals included a new Mass Effect, an unannounced new IP from developer BioWare, and an action sports game from Criterion Games.

The presentation ended on a high note with Battlefield Hardline, a cops-versus-criminals first-person shooter set in Los Angeles that is intended to have elements of a television crime drama. On Monday, EA announced that gamers can now sign up for a chance to participate in the closed beta of the game on the PS4 and PC. We believe that the cops-versus-criminals theme could rejuvenate the first-person shooter genre for a subset of gamers who have grown tired of the more traditional war setting.

Michael Pachter is an analyst at Wedbush Securities.