LOS ANGELES – Microsoft said Tuesday it will not release new versions of its sports video games this fall in a move Wall Street saw as opening the door to deeper ties with industry leader Electronic Arts.
Since introducing its Xbox game console in 2001, Microsoft has struggled to gain share in the intensely competitive sports video games market, and EA has shunned Xbox Live, Microsoft's online gaming service, over concerns about its financial model.
Kevin Browne, who manages sports games for Microsoft Game Studios, said in a statement that Microsoft's move was tied to "market conditions and customer feedback."
"We're focused on closing the quality gap between our sports lineup and that of our competitors," he said. "Therefore we will not be shipping new versions of our sports games this fall."
A Microsoft spokesman said three titles that had been planned to be released annually – NFL Fever, NBA Inside Drive and NHL Rivals – were affected, as were three other titles – Links, Top Spin and Amped – that were not necessarily on an annual release schedule.
Those six titles were exclusive to Microsoft's Xbox video game console. Another sports game, RalliSport Challenge 2, is still on track for a May release.
The company said it would keep its XSN Sports brand, which it launched last May as a way to unify and promote its sports properties, and would maintain its online leagues and downloads for existing XSN titles.
In recent years, Microsoft, Sony and Sega, among others, have contended with the growing dominance of EA in sports games, particularly football. EA's Madden NFL 2004 was the best-selling console game of 2003.
Part of the Madden success was the unexpected popularity of online play. Last May, at games industry trade show E3, EA said its sports games for that coming season would support online play only on Sony's PlayStation 2.
That move was part of a long-running dispute between EA and Microsoft over the economics of Xbox Live, where users pay a subscription fee for the service, rather than individual games, and Microsoft controls the servers and the customer accounts.
But analysts saw the temporary shutdown of Microsoft's sports game line as a sign that EA may step into the void.
"This is clearly a positive for Electronic Arts ... and may be the first sign of a closer relationship between the two companies," Credit Suisse First Boston analyst Heath Terry said in a note. "We believe Microsoft's decision makes it more likely that EA will support Xbox Live once its exclusive agreement with Sony expires in June."
Wedbush Morgan Securities analyst Michael Pachter raised his price target on EA to $64 from $56 and said the decreased competition would help the company increase its market share.
Shares in EA touched an all-time high of $54.73 Tuesday before closing down 11 cents at $53.76 on the Nasdaq.
