Electronic Arts Inc. (NASDAQ: EA) has joined the wave of video game companies that may be up for sale. The great rumor mill of Wall St. (and Cyber Street) now has EA as the next possible buyout target. Rumors are showing that it is quietly exploring a sale with private equity firms. The good news is that shares are up more than 10% around $14.60 after closing at $13.09 yesterday. The bad news is that value here is a fraction of its peak.

Before you go load the boat, there are some serious considerations. Activision Blizzard Inc. (NASDAQ: ATVI) has been looking to split out its Activision unit, and the maker of the World of Warcraft’s plan has reportedly not gone well. Another issue is GameStop Corp. (NYSE: GME), which always comes up as a private equity buyout candidate. Barron’s recently talked it up, but this has been a rumored buyout candidate for months and months now.

THQ Inc. (NASDAQ: THQI) is also down and out enough that it has come up as a buyout candidate, and Take-Two Interactive Software Inc. (NASDAQ: TTWO) fought off a real buyout offer years ago and has never really taken back off on the upside.

The social gaming has space and the freemium games have been putting pressure on the entire video game sector. Zynga Inc. (NASDAQ: ZNGA) has led that charge, but now the market has cannibalized the value of Zynga too. Virtual farm animals only go so far it seems.

What may be the big driver for the video game sector is a coming refresh cycle for the video game consoles. Maybe the lower-tech games for smartphones and tablets will peter out if the $59.95 shooter games get more and more lifelike in the next console cycle.

Just be sure to remember one thing more. If the private equity firms are going to take the entire video game sector private, eventually they will want to relaunch these companies in the public markets via IPOs. Maybe these just need good old-fashioned turnarounds that can work.

JON C. OGG

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