But are these deals good for Electronic Arts investors?
On Friday Signal Hill analyst Todd Greenwald asked, "...Why the need for more distribution deals?" He said the most recent deals with Grasshopper and Epic "speak to EA's marketing and publishing strengths, but doesn't say much for their development talent."
Greenwald, who has a "hold" rating on EA stock, said he is "concerned to see how much top-line growth is coming from low-margin distribution deals out of EA Partners."
EA Partners has published games from Harmonix (Rock Band) and Valve Software (The Orange Box), and will be publishing id Software's upcoming Rage (pictured) as well as new IP from Epic Games and Grasshopper Manufacture.
In a phone interview with Edge, Greenwald further questioned EA Partners' deals, from an investor's standpoint.
"[EA Partners' agreements] generate two things for EA: sales--so it helps the top-line--and cash. But the deals are low-margin.
"EA is trying to get its margins up to 20-25 percent, and these deals negatively impact that."
He said EA is willing to take on low-margin projects because publisher needs to flesh out its product pipeline.
He added, "[These agreements] make EA look more like a distributor than a developer of world-class videogame titles. ... It's indicative of the fact that they are not able to develop enough of their own titles to meet their revenue and earnings goals, that they need to fill in the gaps with these distribution deals.
"If they had their own properties, say like what Activision has, they wouldn't need these distribution deals. In the past they haven't, but for some reason now there's a big push.
"I can see that they want to leverage their marketing and distribution platform with other peoples' content, but from an investors' perspective, when you're dealing with operating margins and what not, these deals hurt those margins. It makes it a lot worse."