Report: Comcast preparing deal allowing customers to stream EA video games

By Liana B. Baker and Malathi Nayak

LOS ANGELES/SAN FRANCISCO (Reuters) - Comcast Corp may soon allow customers using its cloud-connected X1 cable box system to buy games from Electronic Arts Inc through their televisions, according to five sources briefed on the plans.

Such a partnership would come as the cable company seeks to protect its turf against a new wave of challengers.

After two years of testing, Comcast and EA, are close to reaching an agreement to stream video games such as "FIFA" and "Madden," into the living rooms of some of Comcast's more-than 22 million customers across the United States, said the sources, who declined to speak publicly before a deal had been struck.

Comcast would make the games available on X1, a video operating system with apps and an interface that is considered the most sophisticated in the cable industry, the sources said. It features Internet applications, viewing recommendations and voice control.

If the agreement goes through, it would mark the boldest step yet by a cable company to muscle into the territory of leading video-game console manufacturers such as Sony Corp and Microsoft Corp.

Comcast has been beefing its x1 system with new features to stop potential customer defections to rival video streaming systems such as Apple TV and Amazon.com Inc's FireTV, which was launched just last month with a slew of games.

Apple TV allows users to stream games from their iOS phones and tablets to TV sets, and developers expect Apple to bring gaming directly to its streaming box. FireTV was released with over 100 free and paid games from the likes of Disney and Electronic Arts.

Comcast and EA's aim is to make buying games as easy as ordering a pay-per-view movie, sources said. This could create a new distribution model that circumvents console and video-streaming device makers.

EA and Comcast, which is awaiting regulatory approval for its $45 billion proposal to buy Time Warner Cable Inc, declined to comment.

The TWC deal, which would make Comcast the country's largest cable provider, highlights Comcast's desire to thwart the fresh challenge from the video and entertainment upstarts.

A NEW DAWN

For Electronic Arts, a deal with Comcast could represent an important new revenue opportunity.

The video game industry has yet to see a sustained recovery in sagging software sales despite robust hardware sales driven by the November launches of Microsoft's Xbox One and Sony's PlayStation 4 consoles.

In January, Redwood City, California-based EA lowered its 2015 revenue forecast - prompted by the sooner-than-expected drop in sales of games for older consoles after the release of the new devices.

Under the agreement now being hashed out with Electronic Arts, Comcast will offer action, sports and casual titles from EA's portfolio, including potential titles such as "FIFA," "Madden," "Monopoly" and "Plants vs. Zombies," the people said. The game offerings have not been finalized.

Customers will be able to turn their tablets into controllers to play the games. Revenue share terms and the exact release date have not been decided.

Comcast has been bulking up the capabilities of its X1 service, which can store content on the cloud, and experimenting with new ways to reach viewers.

Last fall, it started selling movies for download and streaming through its set-top boxes and XFINITY TV website, which created a new path for Hollywood studios to generate revenue from films after their theater run ends.

While Comcast added video subscribers for the past two quarters, after years of losses, it is facing increasing competition for viewership, both online and through streaming boxes. The Xbox and PlayStation, for instance, are now marketed as living room entertainment hubs that offer more than just games.

Microsoft and Sony have added media features to their consoles over the past two years like original programming, online video and TV apps -- including Comcast's XFINITY on-demand service. But cable companies so far have not been able to load their set-top boxes with the technology to support gaming.

Comcast will focus on casual and family games at first and consider offering other first-person shooter and action games later based on user preferences, the sources told Reuters.

(Editing by Edwin Chan and Alden Bentley)

[Image: A Comcast sign is shown in San Francisco, California on Feb. 13, 2014. By Robert Galbraith for Reuters.]