Afflicted with a dwindling sales figure of
Star Wars: The Old Republic
,
Electronic Arts Inc.
(
EA
) is reportedly set to offer a free trial version starting July.
Being the company's mainstay in the massively multiplayer ("MMO")
game segment, EA is doing all it can to support it. The free
version will let gamers reach to the 15
th
level.
EA believes that the decline in subscriptions from 1.7 million
to 1.3 million in the recently concluded quarter was on account of
the exit of people playing on a casual or trial basis. Therefore,
this step could give the game the much-needed push to fandom.
To make it more popular, EA is also expected to launch the game
in 38 new countries.
Star Wars: The Old Republic
is one of the costliest games from EA's stable in terms of game
development and promotional expenses. The company remains
optimistic and expects it to boost the top-line in 2013.
Activision Blizzard Inc.
(
ATVI
), an arch rival of EA, had already employed this promotional
measure of letting players play for free up to a certain level with
its own MMO game,
World of Warcraft
. The game boasts a subscriber base of 10.2 million (as per first
quarter 2012 estimates). However, it resulted in dubious gains for
Activision, since the subscriber base actually declined in the
recently concluded quarter.
One of the primary reasons for the dwindling number of
subscribers of these bellwethers can be traced to the emergence of
free to play MMOs by social game makers like
Zynga Inc.
(
ZNGA
). Moreover, EA's expanding portfolio of free to play games
has also been cannibalizing its own product.
Overall, we remain cautious on the company due to the gloomy
macro-economic environment and increasing competition from its
peers.
However, we believe that EA's high-quality titles and a robust
product pipeline along with the increasing online exposure and
traction in the social and mobile gaming market are the long-term
positive catalysts.
Thus, we have a Neutral recommendation on EA over the long term.
Currently, EA has a Zacks #4 Rank, which implies a 'Sell' rating in
the near term.
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