Analysts, gamers and investors want to know more details about Star Wars: The Old Republic, the big online game coming from Electronic Arts. But the video-game giant isn’t ready just yet to talk about the biggest details of the game, as evidenced by vague comments on today’s earnings call for EA.
The Old Republic is EA’s Hail Mary pass in online games and meant to take away a lot of users from rivals such as Activision Blizzard’s seven-year-old game, World of WarCraft. If EA succeeds with this title, it will have persistent revenues coming in from subscription fees charged to users. That’s like printing money, much like EA does with its sports games every year.
In anticipation of this game, Blizzard Entertainment recently made the first 20 levels of World of WarCraft free to play, drawing revenue instead when players buy virtual goods. EA’s game is expected to be a subscription-only premium title, and EA hopes to launch it in the last three months of the year. Beyond that, the details are slim for a title that has been in the works for years and has a huge investment behind it.
“You mentioned record pre-orders for Star Wars: The Old Republic,” said one analyst on the conference call this afternoon. “Can you wrap some context in that?”
While EA wants to keep everyone informed about its progress on the major game, it also doesn’t want to give away its secrets to competitors too soon. Michael Pachter, an analyst at Wedbush Securities, said there was “nothing new” beyond what EA had mentioned to analysts in a call a couple of weeks ago.
Frank Gibeau, head of the EA Games label at EA, said he couldn’t supply any numbers yet on the pre-orders. But he said that the title has had better pre-orders on EA’s new Origin digital game distribution network than Battlefield 3, another highly anticipated title. But of course, Gibeau could not say how many pre-orders EA had for Battlefield 3, which was about 10 times the number of pre-orders for the 2010 game Battlefield Bad Company 2. And again, EA never said how many pre-orders it had for that game, though it eventually sold 9 million units.
John Riccitiello, chief executive of EA, took pity on the analysts by trying to explain to them how EA looks at the investment. He said that the game needs 500,000 paying subscribers to break even and that it would be nicely profitable with 1 million subscribers. But given the historical investment, that number might be underwhelming. If EA gets 1.5 million to 2 million subscribers, then that will be enough to “make it look like a great investment and justify the purchase of BioWare Pandemic.” EA bought BioWare Pandemic (BioWare is the developer of The Old Republic) for $800 million in 2008.
Gibeau said there are thousands of players in the beta test of The Old Republic now. The expected conversion rate has been measured by third parties and it is very high. That means a lot of the players who are testing the game say they want to subscribe to it when it formally launches.
Most frustrating of all for observers, EA won’t say when it will launch the game yet. Riccitiello said the target is to launch the game in the third fiscal quarter, or the last three months of the year. But he said the launch could move to the fourth fiscal quarter if that is what testing results mandate.
But EA has to be careful to fully test the game and ensure that it can handle millions of players. It must also ensure that its Origin digital game distribution platform, which handled the pre-orders, can accommodate all of the purchases when the game formally launches. For that reason, EA will launch the game only when it is perfect in terms of execution, Riccitiello said.
“Today, we are giving a series of good markers relative to the progress we are making,” Riccitiello said. “These are on the development, consumer feedback, and operational feedback.”