With yesterday’s news
regarding Star Wars’ The Old Republic going free-2-play this coming Christmas period, there was some worry that this may be putting Electronic Arts in serious financial trouble.
Wedbush Securities seems to think that this will be a good thing
and that EA’s move is in the right direction.
"We remain incorrigibly positive on the EA story. Despite a relatively low number of packaged good releases this year, we expect EA to grow revenue and earnings, primarily due to unrivaled digital strength. We believe EA represents the best opportunity for investors to benefit from continued digital growth for the industry next year, as well as from a likely rebound in packaged goods sales next year," wrote Wedbush Securities analyst Michael Pachter in an investors note.
Stock market moves have also reacted positively to the news with EA’s stock closing up six percent during yesterday’s trade.
The general movement amongst games to offer a free-2play option has definitely shown that it can be done and be done profitably, as examples such as Riot Games’
League of Legends and Wargaming.net’s
World of Tanks, not to mention other publishers moving in the realm, such as Perfect World and Hi-Rez Studios. Valve Software has also publicly stated that turning some of its games over to a F2P model has brought in more revenue than it ever did as a payware option, citing the example of Team Fortress 2, comically now described as a war-themed hat simulator.
Only time will tell whether this move will be successful and whether the bigwigs over at EA and Bioware can adapt to the change.
"We expect the network effect to augment the number of gamers further. In the long-term, we believe the adjustments will result in incremental revenue and earnings growth as high-margin Cartel Coin purchases by a much larger pool of gamers and additional advertising generate more revenue than was lost through declining subscription fees and the lower MSRP."
Ultimately, Pachter believes that Star Wars now has the potential to "attract at least 10 million MAUs indefinitely, with upside to perhaps 50 million." He added, "Thus, we believe that contribution from the model shift could be significant for years to come."
And who said gaming wasn’t big business?
Thanks to Massively
for the alert, and GamesIndustry.biz
for the source!