Following Activision Blizzard’s earnings announcement, the publisher held its investors call to discuss its results and the industry at large. Chief Executive Bobby Kotick was asked by an analyst about the challenging marketplace this year and why sales have been down at retail.
“You have a very difficult macroeconomic environment, when you look at the things that can generally have an impact on the consumption of entertainment – unemployment data is very concerning, and when you look at the challenges in Europe there are a lot of things that are going to affect the macroeconomic outlook. We are also at the late end of the cycle, and the late end of a console cycle is always going to have its share of difficulties,” Kotick began.
He then proceeded to lay some of the blame at the feet of his competitors, which he said are not necessarily doing the industry justice by shipping less than stellar games.
“I also think you’ve had, unfortunately, a stream of products that are less than adequate from some of our competitors. The demand in the marketplace is for great quality products. If you look at the success we’re having it validates that there is an opportunity for great quality products but I think at this stage in the cycle, it’s challenging for anything other than great quality products,” he said.
Kotick added that other sectors, particularly mobile, are having an impact on how much money consumers are willing to spend. Beyond that, many gamers are happy to keep playing online games for longer stretches of time instead of rushing out to buy new products.
“There’s also a lot of competition for entertainment dollars – you look at mobile games and what’s happening there and the pricing there that’s having an impact,” he continued. “And I also think that a lot of the games we make, like Call of Duty, that are multiplayer games offer a lot of replayability, and when you have the opportunity for replayability in an economic environment like this, you’re going to spend more time playing the games that you have.”
“But I will say that if you look out at the next five years, there’s a lot of reason to be hopeful and enthusiastic, but the next few years are going to be challenging,” Kotick concluded.
A new report from Cowen and Company states that the recently settled case between ex-Infinity Ward studio heads Jason West and Vince Zampella and Activision settled to the tune of ‘tens of millions.’ Analyst Doug Creutz believes that while the settlement was undisclosed, the two Call of Duty executives walked away with a very healthy sum.
The comments from the firm come just a few days shy of financial reporting for Activision. Creutz notes that Activision will more than likely ignore the settlement when discussing the outlook for the company during the earnings call as it feels investors will see the sum as negligible going forward.
Activision is looking at healthy sales overall from the Blizzard side, thanks in part to an expected 8 million units sold for Diablo III, says Creutz. The game pushed past 6 million units sold in May, beating out earlier predictions of only 5 million forecasted. Blizzard’s next release, StarCraft 2: Heart of the Swarm, is more than likely not going to ship until 2013, adds Creutz.
EA is also gearing up to release its financial report as well. Creutz believes that EA will be reducing sales forecasts for upcoming titles, notably Medal of Honor: Warfighter. The game is expected to only sell 1.44 million units, a sharp decline from Creutz’s previously forecast 2.33 million. The analyst also had sobering news for BioWare’s The Old Republic, which he believes will continue to see rapid declination in subscribers to around 500,000 users overall.
Star Wars: The Old Republic got off to a hot start when it launched, quickly gaining a million subscribers, hitting a peak of 1.7 million players but then more recently seeing a drop off to 1.3 million subscribers. It’s clear that the BioWare MMO is facing increasing pressure from other MMOs and free-to-play online games, but EA is prepared to do anything to ensure that gamers enjoy being in a galaxy far, far away for a long, long time. EA labels boss Frank Gibeau recently discussed.
“We’re really proud of Star Wars. We’re really excited about the launch. We’ve had tremendously positive feedback from our fans and our subscribers. You’re right, it is a complex and difficult market out there on the PC because of the availability of free-to-play products like our own, like World of Tanks, League of Legends… WoW is a free download that you pay a subscription to after a period of time. We’re cognizant – we see that,” Gibeau told us.
Gibeau stressed that EA will continue to evaluate the business around Star Wars and implement changes as needed, so free-to-play isn’t out of the question at all (indeed, BioWare recently said as much too).
“We’re going to be in the business from a long term standpoint so absolutely we’re going to embrace free access, free trial, ultimately some day we can move in and embrace that model. It’s all a matter of timing and thinking things through. We have a great business right now and we’re not looking to make any abrupt changes. We made some good announcements in terms of giving you the first few levels free, because our telemetry told us that if we can get you to around level 8 or 9, you stick with us for the long term. So really the strategy right now is about opening up the funnel at the top so we can acquire more customers who are interested in Star Wars who perhaps aren’t ready to pay the full price,” Gibeau continued.
“[We want to give them] an opportunity to try and it and say, ‘You know, I really do like this. I’m going to make that commitment.’ MMOs, obviously, are a big commitment of time and money and so giving people an opportunity to access it for free, try it, we found in our telemetry and our experiments is a really good strategy and a good tactic. We’re going to do that. We also announced a… mass amount of content thats coming for the service, so we’re going to be in the Star Wars business for ten years, who knows? We’re still publishing Ultima Online for seventeen years. So we’re definitely going to be in the Star Wars business for a long time and if the business changes in accordance with how the market is reacting, then that’s just good process for us since we’re trying to create the best possible service for our gamers.”
We asked Gibeau if he’s absolutely confident that a decade from now EA would still have people playing Star Wars: The Old Republic. He answered, “I am, actually. We’re still playing Dark Age of Camelot, we’re still playing Warhammer, we’re still playing Ultima Online, we’re still playing Runescape, we’re still playing Lineage. What’s beautiful about an MMO is that when you get to a certain scale it stays with the program for a long time.”
Part of lasting a decade or more will obviously involve being flexible with business models. “The advent of free-to-play is certainly a change in the dynamic of the PC market. I don’t think subscriptions ever go away, but when you have an IP as broad as Star Wars, we’re definitely going to look at opportunities to grow that business and look at different ways of bringing customers in and serving them,” Gibeau said.
Last week, an analyst report from Cowen and Company suggested that BioWare’s Star Wars: The Old Republic is losing subscribers and would drop from a peak of 1.7 million recorded in February to 1.25 million by the end of EA’s fiscal year. BioWare has now come out to deny that its MMO is in decline.
Speaking to PC Gamer, BioWare’s Daniel Erickson said that the company’s subscriber numbers for the game haven’t dropped but he did admit that concurrent users at peak times has been down. Erickson said that this is why some players have been experiencing “light” servers, and BioWare may consider merging some servers.
Erickson also commented that BioWare is doing “anything and everything” to boost its concurrent users number. “Nothing is off the table when it comes to making sure our communities are strong and active on each server,” he said.
EA BioWare’s Star Wars: The Old Republic is off to a good start, “with more than 1.7 million active subscribers and growing,” according to CEO John Riccitiello. While player churn is always a concern in MMOs, DFC Intelligence does see long-term success for the title.
The market research firm noted that The Old Republic “has the potential to be a successful long-term online subscription PC game… despite a general decline in high-end subscription game products and growing competition from numerous free-to-play games like Riot Games’ League of Legends, War Gaming’s World of Tanks, and S2 Games’ Heroes of New Earth.”
DFC, which conducted the study in conjunction with Xfire, tracked game usage data from the launch of the MMO on December 20, 2011 through February 20, 2012 and also surveyed over 4,000 Xfire users in January 2012. Based on this data, DFC believes that Star Wars can indeed reach over one million long-term paying subscribers (defined as a subscriber that pays for over six months).
“The current trend among large massively multiplayer online games is to have strong initial sales, after which users quickly lose interest and are not converted to long-term paying subscribers,” said DFC Intelligence analyst Jeremy Miller. “While early signs are fairly positive, over the next few months the plan is to closely monitor usage and consumer reaction to gauge how well Star Wars: The Old Republic performs over time.”
Miller added, “The next three to six months will be critical to determine if the game can attract a large and sustained paying subscriber base.”
DFC said that this study is part of an “ongoing initiative” with Xfire to better understand the core PC gaming market.
“The Xfire user-base is a strong trend indicator for gaming titles like Star Wars: The Old Republic and World of Warcraft,” said Xfire Chief Marketing Officer, Juston Brommel, “One of the core product features that attract gamers to Xfire is the ability for users to track their game hours. This data gives Xfire and DFC terabits of insightful trends into which games users are playing and how often.”
Bright List Studios, best known for the Harry Potter games, has been closed by Electronic Arts. Apparently, the axe fell very late last year; and the company was able to keep the entire thing pretty quiet. The exact number of lay-offs is unknown at this time.
Sources tell us that a number of the developers were relocated to other EA studios, with some developers finding a home at Criterion and PlayFish. Other developers apparently opted to get off the EA train and have moved on to Supermassive Games, Jagex, as well as some other studios in the area.
EA is not commenting on any specifics yet, other than to say that the consultation period had ended, and the studio was closed late last year.
The early success of Bioware and EA’s Star Wars: The Old Republic is an indication of a healthy market for subscription based MMOs, according to analysts monitoring the high-profile release.
Electronic Arts said over the Christmas period that more than one million users had registered for the game, which officially went live on December 20, although it had steadily rolled out early access to the game beginning two weeks before that.
“We view the early success of Star Wars as an indication of a healthy MMO market,” said Baird Equity Research’s Colin Sebastian. “While there is likely some shifting of usage from Activision’s World of Warcraft, we see a viable market for multiple million-user MMOs in the US and Europe.”
Baird Equity estimates that the game has peak concurrent users of roughly 350,000 players.
According to analysts at Cowen and Company the uptake of The Old Republic has had “minimal apparent impact” on Blizzard and Activision’s market-leading World of Warcraft.
But it also noted that it expects a decline in WoW subscriptions the fourth quarter to be higher than 2.5 per cent, following recent trends in the game which have seen players leave the game.
As of December 31, EA has a total of 215 operational Star Wars servers, with 124 in the US and 91 in Europe. That compares to 491 European and US servers for World of Warcraft combined.
Early critical response for The Old Republic has been generally positive, although many outlets are still in the process of reviewing the game. It currently boasts a Metacritic score of 88, but the game has not been without its launch controversies, including gold-farming and bans for players that some have seen as unfair.
All eyes are now on the game to see if it can maintain its subscription business model, with many expecting a shift to free-to-play, as has been the case with multiple MMOs over the past 18 months.
Star Wars: The Old Republic will launch on December 20 in North America and December 22 in Europe.
The date was revealed by Bioware co-founders Dr. Ray Muzyka and Dr. Greg Zeschuk during a developer session at the Eurogamer Expo.
Muzyka emphasized the importance of creating a high quality product, and finding “a good window” that would give players time to play it.
“We’re getting more and more confident too because we’ve been testing for many months now with thousands and thousands of beta testers, so we’re doing exhaustive testing of all different aspects of the service,” he said.
“Taking all that feedback to heart and integrating it in and continually making it better, so we’re getting very confident in the quality now.”
The news that Blizzard’s Diablo III – which will also be a persistent online experience – won’t launch until next year may have contributed to the decision to launch this year.
“It would make sense mutually to probably not fall on top of one another, but our primary concerns, like [Blizzard], is to launch a great game first and foremost,” Muzyka added. “If we’re steering clear of great competitors well, so much the better.”
Sony Online Entertainment president John Smedley claimed that The Old Republic has a “legitimate shot” at 2 million subscribers. However, Smedley also said that it will be the last large scale MMO to use a traditional subscription business model.
“Why do I think that? Simply put, the world is moving on from this model and over time people aren’t going to accept this method. I’m sure I’m going to hear a lot about this statement. But I am positive I’m right.”
Courtesy-GI.biz by Matthew Handrahan
The annual fee is set as 2000 Microsoft Points roughly $25.00– at the time of writing an official cash figure wasn’t available – and will give subscribers access to four exclusive benefits across all the four franchises.
“We’ve been talking to consumers in the U.S. and over there in Europe about the type of thing they would like to see that they aren’t currently getting from their EA Sports experiences,” EA Sports’ president Peter Moore told GamesIndustry.biz.
“It’s very important to communicate that this doesn’t change anything about EA Sports other than to add a layer on for people who are interested in those areas. It doesn’t subtract or detract in any way from the core experience.”
Season ticket holders will be able to download and play the full version of the latest version of each game three days before it is released. The download will expire on launch day, when the user will be able to purchase the game through conventional channels, taking any experience or achievements earned with them.
The other benefits are a 20 percent discount on all EA Sports DLC, including Ultimate Team packs, accelerator packs and gear upgrades; free premium web content; and a membership recognition badge displayed in-game and on the user’s EA Sports profile.
Moore highlighted the early access and discounted DLC benefits as the “brain behind the programme,” and claimed that the initiative is, “not about making a profit in the early going.”
“It’s about figuring out…a price that isn’t going to eliminate a huge amount of people for the value that’s delivered. We took it to the consumers and asked what they thought. The price we landed on is around 2000 points, and we think it’s a great price.”
Season Ticket is further evidence of EA’s commitment to growing its digital business, with EA Sports vice president Andrew Wilson recently speaking at both Develop and directly to GamesIndustry.biz on the subject.
The service covers the EA Sports FIFA, Madden NFL, NHL Hockey and Tiger Woods’ PGA Tour franchises. It will be available in North America, Europe, Australia and New Zealand for Xbox 360, and North America for PlayStation 3.
Courtesy-GI.biz by Matthew Handrahan
It appears that Star Wars-The Old Republic pre-orders are doing quite well. EA reported that the pre-order are breaking records that the company had. An EA spokesperson said “The number of pre-orders is way ahead of our expectations.”
EA’s next closest game in pre-orders is Battlefield 3 and SWTOR is way ahead of that game. Many retailers are confirming that Star Wars is in high demand which is great for a PC title; and are comparing the demand to Word of Warcraft expansion.”
Many hating analysts may question EA’s ability to make money with this MMO title. Nevertheless, EA continues to be confident that they will be able to make SWTOR profitable for them to operate. Time will tell if they will succeed. However, with BioWare behind this game that feat should not be difficult.
Electronic Arts has reported first quarter profits of $221 million, more than double the $96 million from the same period last year.
Sales were up to $999 million, compared to $815 million, with 2 million sales of Valve’s Portal 2, Dead Space 2 and Dragon Age 2. Crytek’s Crysis 2 has now sold over three million units since release.
“This was another solid quarter driven by both digital and packaged goods,” commented John Riccitiello, CEO.
“We saw strong digital revenue growth over the prior year. On packaged goods, NCAA is off to a great start and pre-orders for Battlefield 3 are tracking extremely well.”
Breaking down the $999 million sales for the quarter, digital sales accounted for $232 million, up from $176 million. Packaged goods sales were at $647 million compared to $586 million in 2010, and distribution of boxed product hit $120 million, up from $53 million.
EA revealed that FIFA 11 has sold 11 million units across all platforms and Battlefield: Bad Company 2 a total of 9 million since release.
Star Wars: The Old Republic has broken EA’s pre-order records, according to the company, while Battlefield 3 pre-orders are ten times that of Battlefield: Bad Company 2.
It appears that EA and BioWare have some great news for those who are dying to play Star Wars: The Old Republic. EA and BioWare will Beta Test, starting in September that will give “selected players” a chance to have an early look at the game.
Unfortunately, no additional specifics on whom the “selected players” might be, those that want a shot at getting in the beta can still sign up on the website at the link below. No other specifics were given at this time and the number of weekends the Beta Test might run is another unknown.
Electronic Arts will open a new studio in Austin, Texas, and employ 300 new team members across its sports, games, IT and finance operations.
The 300 positions will be divided evenly between contract and full time employees, with the EA Sports team taking over two buildings that are currently home to Mass Effect developer Bioware.
“I think we’ll probably start this first year somewhere around 30-35, just to get the team up and moving, just so they can start building features and working on HD platform development,” said EA Sports COO Daryl Holt in an interview with Joystiq.
Holt also confirmed that Austin team wouldn’t replace any current EA studio, or affect the company’s Tiburon and Burnaby studios.”We’re not going to disrupt what’s currently going on, Orlando’s expanding, Burnaby’s expanding, EA’s growing,” he said.
It’s not decided which franchises the new team will work on, and as yet no limits have been put on the new studio’s growth. “But it’s not something that’s going to be open-ended while we recruit the team, because we want to recruit the right talent.”
The news announced at the Austin Operation during a visit from local governor Rick Perry.
“Perry has created a very pro-business environment,” said Frank Gibeau, EA Games president. “It helps us to look to Austin as a long-term opportunity.”
“If it’s in the game, it’s in the game,” said Perry. “And right now Texas is where the game is being played. Much like the video gaming industry, our state is built on the foundation of competition.”
“Thanks to our low taxes, reasonable and predictable regulatory climate, fair legal system and skilled workforce we continue to attract companies from around the nation,“ he added. “It isn’t rocket science.”
EA already employs around 450 people at it’s Austin studio, and will apply for incentives from the Texas Film Commission.
Courtesy-GI.biz by Rachel Weber
Electronic Arts has reported that they had a loss for the third quarter endeding December 31st, 2010 of $322 million, compared to a loss of $82 million for the same period in 2009.
Total sales for the period were $1.053 billion, also down on the $1.243 billion in the previous third quarter.
Digital sales brought in $211 million compared to $152m in ’09, fortunately packaged goods were up from $929 million to $1.108 billion, but distribution was down to $91 million from $265 million.
EA’s board of directors also decided to approve a stock repurchase program of up to $600 million of Electronic Arts stock over the next eighteen months, a move according to CEO John Riccitiello “demonstrates our confidence in EA’s digital strategy.”
Highlights for the quarter were sales of the recently launched Dead Space 2 which were double those of the original, and Medal of Honor and Need for Speed: Hot Pursuit, both of which have passed 5 million sales during the period.
EA also said it was the number one publisher on Xbox 360 and PlayStation 3, the App Store and Microsoft Windows Phone 7. FIFA 11, Madden NFL 11 and Battlefield: Bad Company 2 have also now sold over five million units since launch. Let’s see how they perform next quarter since Dead Space 2 is doing well.
The price of the DLC will be 1,200 Microsoft Points or $15 bucks for the PlayStation 3. No pricing for the PC content was given, but sources are saying more details are forthcoming.
Gamers open your piggy banks and prepare to do more shooting.