Wednesday, January 26, 2011

EA Investors Unsure About Old Republic

An analyst from Janco Partners, a broker dealer that works on research with telecommunication companies, believes that EA investors are unsure about putting the funds into Old Republic. Mike Hickey believes that

"[M]any investors are betting against SWTOR achieving market success, provided the company's and industry's track record at releasing successful new MMOs."

Which, if you think about EA's success, or lack of, with MMO's, it kind of makes sense. Look at Warhammer Online and All Points Bulletin. Though I'm unsure of how EA acquired Warhammer or if they started out with the license, but APB was picked up by EA during it's development. Much in the same way EA got on board after Old Republic began work. APB barely lasted 2 months before the servers were shut down. Warhammer Online isn't doing bad for where it's at. It's settled into a good niché for itself in the MMO spectrum. But this is EA. They want World of Warcraft numbers right out the gate, which Warhammer Online didn't give them.

So now comes the question, are EA's expectations too high for their products? WoW didn't get it's fan-base overnight, even though it feels like it did. They had to build it up, and it's a product that has grown in subscriptions over the years. Was it immediately popular? Yes. But those 7 million subscribers didn't happen overnight. They were generated over time. But with EA's unsecured record on MMO's, they want to put money on a product that they know will give them millions of subscribers right out the gate.

And then you have to look at the current market. A number of MMO's have been moving to the free-to-play model, with advanced subscriptions for those interested in premium items. Which has worked for some. Look at Lord of the Rings Online. Their sales boosted once they moved to free-to-play. Champions Online is taking that same route and already there's a buzz about an increase in new user accounts. But for EA, that wouldn't be a good sale. It'd cut into their profit margin for monthly online fees. Why? Star Wars is still owned by LucasArts. They gotta pay the royalties to the big G. So the pot is getting split 3 ways. Bioware, LucasArts, and EA. Not as much money is going to be received in return. So for EA, they need to see some proof before they start to throw more money at Bioware.

It's going to be a long, bumpy road ahead.


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