Did Electronic Arts Just Cancel Star Wars: The Old Republic?
Electronic Arts (NYSE: EA) will soon allow consumers to play Star Wars: The Old Republic for free. Is this the beginning of the end for EA's flagship MMORPG?
Fans of the game may argue that Activision (NASDAQ: ATVI) pulled a similar stunt with World of Warcraft. However, WoW is an established franchise with annual expansion packs and a legion of fans unlike any other. The game's worldwide presence is not to be denied.
Star Wars: The Old Republic, in contrast to WoW, is the new kid on the block. It arrived with a big-name franchise attached, a mountain of fanfare, and a galaxy full of marketing hype. The game has yet to catch on with consumers, who are increasingly wary of paying $40 for the software plus $10 to $15 every month to continue playing the game online. MMORPGs (Massively Multiplayer Online Role-Playing Games) do not have any value outside of their multiplayer experiences. Thus, users are required to pay the monthly fee.
By eliminating the monthly fee for users who are only interested in playing up to level 50, EA is clearly hoping to attract new customers. This month, the company will also reduce the game's MSRP to $14.99. As of this writing, though, GameStop (NYSE: GME) still sells the game for $39.99. Best Buy (NYSE: BBY) and Wal-Mart (NYSE: WMT) are charging the same old price.
Amazon (NASDAQ: AMZN) and Target (NYSE: TGT) are the only major retailers that offer any alternatives. Amazon.com sells Star Wars: The Old Republic for $10 less than its big-box competitors, while Target maintains the game's launch price of $59.99.
Regardless of prevailing price differences across vendors, Star Wars: The Old Republic will likely get cheaper with time. And with every price reduction and every free-to-play opportunity, the game may move further and further away from profitability.
At this stage, EA still hopes to turn the game around. For EA to pull this off, the company must first convince people to play the game - at any cost. Second, EA must convert all free players to paying customers.
This might sound like a realistic goal. But it has not kept World of Warcraft (Star Wars: The Old Republic's biggest competitor) from hemorrhaging users.
World of Warcraft's troubles may seem insignificant compared to the challenges that EA has been facing and may continue to face in the months ahead. In May, EA revealed that Star Wars: The Old Republic had sold roughly 2.4 million copies. On a sales basis, this was good news. But of those 2.4 million buyers, only 1.3 million actually subscribed to the monthly service. In previous months, the game had as many as 1.7 million players.
Inevitably, some subscribers are consumers who take the free month offer (included with every copy of the game) and leave as soon as the trial is up. But if players were willing to spend $40 to $60 on the software and walk away, are they really more likely to stick around now that the MSRP is about to drop? Consumers play what they enjoy. And if Star Wars: The Old Republic was not enjoyable enough to hook consumers before, the new price point is unlikely to make a difference.
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