One of the hot questions in gaming circles these days is whether or not Electronic Arts (NASDAQ:EA) is considering a subscription model for its first person shooting (FPS) game Battlefield 3. We believe the answer may very well be yes.
Considering the phenomenal success of its rival Activision Blizzard’s (NASDAQ:ATVI) Call of Duty: Elite service, EA might be weighing its options in FPS subscription model. Should that happen, this will go against the very nature of the claim EA has been making until now that Battlefield 3 multi-player service Battlelog will always remain free. Here we look at why EA might be tempted to venture in the FPS subscription business and why Call of Duty: Elite could be a model worth copying – at least in the eyes of EA.
Call of Duty: Elite’s success sure has raised eyebrows within EA
Despite a lot of hue and cry before its release, there is no denying the fact that Call of Duty: Elite has been a phenomenal success. The multi-player subscription service which was launched alongside Call of Duty: Modern Warfare 3 (MW3) in November 2011, has attracted gamers like never before. And with an array of services such as prioritized monthly downloadable content, daily competitions with virtual and real life prizes, pro analysis and strategies, Elite TV etc the trend is expected to continue further.
On the other hand, Battlelog has failed to create the buzz which EA had initially expected. EA had expected that it can leverage the free services of Battlelog to push Battlefield 3 and related downloadable content (DLC) sales. However, since November 2011 is has rather been a one way traffic with Call of Duty MW3 virtually decimating any threat whatsoever from Battlefield 3.
Another significant point to note is that through Call of Duty: Elite, Activision is not only increasing the sale of its DLC but also shunting the retailers in between thus increasing the margins on its DLC.
However, the same is not applicable to EA. Considering the rapid digitization of video-gaming industry, every developer is trying its best to reach its consumer directly, thus taking hold of fast growing digital distribution market. Therefore, a similar subscription model such as that of Call of Duty: Elite can not only increase EA’s prospects in DLC sales but also enable the company to get a hold in FPS digital distribution too.
Our price estimate for Electronic Arts stands at $20.62, which is roughly 15% above the current market price.