Video gaming developer Electronic Arts (NASDAQ:EA) has announced a free trial of Star Wars: The Old Republic (SWTOR) playable up to level 15.  The move comes after a massive decline of 400K in SWTOR subs last quarter, which resulted in EA’s stock crashing by roughly 8% immediately after the earnings release. We believe the increase in level cap reflects EA’s desperate attempt to revive SWTOR. EA competes with other game developers like Activision Blizzard (NASDAQ:ATVI), Take-Two Interactive Software (NASDAQ:TTWO) and casual gaming mainstays such as Zynga (NASDAQ:ZNGA).
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EA desperate to revive SWTOR
EA had launched SWTOR in December last year to take on rival Activision Blizzard’s World of Warcraft (WoW) in the massively multiplayer online role-playing game (MMORPG) space. The game holds immense importance to EA as the game development alone cost the company $135 million, which makes it the costliest game to date.
However, after a strong initial reception, the attractiveness of SWTOR seems to have fizzled out. The first apprehensive signs were when EA decided to launch SWTOR in 38 new countries, without gaining proper traction in the domestic market. The disclosure of SWTOR subs dropping by a massive 400K in the Q4 earnings release confirmed the market apprehensions, which led to EA’s stock declining by 8% immediately after the disclosure. The game’s hype had helped boost EA’s stock in a big way during 2011, with the stock outperforming most of its peers. As the game lost steam in 2012, EA seems to have paid a heavy price, losing nearly 34% of its stock value since the beginning of the year.
The announcement follows a similar decision made by rival Activision Blizzard a year ago, when the company was forced to open WoW for free up to Level 20, in order to contain the rapidly declining WoW subs.  However, the move didn’t provide much respite to the company, as WoW’s subscription base continued to decline and alleviated only after Blizzard decided to provide free copies of the highly anticipated Diablo 3 to WoW’s annual pass subscribers.
We can understand the effect of the latest move only after analyzing the performance of SWTOR over the next few months. However, it sure does display EA’s desperateness to revive its struggling game.Notes: