EA’s Star Wars Game Launched Early Amid Hopes of a Blockbuster

Electronic Arts (NASDAQ:ERTS) wants to leave no stone unturned in the promotion of its biggest 2011 release, Star Wars: The Old Republic (SWTOR). The company has launched early game access of its upcoming MMO, which will provide customers that pre-ordered access to play the game starting December 13, exactly a week before its scheduled worldwide launch on December 20. ^[1] SWTOR is a highly anticipated MMO, which will put EA directly in competition with its arch rival Activision Blizzard’s (NASDAQ:ATVI) World of Warcraft (Wow). We believe the move will not just help EA in managing server volumes thereby helping to ensure a smooth day-one experience, but is also an ideal marketing platform if the game strikes a chord with the early gamers.

Trefis EA price estimate stands at $20.62, which is in line with its current market price.

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Star Wars vs. World of Warcraft

Star Wars: The Old Republic marks EA’s first big aim into MMORPG space, an area heavily dominated by Blizzard with its World of Warcraft franchise. SWTOR holds immense importance to EA and can be reflected by the fact that the game development alone has costed EA $135 million, which makes it the costliest game to date. The pre-sales reception of SWTOR has been phenomenal with the game sweeping many prestigious video-gaming awards till date. Additionally, SWTOR has managed to generate a frenzy amongst MMORPG gamers with pre-sales numbers already nearing 1 million. ^[2]

SWTOR hype has also helped in a big way to boost EA’s stock during 2011, with EA outperforming most of its peers on the stock market in 2011. Gaming critics along with investors are giving SWTOR a credible chance, banking on the notion that WoW has come of its age and it may lose its subs to more recent and technically advanced MMOs like SWTOR.

However, on the other hand we believe things are not going to be easy for EA either. Blizzard is considered to be a pioneer of MMORPG gaming and considering the clout of WoW in MMORPGs and its huge loyal customer base, WoW any day holds the capability to give SWTOR a run for its money. Another important factor to consider is the importance of WoW for Activision Blizzard. World of Warcraft is often cited as the money minting machine for Activision Blizzard, and always features on the top of company’s strategy. We won’t be surprised if Blizzard soon comes out with some major enhancement to WoW in order to protect its most important game from the increasing threat of SWTOR.

Early game access of SWTOR, What are the implications?

With the announcement of early game access of SWTOR, we believe EA is targeting two major objectives. First, EA wants to ensure that the mega launch of SWTOR on December 20th will be glitch free. The company wants to remove server volume management problems, if there are any alongside removing any other technical bugs that may come in the game play.

Second and equally important, the company wants to promote SWTOR through word of mouth marketing. MMORPG gamers are always characterized by their involvement in gaming community forums, and a satisfied bunch of pre-order gamers can greatly help EA in pulling additional customers towards SWTOR. However, the move may backfire if the gamers fail to strike a note with SWTOR. EA has already experienced this scenario in Battlefield 3, when its beta version drew sharp criticism from gamers, which ultimately impacted the sales of Battlefield 3. But we believe the risk is worth taking, considering the importance SWTOR holds for EA and the scale of money and effort that EA has put into it.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. EA launches early game access for SWTOR, Source: EA’s IR [↩]
2. VGChartz analysis of SWTOR numbers, Source: VGChartz [↩]