Star Wars: The Old Republic could attract up to 50m monthly players says Wedbush

Wedbush Securities remains "incorrigibly positive" about EA

EA's had a rough time with its stock price down over 50 percent since November. The company is clearly still dealing with the turbulence surrounding its ongoing transition, but investors want results now. EA's board stands behind CEO John Riccitiello, and apparently so does Wedbush Securities, which issued a bullish report on the publisher following yesterday's fiscal report (which was about in-line with expectations).

"We remain incorrigibly positive on the EA story. Despite a relatively low number of packaged good releases this year, we expect EA to grow revenue and earnings, primarily due to unrivaled digital strength. We believe EA represents the best opportunity for investors to benefit from continued digital growth for the industry next year, as well as from a likely rebound in packaged goods sales next year," wrote Wedbush Securities analyst Michael Pachter in an investors note.

"Therefore, we recommend that investors continue to accumulate shares of EA while they trade at a significant discount to our price target."

Wedbush currently has a 12-month price target of $29 and a rating of "Outperform" for EA. The market is reacting positively to EA's fiscal news, which involved making Star Wars: The Old Republic free. EA's stock closed up almost six percent at $11.68.

Specifically on the Star Wars news, Pachter noted, "We believe the free-to-play option and lower retail price will combine to significantly increase the number of Star Wars players by the end of the year as the two largest barriers to entry for potential Star Wars gamers (apart from an appreciation for the franchise and PC gaming) have been significantly reduced or eliminated."

"We expect the network effect to augment the number of gamers further. In the long-term, we believe the adjustments will result in incremental revenue and earnings growth as high-margin Cartel Coin purchases by a much larger pool of gamers and additional advertising generate more revenue than was lost through declining subscription fees and the lower MSRP."

Ultimately, Pachter believes that Star Wars now has the potential to "attract at least 10 million MAUs indefinitely, with upside to perhaps 50 million." He added, "Thus, we believe that contribution from the model shift could be significant for years to come."

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Latest comments (13)

Nicholas Pantazis Senior Editor, VGChartz Ltd9 years ago
Hahahaha no. No, seriously, Michael you're a very smart man, but that's insanely overestimating this game. Look, it barely attracted 2 million new buyers, and the reason it's bleeding subscribers is a lack of long-term content. The Free to Play audience is notoriously fickle, moving between multiple free to play games on a whim. A game like SWTOR that already has a content problem is going to bleed those F2P people as fast as they come. To top all this off Guild Wars 2 is coming this month, with almost as many preorders as SWTOR had launch sales, and much more hype and much better content and player reception.

The MAUs will likely settle at around half what Pachter has predicted... 5 million to at best 10 million, unless Bioware suddenly spews forth a massive influx of long-term content (none of which is accessible by free users anyway, who can only play through the main story).

Edited 1 times. Last edit by Nicholas Pantazis on 2nd August 2012 2:22am

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Bruce Everiss Marketing Consultant 9 years ago
I would like to have some of what Pachter is smoking.

Runescape is the biggest free MMO and has about 10 million active accounts.
It also has immensely more content which makes it a vastly richer and more rewarding experience.
And it has been accumulating players for over 11 years.

SWTOR is broken in several ways and he seems to be oblivious to this.
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Dan Howdle Head of Content, Existent9 years ago
I agree with Bruce. This is becoming a habit.
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Show all comments (13)
Terence Gage Freelance writer 9 years ago
Oh, that Pachter! If he wasn't such a successful analyst he would make a brilliant comedian.
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Stephen Woollard Online Infrastructure Specialist, Electronic Arts9 years ago
For what it's worth (and this is strictly my own opinion, not that of EA) I believe charging for the client was a mistake from the outset. Charging for collector's editions and such is one thing, but I am firmly of the belief that the basic client for any MMO should be a free download.

The problem is, some publishers use the sale of the client as a means of recouping some of the development costs and then use subs to pay for the running costs (I honestly don't know if we did that with SWTOR), but charging for the client puts people off - I know of several MMOs in the past that I tried simply because I could download the client for free; if I'd needed to pay for the client I wouldn't have touched them with a barge pole.
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Michael Gunter Monster Hunter 9 years ago
This is all my PERSONAL opinion, not reflective of the company I work for necessarily, just so I don't have to iterate this multiple times... that being said...

Hah! He a good analyst might be, but a gamer not he is. (sorry, couldn't help myself especially considering it's on the subject of Star Wars) I must say I agree with all of the commenters on this one. Being an avid gamer and F2P supporter I balked at their definition of "free to play." They're doing it wrong.

This game will go right alongside the LOTR Online on a special list of Freemium titles I will never get in to simply because I CAN'T play it for free, since they are still limiting end game content and more or less trying to frustrate their users into buying premium (by limiting basic functionalities, like capping entry limits and auction hall postings and forcing longer travel times, or, like, the ability to even log into the game during peak hours). This would hardly be constructive if I didn't give an example of someone doing it right, so for a good example, I would say Nexon (mostly) and (more mostly) are on a good path to "doing it right."

For anyone unfamiliar with why their models resonate, in short, they don't limit core content, and (almost) everything is obtainable through in-game means. The un-obtainable (without real money investment) content generally falls into a "prestige" category and gives no distinct advantage of gameplay to a paying player versus a free player. I could say more, but this is getting kinda TL;DR even for my tastes...
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Hugo Dubs Interactive Designer 9 years ago
If you have the abilitiy to get all game features through time, it isn't a free to play but simply a game progression.
Even if you need more time than a premium player, this still remain a game progression. Frustration is part of the process as it incitates you to buy some content.

Don't forget that playing F2P, you entered the game for free, you tasted it, and you liked it or not, so in a way buying content is the normal way to pay back devs who made the game. When Im reading you I think you want the games to be free.
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Nicholas Pantazis Senior Editor, VGChartz Ltd9 years ago
I'd like to reinforce what Stephen just posted. Who decided it was a good idea to sell both a game client and charge a monthly fee? I totally understand selling the client if you aren't doing a monthly fee and your in-game purchases are purely cosmetic (Guild Wars 2), but if the VAST majority of your income will be from subscribers, why not make that barrier of entry as tiny as possible?
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Michael Gunter Monster Hunter 9 years ago
Again, this is all my personal opinion here.
When Im reading you I think you want the games to be free.
Hence the term "Free to Play" being somewhat misused in a lot of cases, as it has been applied to SEVERAL games which probably fall under a system that should be classified more clearly. Models like SWTOR recently adopted are often referred to as Freemium for their combination of basically giving players a sample (the Free part of it) and then requiring a premium contribution (the mium... part of it...)

You could turn this into a discussion of semantics, but the point I'm making you glossed over in your post is that the nature of how they're doing their implementation of "Free to Play" will not be anywhere NEAR as attractive as mister Pachter believes it will be. He is out of touch with what resonates and how valuable such a model COULD be if it were only a bit more "Free to Play" instead of "Frustrate til Pay."
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Greg Wilcox Creator, Destroy All Fanboys! 9 years ago
@Nicholas: Why? Because anything Star Wars makes money, that's why. That said, SOMEHOW, no one involved figured the current F2P MMO model into the equation, nor the fact that the die-hards would burn through the game content faster than it could be produced. Which is why I'll go to the grave saying a series of single-player games with optional co-op/online play would have been a better deal for everyone.

EA and BioWare could have put out a big KOTOR-like game and been releasing chapters every few months via DLC followed up with a big GoTY edition that had all the content from the previous year and probably kept over a million people playing what would amount to an old-school chapter play set in the Star Wars universe...
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Morville O'Driscoll Blogger & Critic 9 years ago
@ Greg

And you don't know how many people would've loved that. The clamour for a KoTOR 3 is huge (hell, the clamour for releasing KoTOR 2 on Steam is massive, and that needs a fan-patch to fix the game). I, certainly, was put off by the client cost+sub fee (one or the other would be fine, but I'm not made of money) and I'm not a huge fan of MMos anyway. A single-player with optional co-op would've parted me from my money right-quick.
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Benjamin Crause Supervisor Central Support, Nintendo of Europe9 years ago
Where to these people pull 50m possible monthly players?
This sounds so heavy it hurts.

I am pretty sure many will come back for playing it more on F2P. Including me because the characters story leading to level 50 is awesome.
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Andreia Quinta Photographer 9 years ago
"we expect EA to grow revenue and earnings, primarily due to unrivaled digital strength. We believe EA represents the best opportunity for investors to benefit from continued digital growth for the industry next year"
Unrivaled? Some one must be oblivious to the existence of Steam. It might be a good opportunity to investors if one year from now we can safely say the Origin client is stable and has attractive sales with a good library. So far isn't the case. The best "opportunity" and safest one as digital market goes is Steam or XB Live, hands down.
If EA keeps with the mentality of summer/xmas/75% off sales "cheapens the IP" then that's just handing the monopoly to the competition.

Edited 1 times. Last edit by Andreia Quinta on 5th August 2012 12:42pm

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