|EA to offer free Star Wars|
Tuesday, 05 June 2012 12:45
The company plans to offer a big part of its Star Wars: The Old Republic online game for free in hopes of securing long-term revenue.
Electronic Arts (EA) plans to offer a big part of its "Star Wars: The Old Republic" online game for free, and licensed the rights to produce video games with the "Ultimate Fighting Championship" brand, hoping to breathe life into efforts to secure steady long-term revenue.
EA announced the licensing agreement with Zuffa yesterday. The licensing rights were previously held by THQ, which received an undisclosed cash payment, Zuffa and THQ said.
EA has struggled to get "Star Wars: The Old Republic", the massively multiplayer role-playing game based on George Lucas` science-fiction movie, off the ground since its December launch.
The company announced last month it had lost 400 000 subscribers in its fiscal fourth quarter.
Video game companies have been trying to turn gamers from one-time purchasers into subscribers who generate a steady and predictable revenue stream.
From July, EA will offer 15 "levels" for free, meaning gamers will be able to join and play the beginning phases of the game without paying. That might be the jumpstart the game needs, analysts say.
"Part of it is just trying to be promotional, trying to keep the game alive," said Sterne Agee analyst Arvind Bhatia. "We`ve got a little bit north of a million subscribers on average for the year, and if it goes down too much it increases the risk of the game going away.
"It`s a little bit desperate but it`s showing us where the industry is going: people are not ready to pay."
On Monday, EA also announced a $50-a-year premium service for "Battlefield 3", the first-person shooter game that competes with Activision Blizzard`s popular "Call of Duty" game.
More than 15 million copies of "Battlefield 3" have been sold. Bhatia said EA might be hoping a portion of those players sign up for the premium service, which offers five new expansion packs or additional content.
EA shed 36% of its value in 2012, hurt by worries about its ability to deliver growth and compete with Activision.
The acquisition of the "Ultimate Fighting Championship" licence will also bring on board a significant slice of annual revenue. Analysts estimate the UFC games generated about $100 million in revenue for THQ.
EA has spent more money on "Star Wars" – some analysts estimate $100 million to $300 million – than any other game in its history.
Wall Street is watching to see if the game can succeed and bring EA steady subscription-based revenue for years to come.
EA had been hoping to take on its biggest rival, Activision, which had more than 10 million subscribers to "World of Warcraft" last quarter.
"Warcraft" is the seven-year-old Internet game that re-energised the market and is Activision`s most profitable franchise. It only recently opened up its starting levels to gamers for free.
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