EA: BF3 Premium “Largely Off-sets” Poor SWTOR Performance
Game Front took a step into the spin zone today during Electronic Art’s Q1 2013 Investor Call. Earlier in the day, the news had hit: Star Wars: The Old Republic is going free-to-play. CEO John Riccitiello, EA Labels head Frank Gibeau, and other EA bigwigs spent parts of the call in damage control mode, trying to reassure investors that the bad news about the publisher’s expensive WOW-killer was mitigated by other positive signs.
In particular, they pointed to the strong performance of the Battlefield 3 Premium service, which was launched earlier this summer. For Premium customers, $50 provides access to all five of the game’s DLC packs; the last, “End Game,” is scheduled for release this winter.
BF3 Premium has been a hot seller since it was introduced, generating $37 million in sales and over a million downloads in just two months. This is big money, to be sure, but is it enough success to support EA’s claim, repeated more than once during the investor call, that “strength on Battlefield largely off-sets Star Wars?”
This may or may not be true from a financial standpoint; it’s a matter of weighing SWTOR’s lost subscription revenue against the amount that BF3 Premium exceed EA’s expectations — two figures the megalithic publisher is unlikely to cough up. Nevertheless, the big-budget MMO’s spiraling subscription numbers raise questions about the overall viability of the product and its business model. Microtransactions are sure to recoup some of missing subscription cash, but SWTOR’s quick stagnation represents a pricey risk that hasn’t paid off for EA, and it’s a mistake investors and executives will remember. This is bad news for developers BioWare, who could bear the brunt of the disappointment emanating from both groups.
The contrast between EA’s prepared remarks during their Q4 2011 and Q1 2013 — between stolid optimism and rueful pragmatism — could not be more stark:
Interim CFO Ken Barker, 5/7/2012:
“We delivered an extraordinary launch of a solidly profitable long-term franchise…We expect this title will further expand our margins in fiscal 13 as we get the full year benefit of subscription revenue…the current number of active subscribers, 1.3 million, is very consistent with the original assumptions we made when we acquired BioWare in 2008….while this franchise is very profitable, it only represents a mid-single digit percent of our total profitability in fiscal 13.”
EA Labels Head Frank Gibeau, 7/31/2012:
“Although it launched well, subscriptions have been on a declining trajectory and have now slipped below one million. Last year we announced that the breakeven point was roughly 500,000 subscribers. And while we are well above that today, that’s not good enough. The message from players exiting the game is clear – 40 percent say they were turned off by the monthly subscription. And many indicated they would come back if we offered a free-to-play model.”
What a difference three months makes!