Electronic Arts shifts gears on 'Star Wars' game
The company is attempting to reinvigorate its online role-playing game by offering a free-to-play version.
Electronic Arts (EA) will soon allow consumers to play "Star Wars: The Old Republic" for free. Is this the beginning of the end for EA's flagship online role-playing game?
Fans of the game may argue that Activision (ATVI) pulled a similar stunt with "World of Warcraft." However, Activision's established franchise has annual expansion packs and a legion of fans unlike any other. The game's worldwide dominance is not to be denied.
In contrast, "Star Wars: The Old Republic" is the new kid on the block. It arrived with a big-name franchise attached, a mountain of fanfare, and a galaxy full of marketing hype. Yet the game hasn't caught on with consumers, who are hesitant to paying $40 for the software plus $10 to $15 every month to continue playing it online. These games were intended to be exclusively played online with the required monthly fee.
But EA is eliminating the monthly fee for users playing up to level 50, a move designed to attract new customers. The company will soon reduce the game's initial price to $14.99. GameStop (GME) still sold the game this week for $39.99, and Best Buy (BBY) and Wal-Mart (WMT) had not changed their prices. Amazon (AMZN) sold the title for $10 less than its big-box competitors, while Target (TGT) maintained the game's launch price of $59.99.
The price for "Star Wars: The Old Republic" will likely drop further over time. And with every price reduction and every free-to-play opportunity, the game may move further away from profitability.
At this stage, EA still hopes to turn the game around. For EA to pull this off, the company must first convince people to play the game -- at any cost. Second, EA must convert all free players to paying customers.
This might sound like a realistic goal. But it has not kept even the industry-dominating "World of Warcraft" from hemorrhaging users.
The troubles for "World of Warcraft" may seem insignificant compared to the challenges that EA has been facing and may continue to face in the months ahead. In May, EA revealed that "Star Wars: The Old Republic" had sold roughly 2.4 million copies. On a sales basis, this was good news. But of those 2.4 million buyers, only 1.3 million actually subscribed to the monthly service. That's down from as many as 1.7 million players in the past.
Some of those subscribers were still in the free month offer included with every copy of the game, and leave as soon as the trial is up. But if players were willing to spend $40 to $60 on the software and walk away, are they really more likely to stick around now that the price is about to drop? Consumers play what they enjoy. And if "Star Wars: The Old Republic" was not enjoyable enough to hook consumers before, the new price point is unlikely to make a difference.
Copyright © 2014 Microsoft. All rights reserved.
VIDEO ON MSN MONEY
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.