On the strength of selling more than 2 million copies of its new massively multiplayer online Star Wars: The Old Republic, Electronic Arts (Nasdaq: EA ) beat analysts' expectations for both revenue and earnings during its third quarter. Is SWToR the MMO that EA needs to finally compete on an even field with Activision Blizzard (Nasdaq: ATVI ) and its massively popular World of Warcraft franchise? It's hard to say right now, but if its first six weeks are any indication, it might be heading in the right direction.
Subscriptions are more important
Though it sold 2 million copies, the number that truly matters is subscribers. Since the purchase of the software comes with a free 30-day subscription, it's hard to pinpoint exactly how many of the current 1.7 million subscribers have transitioned into paying for the game. That said, with chief competitor World of Warcraft checking in with 10.3 million subscribers at the end of its last quarter, Star Wars will have a long way to go to truly surpass the king.
Skeptics abound when it comes to the numbers, suggesting that only around 70% of the active subscribers have entered paying territory. Nevertheless, this is still faster growth than even WoW was able to garner during the same period after its launch, truly making SWToR the fastest-growing MMO of all time. The true test for the subscription-based model will come over the next year, as more bugs are removed and other content is added. If its subscription base grows at a quarter of the current amount per month, EA will be looking at around 6 million subscribers at year end. That would truly be a success.
Not just about Star Wars
The third quarter also saw strong performances from two leading console games. Battlefield 3 sold more than 10 million copies across various platforms after its launch during the quarter, including a then-record 5 million copies during its first week. FIFA 12 has sold more than 10 million copies since its release during the previous quarter. While the best-selling game last year was Activision Blizzard's latest entry into its Call of Duty franchise, EA showed that it can compete with the world's largest game developer, primarily driven on the strength of its sports franchises.
EA entered the social-gaming arena last summer with its purchase of PopCap Games. Over the previous 12 months, the developers of games like Plants vs. Zombies grew revenue by 30%. EA also introduced a Facebook version of its popular Sims game, which quickly grew to be the second-most-popular game on the social-networking site, trailing only Zynga's (Nasdaq: ZNGA ) Cityville. Since its launch, it has retreated a bit, but The Sims Social is still the fifth-most-used game on Facebook, trailing four Zynga games.
While I don't think Electronic Arts will be joining Activision Blizzard in paying a dividend anytime soon, the future looks bright for the company. Not only will it continue adding content to Star Wars, but it also has Mass Effect 3, one of the most-anticipated games of the year, slated for release during the next quarter. To keep up with all the latest developments, be sure to add Electronic Arts to My Watchlist today.