Electronic Arts (ERTS) and Bioware, a Canadian electronic entertainment company, have received nearly 1.5 million signups for the beta version of their upcoming massive multi-player online game (MMO) Star Wars: The Old Republic.
The players selected to play the Beta version will be informed through emails. The beta testers will have access to the game and provide valuable inputs to the company in order to enhance every aspect of the game play to ensure a better gaming experience when the game is finally released.
The game is slated to release in 2011, although a specific date was not mentioned. Electronic Arts expects to surpass the unprecedented success of Activision’s (ATVI) massively popular MMO game World of Warcraft. Presently, there are approximately 12.0 million MMO players and half of the clan is hooked on World of Warcraft.
Electronic Arts had strategically chosen the Star Wars franchise for its MMO as it has a huge fan base and the company is set to tap not only the tier1 and tier2 users but also expects to cater to the potential players familiar with the Star Wars name but have not yet played a MMO.
The blockbuster response that Electronics Arts has already received is an early indication of the significant demand for the game even before its release.
Electronic Arts remains focused on delivering quality titles, which we believe will drive significant top-line growth going forward. The company’s impressive product pipeline is expected to drive market share gains over the long term.
However, Electronic Arts continues to face a nation-wide class-action lawsuit based on allegations that video game consumers were forced to overpay for popular sports titles including Madden NFL. Any negative result from this lawsuit will hurt the company’s pricing strategy over the long term.
Moreover, weakness in the overall packaged-goods sector, compounded by intense competition from Activision Blizzard and Take-Two Interactive Software Inc. (TTWO) will impact profitability over the long term. Thus, we remain Neutral on Electronic Arts on a long-term basis (6-12 months).
Currently, Electronic Arts has a Zacks #3 Rank, which implies a short-term Hold rating.
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