EA Share Price Slides Over Old Republic Concerns

[Andy Chalk]

EA Share Price Slides Over Old Republic Concerns

Electronic Arts' share price slid by nearly four percent today after an analyst expressed "creeping concerns" about the performance of Star Wars: The Old Republic.

First things first: let's not turn this into a "The Old Republic cures cancer/shot my dog" conversation. Some people like it, some people don't and the general consensus seems to be that while it suffers from issues of various sorts, it's certainly not the ugliest MMO launch ever. Neither I nor anyone else cares what you think about The Old Republic.

People do seem to care what Brean Murray, Carrett & Co. LLC analyst Todd Mitchell thinks, however, and he thinks that EA's shiny new MMO isn't quite living up to expectations. In an investor's note to clients expressing "creeping concerns" about the game, he wrote, "Specifically, initial sales appear to be below expectations, and casual observation of early play is causing us to rethink our churn assumptions."

In the wake of Mitchell's note, which included a reduction in price target from $28 to $22, EA's value took a tumble. After opening at $18.23 and climbing briefly to $18.40, it fell as low as $16.85 before closing at $17.54, a loss of 3.94 percent for the day - not enough to make anyone jump out a window, but hardly cause for celebration.

Sub-par performance or not, a big part of the investor/analyst uncertainty almost certainly stems from recent reports that making The Old Republic may have cost EA as much as half a billion dollars. Half a billion dollars! [http://www.escapistmagazine.com/news/view/115306-Analyst-EAs-Spent-500-Million-On-The-Old-Republic] That's a mighty big roll of the dice, and "pretty decent" under those circumstances just isn't good enough.

Source: MarketWatch [http://www.marketwatch.com/story/ea-falls-on-broker-concerns-about-star-wars-2012-01-19?siteid=yhoof2]


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[Sixcess]

First things first: let's not turn this into a "The Old Republic cures cancer/shot my dog" conversation. Some people like it, some people don't and the general consensus seems to be that while it suffers from issues of various sorts, it's certainly not the ugliest MMO launch ever. Neither I nor anyone else cares what you think about The Old Republic.

In that case where's the discussion value in this thread?

How are we supposed to discuss this if we can't talk about why we think TOR is or isn't living up to expectations?

 

[RedEyesBlackGamer]

First things first: let's not turn this into a "The Old Republic cures cancer/shot my dog" conversation. Some people like it, some people don't and the general consensus seems to be that while it suffers from issues of various sorts, it's certainly not the ugliest MMO launch ever. Neither I nor anyone else cares what you think about The Old Republic.

In that case where's the discussion value in this thread?

How are we supposed to discuss this if we can't talk about why we think TOR is or isn't living up to expectations?

I second this.
OP: EA went all in with a promising hand, and the flop hasn't given them anything.

 

[seraphy]

I really dislike EA/Bioware lately. Thanks to Origin mostly and other stupid nonsense.

I am almost, almost just hoping for them to crash and burn. In the hopes that if/when they reborn, they actually allow me to get their games where ever I want, and not touch Origin if I don't want to. And just generally thinking customers a bit instead of just their corporate bottom line.

 

[Soviet Heavy]

Sigh, whatever. Right now, I'm just curious about what Lucasarts will have in store following TOR. While it doesn't interest me as a game, its success or failure could affect future star wars titles.

 

[Sylveria]

First things first: let's not turn this into a "The Old Republic cures cancer/shot my dog" conversation. Some people like it, some people don't and the general consensus seems to be that while it suffers from issues of various sorts, it's certainly not the ugliest MMO launch ever. Neither I nor anyone else cares what you think about The Old Republic.

In that case where's the discussion value in this thread?

How are we supposed to discuss this if we can't talk about why we think TOR is or isn't living up to expectations?

I gotta agree here. The cost, quality, and predicted success of this game is the whole crux of these happenings thus they need to be discussed at least in part.

Also, if you didn't care, you wouldn't need to say you don't care. By finding the need to reference that you do indeed not care, you demonstrate that you care a great deal. Kinda like the guy in every horror movie who needs to be asked "What, are you scared to go?" before replying "Pff, I'm not scared." before walking in, instead of just going in unprompted.

 

[RedEyesBlackGamer]

First things first: let's not turn this into a "The Old Republic cures cancer/shot my dog" conversation. Some people like it, some people don't and the general consensus seems to be that while it suffers from issues of various sorts, it's certainly not the ugliest MMO launch ever. Neither I nor anyone else cares what you think about The Old Republic.

In that case where's the discussion value in this thread?

How are we supposed to discuss this if we can't talk about why we think TOR is or isn't living up to expectations?

I gotta agree here. The cost, quality, and predicted success of this game is the whole crux of these happenings thus they need to be discussed at least in part.

Also, if you didn't care, you wouldn't need to say you don't care. By finding the need to reference that you do indeed not care, you demonstrate that you care a great deal. Kinda like the guy in every horror movie who needs to be asked "What, are you scared to go?" before replying "Pff, I'm not scared." before walking in, instead of just going in unprompted.

You might as well disable the comments for this article because it basically prohibits any discussion on the subject.

 

[Azuaron]

Let me get this straight, an MMO that got over a million subscribers in under two weeks, making it the fastest growing MMO at launch ever, isn't doing good enough? What do you want? Your computer to start laying golden eggs every time your character gains a level?

 

[Sylveria]

Let me get this straight, an MMO that got over a million subscribers in under two weeks, making it the fastest growing MMO at launch ever, isn't doing good enough? What do you want? Your computer to start laying golden eggs every time your character gains a level?

Is that a feature? I'd put up with Origin datamining my PC if I got gold eggs out of it.

 

[Sixcess]

Let me get this straight, an MMO that got over a million subscribers in under two weeks, making it the fastest growing MMO at launch ever, isn't doing good enough?

Not if EA's expectations were that it'd launch with two million. I stress if because I don't know, but it wouldn't surprise me - they've been very very ambitious with TOR. EA didn't throw this kind of money around to get a moderately successful MMO.

One million isn't really that good. Warhammer Online, an infamous flop, launched with 800,000 subscribers, and that wasn't hyped to near the level of The Old Republic.

TOR runs the real risk of being unable to live up to the unrealistically high expectations of not only its playerbase, but of its investors, and that's not a good place for it to be at.

 

[antipunt]

I understand what others are getting at here, but I think Andy is just making a somewhat sarcastic jab at the flame wars that have popped up in all the past threads. Groups do seem rather polarized, with everything canceling each other out landing us back smack-dab in the middle where we started

 

[Ickorus]

As much as I love to bash on EA whenever possible I must ask when we started taking analysts seriously again.

For my part though, i've got several friends who bought the game, praised it highly, reached max level and seem to have stopped really playing it now, im thinking the game would do far better as a B2P with paid for expansion content (Like Guild Wars) than a P2P game since it seems to be very story based and from what i've seen that's why most of the people I know kept playing it.

I am of course speaking from what i've seen of others since I haven't played the game personally except for a couple of minutes during beta so disregard what I say if half of it is bollocks.

 

[Berenzen]

I'm highly doubt that it cost half a billion dollars to make. Assuming that they spent 100 million dollars on advertising and that they started right after KotR2 came out, that means that they had to spend just a little over 57 million dollars per year. Unless they were paying voice actors obscene amounts of money, as well as their employees at Bioware Austin. I doubt that the half billion dollar analysis is correct.

 

[Omnific One]

Haha, if it had been made by DICE, you could have said, "That's a mighty big roll of the DICE."

Haha

Ha

Oh, screw it.

 

[Sylveria]

Hey I've got an idea: How about we wait and see how many people ACTUALLY KEEP THEIR SUBSCRIPTIONS after tomorrow before we start jumping overboard/to conclusions? But no that would be the rational thing to do.

As much as I love to bash on EA whenever possible I must ask when we started taking analysts seriously again, because I was sure they'd become some sort joke in the gaming industry.

People love sensationalism. Any excuse to drive themselves into a frenzy.

Well... considering their stock took a substantial drop, apparently people with far more money than you or I will ever have are taking the analysts seriously.

 

[Scars Unseen]

Hey I've got an idea: How about we wait and see how many people ACTUALLY KEEP THEIR SUBSCRIPTIONS after tomorrow before we start jumping overboard/to conclusions? But no that would be the rational thing to do.

As much as I love to bash on EA whenever possible I must ask when we started taking analysts seriously again, because I was sure they'd become some sort joke in the gaming industry.

People love sensationalism. Any excuse to drive themselves into a frenzy.

Well... considering their stock took a substantial drop, apparently people with far more money than you or I will ever have are taking the analysts seriously.

And if those people were collectively rational and intelligent, the market would not react to every little word said. These people take pretty much everything seriously regardless of merit.

 

[Vrach]

First things first: let's not turn this into a "The Old Republic cures cancer/shot my dog" conversation. Some people like it, some people don't and the general consensus seems to be that while it suffers from issues of various sorts, it's certainly not the ugliest MMO launch ever. Neither I nor anyone else cares what you think about The Old Republic.

In that case where's the discussion value in this thread?

You're obviously expected to discuss the economical intricacies of EA's shares. I mean, it's not like you're on a gaming forum where your opinion on a game is of any interest to anyone!

OT: I've no idea why/how anyone can expect TOR to start turning profit on day one. This is a long term investment, as is any good MMO (though granted, one can be forgiven for not noticing it, considering there's barely a handful of those on the market). They said they can break even with 500k subscribers, last confirmed thing I saw was 2 million and unconfirmed that it's creeping up to 4, but really, we won't know until a few months in when the subscriptions stabilize.

The better thing to write instead of that ridiculous bolded comment by Chalky would be "Neither I nor anyone else cares what you think about The Old Republic as EA's financial investment". It's nothing but an invite to anyone who'd got a grudge against EA or just likes to ***** about any large company (mostly the same group actually) to wail on it.

 

[SpaceMedarotterX]

It's not about TOR turning a Day 1 profit, It's about TOR spending anywhere from 300 t0 500 MILLION DOLLARS and the fact that with the hit of 1.1 people were unsubscribing by the truckloads, to the point Bioware had to throw out a "Stick with us for 1 more month and get a shiny medal and useless title!"

Guess what, They were NEVER going to sell enough copies of the game to make up for the costs, because 30% of all earnings go to Lucas, this is discounting the fact they owe money to the Hero Engine dudes because of licensing to them as well. Though I'm not sure about the total percentage there.

Factor in all other expenditures and the thing that will turn a profit? that's people sticking with and subscribing.

So how's the community doing in that regard? In short, poorly. And why wouldn't it be doing poorly? They not only failed to adhear to the beta testers, but when confronted with an obviously unfinished product making its way into users hands, their solution is to clasp their hands over their ears and pretend nothing is wrong.

And that's really the crux of it, predicted sales are below expectations, predicted subscribers are below expectation, the profit for TOR seems further and further away with each passing day. Not to mention the HUGE PA disaster that was 1.1

But really here's the total kicker (Although only through my limited interaction with typical stock market trends) the only people who would sell that fast? would be EA employees, because they get their hands on the data first. That's when the domino effect of stocks kick in. Mass selling leads to other investors jumping out through fear, leads to people with bot set ups scooping up 'low costing' stocks otherwise while sales would have fallen, it wouldn't have been immediately as the Stockmarket opened for the day.

For those not on the up and up? it near dropped to -8% decrease, for a market that usually works on a +/- 0.33% as average that was a HUGE drop (which climbed again and currently sits at, If I'm reading this right -3.94%) Really the whole stockmarket thing is a whirlwind of confusion.

 

[Waaghpowa]

Let me get this straight, an MMO that got over a million subscribers in under two weeks, making it the fastest growing MMO at launch ever, isn't doing good enough? What do you want? Your computer to start laying golden eggs every time your character gains a level?

Is that a feature? I'd put up with Origin datamining my PC if I got gold eggs out of it.

Unless you get it digitally, you never need to deal with origin software.