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Paragus Rants

Rants, reviews, and interviews from an MMO veteran and guild leader.

Author: Paragus1

The Silver-Lining: EA Lost 50% of Market Value

Posted by Paragus1 Thursday June 21 2012 at 11:45AM
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The Silver-Lining: EA Lost 50% of Market Value

A friend of mine passed me a link to an article today that I found quite eye-opening in terms of EA (Electronic Arts) and their performance as a company in the markets as of late.  In short, it basically shows that EA as a company has lost 50% of its market value since November of 2011.  You can find the article here...

Now I am not going to pretend to be an expert in the markets, as so many forum trolls often do, but this is very shocking data.   As many of you know, EA is the parent company a lot of different game studios, the most relevent to this community is Bioware (Star Wars: The Old Republic).  As many of you also know, the amount of money it took to create this project made it one of the most expsenive video games ever made, well north of $100 million.  Seeing as the decline started right around the time SWTOR released, the gamer in me clearly is thinking that this is probably not a coincidence.   The article also speculates from the investor side...

"Something has gone terribly wrong for EA, at least in the eyes of stock market investors. There are several plausible explanations for this - each of which is likely to be true to a certain degree, since it's unlikely that any one factor alone is responsible for driving the price down so far.

Firstly, there's Star Wars: The Old Republic. EA's stock price went into decline after The Old Republic's launch, and hasn't recovered yet - and that timing is unlikely to be a coincidence. Expectations among investors for SWTOR were extremely high, given the game's much-publicised high development costs (which probably make it the most expensive game project ever), the strength of the Star Wars license, the track record of developer Bioware and, crucially, the tantalising possibility of building an ongoing MMO revenue stream for EA which would match the one enjoyed by rival Activision Blizzard from World of Warcraft. While it would be unfair to characterise SWTOR as a complete failure, it has certainly not been a success on the level which EA or its investors would have wanted. The game has lost 400,000 subscribers since February, and it seems inevitable that the company will be forced into an embarrassing (but probably commercially sensible) transition to a free-to-play model sooner rather than later."

Let's take a look as well at the fact that earlier this week, we saw another article scrubbed off the internet that mentioned that the developers of TOR were considering the F2P model...

Is there anyone reading this who still thinks that this game is not on a crash course for F2P?  This entire debacle is unfolding exactly the way many of us in the gaming community here saw even before the release.  If you are one of the many in the camp with me that thinks these cookie-cutter clone games need to stop being made, this might be a silver-lining.

It's sort of an old hashed saying on the forums around here that people need to stop giving money to companies that make bad games, because it only perpetuates the creation of more bad games.  Even if you buy a bad game and quit it, they still got your money because you voted with your wallet.  Gamers are a fickle bunch though, and seem to continue to support bad games and keep the cycle going, then try to justify doing it in the name of boredom or love of a certain IP / franchise.  While that exact same idiocy happened in this case, the investors on the back end who fund the creation of these games are now getting an epic financial burn.  Perhaps if gamers are too fickle to stop supporting garbage, the people who fund the creation of it will start doing what we as the consumers should have started doing a long time ago.

Co-Leader of Inquisition