Electronic Arts (EA - Analyst Report) has recently released Star Wars: The Old Republic’s first digital expansion pack named Rise of the Hutt Cartel.
Set in the planet of Makeb, Rise of the Hutt Cartel takes gamers on a story-driven mission where they fight it out against ‘Hutt Cartel’ in the process of passing through five new levels. The expansion pack will allow gamers to gain access to Game Update 2.0: Scum and Villainy. The expansion pack is priced at $19.99, while current Star Wars subscribers will have to pay $9.99, a discount of 50% to the original price.
The release of the expansion pack is EA’s latest initiative to boost the game’s popularity after it launched the Star Wars’ free-to-play version late last year. Star Wars: The Old Republic is one of the costliest games from EA’s stable in terms of game development and promotional expenses. However, it has failed to live up to EA’s expectations with respect to sales.
Now, by providing a new expansion pack and new levels, EA seeks to capture gamers’ imagination and keep their interest in the franchise alive. So far, EA has always benefited from the launch of DLCs and expansion packs for its famous franchises such as Battlefield and Mass Effect.
For instance, in the recently concluded third quarter, extra content and free-to-play were responsible for much of EA’s digital revenue growth. EA’s DLC and free-to-play micro transaction content shot up 50.0% year over year to $185.0 million in the quarter.
Archrival Activision (ATVI - Analyst Report) has also tasted success with DLCs for its well-acclaimed Call of Duty and StarCraft II franchise.
We believe that with a wide array of titles and massive fan following, EA is better equipped to gain traction in the digital format than most of the other new players. Reportedly, both Microsoft (MSFT - Analyst Report) and Sony are expected to launch their next generation consoles this year, which will be a significant growth catalyst going forward.
However, we believe that EA faces a number of headwinds that include a soft video game industry performance and sluggish macro environment. Additionally, the emergence of free-to-play MMOs by social game makers like Zynga (ZNGA - Snapshot Report) and EA’s expanding portfolio of free-to-play games are likely to cannibalize its own product.
Currently, EA has a Zacks Rank #3 (Hold).