Electronic Arts Seeks Online Gaming Share

A long time ago in a galaxy not so far away, Electronic Arts was the number one video game publisher and Activision its closest rival.Then Activision joined forces with Vivendi's games unit in 2008 to become the industry leader, adding its Blizzard division and World of Warcraft, the biggest online role-playing game.

But now the empire is striking back. EA launches Star Wars: The Old Republic on Tuesday, with hopes of winning the loyalty of online gamers to the George Lucas sci-fi franchise and eventually overtaking World of Warcraft.

The stakes are high because the video games industry is now one of the biggest parts of the entertainment sector, having overtaken the film industry several years ago. In the US alone last year, $25.1bn was spent on games compared with $10.5bn taken at the box office.

Silicon Valley-based EA has had some success in taking on Activision Blizzard in the "first-person shooter" genre, in which players see the virtual world through the eyes of their character, who is typically armed with a gun. Its Battlefield 3 sold more than 5m copies in its first week, although its rival's all-conquering Call of Duty: Modern Warfare 3 sold 6.5m copies in its first 24 hours when going on sale in November.

Star Wars has had an encouraging testing phase, with 1.6m gamers volunteering to play an early "beta" version and nearly 1m pre-orders for the game, a copy of which will cost $60 plus a monthly subscription.

World of Warcraft has more than 10m subscribers worldwide, but Ray Muzyka, co-founder of BioWare, the EA studio that makes the new Star Wars game, says it has the potential to be even bigger, given the power of the brand.

"We know from market research that a lot of MMO [massively multiplayer online] players are actively looking for the next big thing and they actually consider Star Wars to be that, either from personal experience of going through the beta or knowing someone who is in it," he says.

World of Warcraft does appear vulnerable at present. Activision shares fell in November when it reported continuing and more rapid declines in subscriptions – down to 10.3m in the third quarter from more than 12m at the start of the year.

The company said most of the decline could be attributed to Asia, where China represents more than half of the global player base.

"We think there's a very vibrant community. There's new content coming next year and we're not spending a lot of time thinking what our competitors are doing," says Bobby Kotick, Activision chief executive.

Michael Pachter, video games analyst at Wedbush Securities, sees Star Wars winning a 10 to 15 per cent share of the $10bn MMO market.

"It will take some of that from World of Warcraft, but I have confidence Activision can get its numbers back up through growth in places like Brazil and China," he says.

Star Wars: The Old Republic is set 3,000 years before the rise of Darth Vader and features 1,000 actors' voices. Players buy the game and then pay a subscription of around $15 a month to continue exploring its universe, with LucasArts receiving royalties from EA.

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