Michael Pachter: Concerns Over Star Wars: The Old Republic Are “Overblown”. EA Stocks Recover.

Michael Pachter: Concerns Over Star Wars: The Old Republic Are “Overblown”. EA Stocks Recover.

In the last few days Electronic Arts shares didn’t fare too well on the stock market due to analysts stating that Star Wars: The old Republic would be tracking below “consensus” expectations. The lack of familiarity of those analysts with the gaming market in general and the MMORPG market in particular was evident (I couldn’t help but giggle at the one that motivated his analysis with “casual observation of early play”. I didn’t know something like that could fly in that kind of document), but, with the way the market works, it takes another analyst to correct an analyst’s misconceptions.

Michael Pachter is well known to gamers because his work touches our hobby quite often, and while he doesn’t always get it right, we can’t say he talks without any knowledge of the gaming scenario like most of the others do. Yesterday he spoke up, alongside Wedbush Morgan colleagues Nick McKay and Alicia Jens.

The official document (that you can find here) estimates that the game sold 1,700,000 units worldwide so far, in line with expectations previously expressed by the firm.

In addition to that it dispels the usual amateurish misconception about peak server traffic: many seem to think that the maximum peak server traffic represents the total user base, which is obviously a rather ludicrous mistake, as it somehow assumes that every customer that purchased a game plays it 24 hours a day, seven days a week.

According to Pachter’s report, he expects about 75-90% of the initial purchasers will opt to become subscribers (which would be a definitely flattering rate for a new MMORPG), and that “the strength of the brand and the skills of EA’s BioWare team will keep the game fresh and relevant for most users.”

Pachter also predicts that the game will sell about two million units by the third quarter of this year, and another million during next year, generating significant operating profits for Electronic Arts in both Fiscal Year 2012 and Fiscal Year 2013 and creating considerable revenue growth year-over-year

In the meanwhile the price of Electronic Arts’ shares recovered on Friday, with a +2.22% increase despite the -0.06% decrease of the Nasdaq composite index as a whole.