The announcement in the drop of subscribers for Star Wars: The Old Republic triggered a 10% slide in shares of Electronic Arts Inc. in after-hours trading Monday, overshadowing news of a better-than-expected quarter for the Bay Area game publisher.

The Old Republic, which had combined development and marketing costs of  over $150 million, is one of the most expensive games that EA has ever made. The game certainly takes the mantle of costliest ever to be produced. Bioware created The Old Republic, its first MMO and launched it on December 20th of 2011. Bioware (along with Pandemic Studios) was purchased by Electronic Arts in the fall of 2007 for cash and stock worth over $775 million.

EA had projected that the game would “approach break-even” at 1 million paying subscribers on an operating basis — that is, the cost of running the online game and developing new content for it, not including the initial cost of creating the game.

Before the Redwood City, Calif., company released its quarterly report Monday, its stock gained a penny to close at $15.13. Immediately after the report, EA shares plummeted nearly 10% to $13.64 in after-hours trading. The stock partially recovered several hours later, climbing back up to $14.31.

EA Chief Executive John Riccitiello downplayed the importance of The Old Republic within the company’s overall financial picture.

“Star Wars’ performance is very much in line with our original assumptions,” Riccitiello said in a call with analysts. “It’s in our top 10 most important brands, but it’s not in our top five. I understand that [the drop in subscribers is] generating a lot of interest. I don’t think it warrants as much as we’re seeing now.”

Executives devoted the bulk of their presentation to EA’s digital revenue stream, which grew 47% in the last fiscal year to $1.2 billion. That represented nearly 30% of EA’s annual revenue of $4.1 billion, up from 23% a year earlier.

“The key is digital revenue,” Riccitiello said. “We’ve changed the company from Tower Records to iTunes … from Sears to Amazon.”

A new report shows that in the past month, Draw Something has lost nearly 5 million Daily Active Users (DAUs), bringing the total down to 10 million from 15 million when Zynga first made the purchase.

One possibility that the game is losing users could be it has a dearth of items to sell. The only items that can currently be upgraded are the colors. Most social games have items that can be bought and added to enhance the experience of the user. Draw Something does not have any of those items, which could be one cause for the loss of users after such a short time period. Whatever the reason for the decline, it is not a good sign for Zynga, which must figure out a way to stop the churn rate from a precipitous fall.

Elder Scrolls Online

Zenimax Online Studios and Bethesda has just announced they are developing The Elder Scrolls Online. The MMO is scheduled to be released sometime in 2013 for both the PC and Mac. The game will feature expansive exploration of the rich world of Tamriel, open-world PVP and  traditional questing.

Set a thousand years before the events portrayed in Skyrim – one of the main themes is that the Daedric prince Molag Bal tries to pull all of Tamriel into his demonic realm. Players will discover an entirely new chapter of Elder Scrolls lore as they delve into the new mysterious world.

“It will be extremely rewarding finally to unveil what we have been developing the last several years,” said game director and MMO veteran Matt Firor, whose previous work includes Mythic’s well-received Dark Age of Camelot. “The entire team is committed to creating the best MMO ever made – and one that is worthy of The Elder Scrolls franchise.”

Whether the world will be open, much in the manner of World of Warcraft is an unanswered question. However, given the nature of the prior stand-alone Elder Scrolls games, it doubtless will be a massive world set with the same ‘lore’ of the older games. I expect PVP, crafting, and leveling to exist but more will be revealed soon from Bethesda.

A comprehensive look at everything from how quests will work to ‘open’ dungeons to player-driven PvP conflict that pits three player factions against each other in open-world warfare will be prominently covered in the June edition of Game Informer.

Sales rose 32 percent to $321 million, the San Francisco- based company said today in a statement. That exceeded the average $315.9 million analyst estimate, according to data compiled by Bloomberg. Profit excluding some items was 6 cents a share, exceeding the 5-cent estimate.

Zynga which raised $1 billion in a December IPO has been branching out by buying OMGPOP Inc. for $180 million. OMGPOP is known social games on mobile platforms and for its hit game Draw Something. The company may see its biggest growth on mobile devices such as iPhone, Android phones and on Zynga.com, said Atul Bagga, analyst at Lazard Capital Markets.

OMGPOP Draw Something

“The company could be well positioned on mobile given its large user base on mobile, its expertise in running free-to-play games, and its understanding of user behavior,” Bagga said in a research note this month. “We are also optimistic around the company’s platform strategy, which we believe could help reduce both use of third-party platforms and content risk.”

It remains to be seen if Zynga can maintain such robust sales increases with growth slowing for Facebook ahead of it’s Initial Public Offering expected in May of this year.

Zynga gained in late trading, after climbing 3.4 percent to $9.42 at the close in New York. The stock has fallen 5.8 percent since it started trading on Dec. 16

Nintendo 3DS

The Nintendo company today released the results of its fiscal year ended March 31, and revealed that revenue had slid 36.2 percent compared to the previous year, ending the period at 647.6 billion yen (about $8 billion). Nintendo generated revenue of over 1 trillion yen in the prior year. Due to sluggish sales, Nintendo posted a net loss of 43.2 billion yen ($532.5 million). In the prior year, it generated a profit of 77.6 billion yen. Software sales  for Microsoft and Sony have also suffered lately, but Nintendo is the biggest loser overall.

Nintendo’s problems continued to mount over the past year. In one example, the company was forced to sell the Nintendo 3DS portable below cost in order to attract customers, forcing the company to take a loss on every unit it sold. Meanwhile, Nintendo’s Wii continued to post sluggish sales, and the company’s software franchises continued to suffer poor sales. Coupled with a strong Japanese yen, Nintendo fared poorly in trying to turn things around.

Wii U

In an effort to reverse the fiscal bad news, at E3 Nintendo revealed a new hand-held console and controller called the Wii U. It includes a controller with a 6.2-inch screen. According to Nintendo, adding a second screen to the living room creates a multitude of new video game experiences while offering families a variety of options to customize their entertainment. In addition to the 6.2-inch screen, the new controller also features an accelerometer and a gyroscope, a rumble feature, an inward-facing camera, a microphone and speakers.

Super Mario Bros. Mii

The Wii U will also feature a new game – Super Mario Bros. Mii. The game has the option for players to use their Miis as playable avatars in the game. Players will be able to play on the Wii U without the television being turned on. The Wii U is rumored to cost consumers $300 and will launch on November 18th, 2012.

Zynga Poker

NPD has released a new report stating that 40 percent of people who have played an upgradable freemium game, or game that is ‘free to play’ with the option to buy items or abilities with in-game micro transactions have made an in-game payment to enhance the experience.

According to Wikipedia, the term “Freemium” is a business model by which a product or service (typically a digital offering such as software, media, games or web services) is provided free of charge, but a premium is charged for advanced features, functionality, or related products and services. The word “freemium” is a portmanteau combining the two aspects of the business model: “free” and “premium”.

The report which polled over 6000 men, women and children, notes that women and girls are “significantly more likely” to play freemium games than men, yet are less likely than men to pay.

The NPD Group says that around 38 percent of the U.S. population currently plays some form of freemium gaming, with the majority of those players who opt to pay doing so within the first month of playing a particular game.
Elsewhere in the report, the group says that only 15 percent of gamers who are aware of freemium games choose not to play them, while a notable 84 percent of gamers who try freemium gaming will then stick with it.

However, while females are more likely to continue playing a freemium game after the initial try, males aged 13 to 34 are most likely to abandon freemium gaming entirely after trying it.

Zynga Farmville

“The majority of freemium gamers who opt to pay to upgrade their experience do so within the first month of playing a particular game,” said Anita Frazier, industry analyst, The NPD Group. “When designing a game, it’s important to consider features that would drive quick conversion to pay.”

This ties in with the prior post I made about software sales declining year over year. Free to play statistics are just now being tracked by NPD, and DLC stats are not accurately portrayed and the results dovetail together. Traditional models of gaming are losing market share to freemium or free to play models with the rise of social media on smartphones. This trend is likely to accelerate in the foreseeable future.

Artists Concept for Xbox 720

According to NPD, industry-wide software sales were down 37 percent in January, 24 percent in February, and 26 percent in March when compared with the same three month time period in 2011. Hardware and accessory sales have also been hit hard with large declines. What is driving this decline and is it a trend or a mere blip on the game industries radar?

It appears that Nintendo is the driving force behind this high-tech sales nosebleed. Their sales have declined 50 percent year over year. This impact is likely due to many factors. Nintendo has not come out with any hardware hits in years while Xbox and PS3have introduced new technologies such as Kinect and PS3 Move, along with games to take advantage of the newer tech. Software and hardware sales are also down for the PS3 and Xbox 360 in 2012, but to a far less degree than the losses suffered by Nintendo.

For years after its November, 2006 launch, the Wii dominated both hardware and software sales charts. I remember when people couldn’t find Wii’s in December of 2006, there was an acute shortage in North America as it became the “IT” gift to get children for Christmas. The appeal of the motion sensor Wiimotes and the casual nature of the games  attracted a new audience of consumer – non-traditional gamers such as parents and grandparents. This enthusiasm for Nintendo games didn’t continue as around 2009 a huge shift to ‘social games’ on mobile platforms such as smartphones and ‘free’ ad-supported social media games attracted huge audiences of consumers. The changing demographics left Nintendo in the dust and scratching their heads wondering what went wrong.

Playstation 4

DLC and ‘free-to-play’ games may be contributing to the decline in overall game sales. These sectors of gaming have accelerated into the mainstream consciousness of game players. With at least 500 million people using Facebook, that is a choice platform for free to play games that have an almost non-existent opportunity cost. In other words, people like to try out and play free games, even though they have to suffer through advertising.

Downloadable content is everywhere these days. From EA to Activision to much smaller game companies – the awareness is that DLC is downright profitable. The delivery mechanism can reach billions and word of mouth spreads easily on social media, so it’s a win-win situation for game companies to include DLC with every top tier game produced.

Will this trend persist? Only time will tell – if another three months go by and the sales patterns continue to suffer, then the industry will need to shift gears. However, Sony and Microsoft are gearing up for the latest iteration of hardware. With new hardware comes a new paradigm shift of better looking games. They may play exactly the same, but the general hype of a new hardware release shines brightly.

Sony is expected to release the PS4 sometime in Q4 of 2012, which would follow the trend of Sony’s previous console generations. The PlayStation 1 was first released in late 1994 in Japan and 1995 throughout the rest of the world. The PlayStation 2 hit stores in 2000, giving the PS1 a retail shelf life of 6 years from its Japanese launch. Likewise, the PlayStation 3 came out in 2006, 6 years after the release of the PS2. Following this trend it is expected that Sony will release the PS4 in late 2012.

Microsoft is expected to release Xbox 720, their newest hardware sometime in 2013 to 2015. Microsoft will likely release the Xbox 720 in Q4 2014, with a super fast CPU, at least a 2 Terabyte hard drive and state of the art graphics chips. The game industry generally wants platform stability and low price hardware to create games with. These newer consoles will doubtless drive up sales figures – once they are released, but the trend of ‘free to play’ and DLC is not  going away as long as they remain profitable.

In an update, Bioware released an addendum to their free time:

“We’ve also got another significant piece of good news: everyone will have until April 22nd at noon CDT (5:00pm GMT -click here for a time zone converter) to have a Level 50 character or Legacy Level 6 on their account to get 30 days of game time on us. (Your 30 days of game time will be applied to your account on April 25th by 11:59pm CDT.) Players will now have multiple options, as well as more time, to try and reach these goals and play all the great new content in Game Update 1.2.”

This enticement will doubtless bring back players who have left the game to try out the new update. You do have to reactivate your account to get the free time (if you had deactivated it). One of the main gripes that a lot of raiders have had about the game is the lack of endgame content. This gives Bioware another month to try to correct that perception by adding more desired high level content.

The amount of changes that have been added with the Legacy 1.2 update should keep players happy for ahwile, but  it is a constant battle to add content faster then players can consume it.

The Legacy System is interesting, and unique as far as MMO’s are concerned. All eight characters (per server) are linked by a last name that is chosen when your first character completes the first Chapter of your class story. Choose your Legacy Surname carefully, because it will apply to all eight characters on the server you play on. If you play characters on a different server, then that server can have a different Legacy Surname.

Legacy

The Legacy System has a Family Tree where each character can be linked to one another in a way you specify. You can make your characters siblings, a spouse, a child, an adopted child, an ally or a rival. How these relate in game terms is unknown, but the possibilities are intriguing.

In addition to setting up your Family Tree, you also get other perks and abilities that start out locked but can become unlocked. One such example is when you get a character to level 50, whatever race that character is now becomes available to all classes. So if you play a Sith Pureblood Inquisitor to level 50, you will now be able to make a Jedi Knight that is of the race Sith Pureblood. Very interesting indeed! This is cosmetic but opens up vast roleplaying possibilities!

Legacy Races Unlock

There are even more items concerning legacy. Depending on what class you play, and how far you get, you unlock abilities that ALL of your classes can use. For example, if you play a Jedi Knight you can unlock a special Force Sweep ability for all of your characters. These special abilities are only used in a ‘Heroic Moment’, that is the 20 minute cooldown ability that all classes have, but still it’s additional abilities that adds to the capabilities of all of your characters. Moreover, you can unlock abilities as you progress in your characters. For example, I have a Smuggler at level 46, and now his class ability of ‘Lucky Shots’, a buff that adds +5% critical to all attacks now applies to all my other characters when they use their own buffs. So, my Jedi Knight with Force Might now also has Lucky Shots and is even more powerful then before.

Additional content was added as well, but that is for another post. I am currently playing SWTOR, due to the fact that Bioware has made it ‘Free’ for a few days (maybe even longer it appears, up to 30 extra days added). I had cancelled my account a month back, but now I feel there is something else to do and explore. Altogether this is a tremendous update for SWTOR and should bring back people that had stopped playing, and some new people that are interested in the new update.

Shepard Shuffles Towards 'Beam'

Ok, I have replayed ME3 again. Here’s why the ending was so bad. As you can see in the picture on the left, Shepard is wearing armor and has a pistol. Alright…but, that is NOT the armor that I had nor the weapons I had before this scene began. What happened to all my customized gear and bad ass weapons that I spent hundreds of thousands of credits on? Where’s my M98 Widow Sniper Rifle? I paid $250,000 credits for that?! Ok, maybe it was blown away when Harbinger’s laser blast hit me. Maybe that’s just some random marines pistol I found.

But what about the armor? What happened to that? Shep is now wearing some crappy marine armor that who knows where it came from… So what happened? I’ll tell you what happened. The game designers took choice away from the player. All those choices you had prior to this point, they were fun, they were engaging, they made you think.  Which armor to wear, the Inferno Armor or customizable N7? Which weapons to take? The heavy sniper rifle or the Geth Pulse Rifle? What power implementation to use? Upgrade shockwave to max or pull? All of those choices were fun and took time to decide on – you also could change what you wanted between missions and perform countless upgrades.  This ending, with the severe lack of choice and things that worked the entire game such as weapons, powers, armor taken away…was painful to play.

Kill the husks that come for you with the crappy pistol. Oh, I forgot…what happened to your BIOTIC POWERS??? Oh, that’s right, my Shepard was an Adept with badass biotic powers. Nowhere on the screen. No way to access them. No way to use them. Powers gone, Weapons gone…Armor gone… Control gone. Freedom gone.

It’s like the designers suddenly said… you know what – this isn’t a game anymore, this is a movie – and we own it. We own you. We’re going to fuck with you by taking away all control and just showing you what happens – just like in a movie. It’s that lack of control, that loss of freedom that people hated about the ending of ME3. The pretty red, green and blue colors were just icing on the cake of taking away all control from the players.

ME3 designers, producers, coders, and powers that be decided to do this for who knows what reason. To completely change the way the entire game had worked for the last five minutes of the end-game sequence. It’s like suddenly nothing makes sense: powers gone, weapons gone, armor replaced… That is what pissed off huge swaths of gamers and why this should never have happened. I loved everything about ME3 until the ending, and that ending just about ruined the entire game.

Maybe the next time Bioware makes a game, they will put some more thought into how it ends, or maybe not. But one thing is sure, take away control and freedom from the players, change everything about how a game actually worked and played for the ending and they will certainly piss off their core fans.