What You Need to Know About Video Games in August
Danny is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Ye Olde Game Investors:
The heat is surprisingly steady as foliage falls upon the video game chessboard. While some leaves tastefully decorate the playing field with notes of revenue growth, other players are struck by falling branches that immediately change their monetization game.
Highlights and Replays
Despite the aforementioned low-subscription playing field, not all is lost for Electronic Arts Inc. (NASDAQ: EA). What's the hope for saving one of the most expensive entertainment productions in history?
Give it away for free, of course.
To gamers, EA's Star Wars: The Old Republic is simply catching up to titles like League of Legends, one of the most popular online games in the world that forever disrupted the Western sanctity around subscriptions. NCSoft Corp (KS: 036570) adapted more quickly than EA with its Korean mammoth, Aion, embracing the free-to-play model earlier this year. Its anticipated Guild Wars 2 title will launch with a hybrid: consumers purchase the game first and then play with no obligated costs thereafter.
This will not be the month that the traditional models die. Activision Blizzard (NASDAQ: ATVI) shows little to no signs of dropping the subscription model for its World of Warcraft title; there are still millions of subscribers to burn through before it finds itself in EA's position. Tera, a relatively young MMO, looks to persist with a loyal -- albeit relatively small -- following of subscribers for which En Masse Entertainment happily develops. Both offer microtransactions, which are optional purchases that can be made for an in-game item or effect, which sometimes even allow players to "earn" game time without paying a dime.
Game Rule of the Month
While the monetization models are different, there is one thing in common with all of the big players above. That commonality has to do with how gamers can get Activision Blizzard's Mists of Pandaria expansion later this year, how they'll get NCSoft's Guild Wars 2 on August 24th, and how new and returning players revive EA's Star Wars: The Old Republic.
Moreover, brick-and-mortar retailers would call foul play on it since it leaves them out of the pure, untapped profits made from sales.
The video games industry rule for you to learn this month is digital distribution. The easier it is for a player to download the game, the easier it is for them to become a regular, paying user. If they can't get the game, they can't become a customer.
If EA steps up in August with all talk and no attention to the account management site that governs their downloads, expect NCSoft to walk away the champion with Guild Wars 2's launch. Those supposed 49 million users aren't going to be playing the game if they can't easily download it. Blizzard's early rampup for digital sales is their move for customers: A WoW player might not also purchase NCSoft's MMO.
Determine the Winners
Everyone's getting their pieces into place. Don't miss out on the plays.
Before investing, consider surveying the field. Guild Wars 2 is running stress tests, Mists of Pandaria has made digital pre-sales available, and Star Wars: The Old Republic is preparing for its free-to-play patch.
You've learned one rule of the game; see firsthand whether you're betting on a winner or a loser.
dfavela owns shares of Activision Blizzard. The Motley Fool owns shares of Activision Blizzard. Motley Fool newsletter services recommend Activision Blizzard. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
