Release Date Window Moved After July 1st?

Today Eric Brown, CFO of Electronic Arts, spoke at the Lazard Capital Markets Technology & Media Conference. The topic of Star Wars: The Old Republic was once again brought up and one of the many interesting things said by Brown was, "So we said it's going to launch sometime in calendar, but not within Fiscal '11. So that basically pens down between you know, April 1st and December 31st of this calendar year. It is also reasonable to infer that it's not in our Q1 guidance. We gave Q1 Fiscal 11, Fiscal 12 non-GAAP revenue guidance, minus 39 minus 44 cents and I think it's not unreasonable to infer that it's not included in that 90 day period."

This indicates that the game most likely won't release before the 1st of July.

Brown also talks about moving from a closed beta, to a semi-closed beta and then eventually to an open beta and then says that EA will talk more about Star Wars at E3, which takes place June 7-9th. Transcription follows after the jump. An audio version of the talk is contained on their website.
Question: Turning to Star Wars, obviously very big opportunity for EA and Lucas in the not too distance on future. The game appears to be on track at this point. But can you talk about, where we might expect an open beta, what that involves in terms of time, investment and to then gauge you know, perhaps more specific launch timing and then a follow up to that. What sort of gives you the confidence, that the subscription MMO model is still relevant, given this massive diversion of content on these other platforms?

Eric Brown: Sure I'll just address timing first and then you know speak to opportunities. So we have for the first time street dated within a date range the Star Wars MMO. So we said it's going to launch sometime in calendar, but not within Fiscal 11. So that basically pens down between you know, April 1st and December 31st of this calendar year. It's also reasonable to infer that it's not in our Q1 guidance. We gave Q1 Fiscal 11, Fiscal 12 non-GAAP revenue guidance, minus 39 minus 44 cents and I think it's not unreasonable to infer that it's not included in that 90 day period. So we've narrowed the window, provided a window for the first time provided on the progress we've made closed beta testing.

The next phase will be to expand the beta testing. Up until now it's been kind of the EA friends and family kind of testing program. We need to expand the testing universe to make it more open scalability, back-end systems, etc. Figure out concurrency etc. Where there are choke points on different maps etc., tune it accordingly. We will be increasing the beta. The business is that we have over a million, closer to one and a half million, opted in happy to step up and be beta testers. North of a million demand to do some free testing, I think is a great indicator of the interest level of the franchise. We haven't given specifics as to milestones, but we will move from closed, to semi-closed, to open in preparation for launch. We'll talk more about Star Wars at the coming E3 event.

Question: Is there a typical time frame open beta or is it such a unique game that it's difficult to?

Eric Brown: It's hard to say it's typical. There's only one other relevant data point in terms of this scale of MMO. So it's hard to provide a rule of thumb. You need months of different flavors of beta testing to making the product generally available. We're really focused on providing a great user experience, because not only do we want to retain, kind of the core tier 1 users. We want word of mouth reference ability to bring in tiers 2, 3 and 4. In terms of addressable market, MMO's are a growth segment. If you look at the western worlds, again North America plus Europe only, we'd estimate there about 12 million people or so playing one or more MMOs. Roughly half are playing World of Warcraft.

I believe Activision sites about a 6 million western world subscriber stat. So there's 12 million people to go after, 6 of whom are playing one game, another 6 of whom are playing some combination of other games. And then there's an opportunity in Asia, not necessarily the same RPU characteristics. So we think that's 10-12 million people to go after, that's a great addressable market right there. Like I said, we've got well north of a million, million and a half ready to test for free. We're not that concerned about generating initial demand. For us it's about creating the right experience, expanded beyond the tier 1 and the tier 2 users. You've got people that have never played an MMO before but are interested in Star Wars, to engage and give it a try. What's really important to us is striking the right balance so that we serve the needs and demands, requirements of the core, pre-existing MMO subscribers.

They demand a lot of content, a lot of community, guilds are very important, special group activities, raids and things like that are real important inside an MMO. But then at the same time we want to make it accessible, so someone can pick it up and play it for the first time, recognize the Star Wars fiction, build a character and get into the game without feeling overwhelmed or intimidated by the hardcore experienced MMO player. If we're successful in doing that, our addressable market is well beyond 12 million people, you know current MMO players and the western market expands into more of a general gamer population. Basically anyone that has certain minimum spec personal computer. That's a very large potential addressable market. We look at it as a tiered opportunity but starting with an addressable market of at least 12 million.

Question: Extending that market is assuming that the monthly subscription model could also be extended to a broader audience or are there other potential modifications?

Eric Brown: We've talked about going in with a traditional subscription model, which is, requires the purchase of a game client, a PC game client. That's the going in assumption. But we have nothing ruled out, in terms of intent or design future micro-transactions because some interesting opportunities is there. The key is you know, what do include in a base monthly fee versus what do you charge extra for? So that requires some pretty careful decisions making. For now we're focused on the more traditional monthly subscription model.

Question: I think there was some restructuring of the contract with Lucas, given some changes there. How involved will be in promoting the game they have some Blu-ray movies coming to market, some 3D versions of movies coming to market? Does that give them an opportunity to inform people that this game is there and available? Or is it all up to Electronic Arts?

Eric Brown: It's a great partnership and our interests are nicely aligned. They were under the old deal structure, under the new deal structure, their just as aligned. It's more of a traditional licensing model that we're quite familiar with, it's [...] the way we deal with our sports license or so it's just more in our zone of familiarity and comfort. They're deeply involved in many aspects of the game, the branding, the characters, the stories, the trailers etc.

It's obviously one of the most powerful if not the most power brands in existence and one would expect them to be involved in the game itself and also work in partnership with EA to make it a success, cause success in a game ultimately benefits them, so there is a great alignment of interest. We haven't announced any specific joint marketing programs and that will just have to evolve over time so, nothing I can say specifically in that regard today.

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