Electronic Arts' told investors on Wednesday that its highly anticipated Star Wars game was off to a strong start and dismissed reports that players were leaving the new Internet game in droves, and its shares rose 6 percent after the market closed.
EA has poured more money and firepower into Star Wars: The Old Republic than it has any game in its 30-year history. Wall Street is closely watching to see if the game can succeed, since it could bring EA riches for years to come. If it fails, EA's earnings will be hurt in future quarters.
The company said it sold 2 million units of Star Wars: The Old Republic to date. It has signed up 1.7 million active subscribers so far, the company said on Wednesday.
Frank Gibeau, president of EA Labels, told analysts on the conference call on Wednesday that the majority of subscribers are paying users.
Since everyone who buys the $60 game receives 30 days of free playing time, this means that players are opting to pay for the service, which could help build a large and loyal user base.
EA executives fought back against reports that large numbers of users are leaving the massive multiplayer online game.
When the game came out December 20, players had to wait a long time to connect to the servers. But then the wait times suddenly dropped, which prompted some analysts to lower their price targets on EA shares because they worried that players had quit the game.
Chief Financial Officer Eric Brown told Reuters in an interview that the company's technology had improved since the game's launch and EA was now able to host more players without the wait times.
We were able to double the amount of people we could support per server and so the lines which appeared to be congested became uncongested due to great engineering. 'Star Wars' has been an incredibly successful launch, he said.
He added that the game has grown faster than World of Warcraft, the Internet game made by EA's biggest rival, Activision Blizzard.
Sterne Agee analyst Arvind Bhatia said the conference call with executives helped quell some of his doubts related to the success of the game but he said it is still too early to figure out how many players EA will be able to attract in the long term.
I feel a lot better about 'Star Wars' now. It is helping that EA is clearing the air and shedding light on how it's going but it is still too early to judge, he said.
EA also said it has sold 11 million units of Battlefield 3, its shooter game that faced off against Activision's Call of Duty: Modern Warfare 3 game during the holiday season.
Looking ahead, the company estimated revenue of $925 million to $925 million in the fourth quarter, and earnings of 10 to 20 cents per share, below analysts' average estimate of 29 cents.
Adjusted for the deferral of digital revenue, the company said net income rose 71 percent to $334 million, or 99 cents per share for the quarter ended December 31. This beat analysts' average estimate of 93 cents.
Revenue rose 17 percent to $1.65 billion, beating analysts' average estimate of $1.62 billion, according to Thomson Reuters I/B/E/S.
EA shares rose $1.06, or 6 percent, to $19.50 after closing at $18.44 on Nasdaq.
(Reporting By Liana B. Baker; Editing by Richard Chang)