The video game giant, known for its Battlefield war simulation games and upcoming Anthem action adventure title launching in two weeks, surprised the gaming world on Monday when it suddenly released a new game called Apex Legends.
The title is free to download and offers a similar feel to Epic Games’ Fortnite: Battle Royale, a free last-man-standing “battle royale” title that’s become a cultural phenomenon since launching nearly two years ago. Both make their money by selling different looks for characters.
The Buckingham Research’s Matthew Harrigan wrote in a note to clients:
“Trading reaction yesterday exemplifies how hit driven video gaming stocks remain, even if cloud gaming and subscription services, including outside party, should eventually be major positives if not fully transformative.”
Harrigan said he’s welcoming the pace at which the game has won over players. However, he notes conditions on Apex Legends activity may be oversold, and the victory is still “dwarfed” by Fortnite’s base of approximately 200 million users.
Electronic Arts rallied to its biggest gain in nearly five years as the stock rose 16 percent Friday. Shares of Activision Blizzard Inc. and GameStop Corp. were all lower, while Take-Two Interactive Software Inc. edged higher to close the day.
Bear in mind that EA’s shares had fallen more than 14 percent last week after its CEO Andrew Wilson announced weak fiscal third-quarter earnings. EA had reported earnings of $262 million for Q3 2018 and a revenue of $1.29 billion as against wall street estimate of $1.38 billion, revealing a shortfall of $90 million for the gaming giant.
The company’s earnings were however up, at $1.95 per share compared with an estimate of $1.94 per share, per data from Refinitiv.
Apex Legends is so much damn fun! Played with many of the homies and had a blast doing it! I wish the looting for guns in the beginning was a little more forgiving but overall, game is awesome!
— Mighty (@Mightymaster123) February 8, 2019
Vince Zampella, head of EA’s Respawn Entertainment division, which made the popular Titanfall shooting game series and its spinoff Apex Legends said:
“We hoped you’d love it as much as us, but never in our wildest dreams could we have expected the outpouring of support and positivity we’ve seen. We tested and tweaked. We argued and agreed. We got to a point where we felt some magic.”
Part of Apex’s success lies in the fact that almost all of its marketing has been generated by ecstatic players themselves. As part of the launch, the company did establish a live stream of the game on day one. The stream ended up being the most watched on Twitch, according to the Esports Observer. But word-of-mouth has been equally important, with players introducing the game to one another over messaging apps such as Discord.
Respawn has also leaned on game streamers by announcing a $200,000 competitive tournament, which starts Feb. 12 in Europe, followed by a North American match on Feb. 19.
Rapid Rise of Free-to-Play Online Games
EA owns iconic gaming franchises such as “FIFA,” “Need for Speed” and “Battlefield,” but the rapid rise last year of free-to-play online games like “Fortnite” and “PUBG” are forcing the company and its industry peers Activision-Blizzard and Take-Two to sit up and take notice.
“Fortnite” and “PUBG,” each backed by Chinese internet giant Tencent, are credited with helping take gaming to new audiences and popularizing the battle royale format, where dozens of online players battle each other to the death.
EA said on Tuesday its decision not to release a battle royale version of “Battlefield V” was one reason why it sold some one million fewer units than expected in the final quarter of 2018.
Videogame review website Eurogamer said it had taken Fortnite about two weeks to hit the 10-million-player mark.
Wall Street analysts covering EA were optimistic about “Apex Legends” but said it was too early to tell if it could become the next “Fortnite.”
And again, this makes sense. Once everyone saw Apex Legends taking off, everyone rushed to get in on those stocks, driving up the price.
Now, if Anthem bombs and comes under EA’s five to six million one week sales estimate, we may see the stock price dip back down, but with Apex Legends on the rise it may be a very healthy couple months ahead for the company, which just a week ago, wasn’t looking particularly great.
Apex Legends, which is free-to-play, is available for PS4, Xbox One, and PC. At the moment of publishing, there’s been no word of a Nintendo Switch port, but Respawn Entertainment has said it would love to bring the game to the Nintendo platform.