Will EA's Loss Be Activision's Gain?

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The problem with Star Wars: The Old Republic is that there are too few Skywalkers and too many walkers.

Electronic Arts (NAS: EA) is getting crushed today after reporting last night there were just 1.3 million active players by the end of March.

"Star Wars: The Old Republic is developing a committed community of players with more than 1.7 million active subscribers and growing," CEO John Riccitiello said back in February.


EA has poured a lot of money into that game. When you lose 400,000 players -- and all of your momentum -- in two months, you don't get that back.

Tell that to Activision Blizzard (NAS: ATVI) . The world's largest video game company saw its World of Warcraft gamers peak at 12 million nearly two years ago. After relentless quarterly declines, the ranks of orcs, dwarves, and elves stand at 10.2 million by the end of December. We'll get a new tally when the company reports its quarterly results tomorrow.

Optimists argue that the defections decelerated in Activision Blizzard's most recent quarter. Just 100,000 net gamers bolted during the holiday quarter. However, the trend is still pointing in the wrong direction.

When EA raced to 1.7 million Star Wars fans during last year's debut of Star Wars: The Old Republic, many figured the players were coming at the expense of World of Warcraft. Now that EA's contender is slipping, could some of those 400,000 net defections be racing back to Activision Blizzard?

Don't bet on it.

There's a word to describe what's happening here -- and I'm about to coin it: Zynganization.

Zynga (NAS: ZNGA) has taught gamers to be fickle. Just as FarmVille players swap their farmlands for urban living in CityVille, social games don't stay on top for too long. There may never be another seven-year run of greatness like World of Warcraft accomplished.

Software developers don't see it that way. They still believe they can plug in expansion packs to keep a title going, but gamers are no longer as committed. Even Zynga found this out the hard way when Mafia Wars players didn't jump on Mafia Wars 2.

So, yes, Zynganization.

Keep that word in mind when Activision Blizzard reports further shrinkage tomorrow. Have the word handy when EA shakes its head three months from now, befuddled at how Legacy and Allies couldn't stop its dearth mauling.

Zynganization. It'll grow on you over time -- because every other game won't.

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At the time this article was published The Fool owns shares of and has written calls on Activision Blizzard.Motley Fool newsletter serviceshave recommended buying shares of Activision Blizzard.Motley Fool newsletter serviceshave recommended creating a synthetic long position in Activision Blizzard. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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