14 DAY TRIAL // Bobby Kotick, the Chief Executive Officer at publisher Activision Blizzard, recently talked about how he does not understand the economic fundamentals behind the upcoming Star Wars: The Old Republic.
But two leading analysts of the industry believe that even if it needs to split money with LucasArts, Electronic Arts will quickly make a profit on the MMO.
Jesse Divnich, who is an analyst watching the video game industry for EEDAR, has stated, “Licensors do take a piece of the pie and is an economical hurdle that entertainment has been struggling with for years. It’s a give and take scenario, but given EA’s historical ability to negotiate favorable license terms, I don’t believe Lucas’s share is a detriment to the game’s profitability.”
Michael Pachter, who works for WEdbush Morgan, added, “The revenue split is around 35% to LucasArts after EA earns back their investment. That means EA keeps most of the revenue from disc sales, so they should earn a nice profit there. Keep in mind that EA expensed the development cost when incurred, so much of the disc sales revenue will be profit.”
The analyst added that he believes most MMOs need to get about a quarter million subscribers in order to cover operations expenses, which probably means that Star Wars: The Old Republic would require about 400,000 long term subscribers in order to break even.
Every player after that will be pure profit for Electronic Arts.
A previous report said that The Old Republic has the ability to draw about 1.6 million players away from the Blizzard made World of Warcraft, although it’s not clear if they will stay with the BioWare MMO in the long term.
Fans will be able to play Star Wars: The Old Republic on December 20, with a number of early access days offered for those who have pre-ordered the MMO.