Following comments by Activision Blizzard boss Bobby Kotick, who said the Star Wars MMO deal was not lucrative for EA, Analysts Michael Pachter and Jesse Divnich are both weighing in on the potential cash flows that Star Wars: The Old Republic could possibly bring in, and both are optimistic. With LucasArts and BioWare working on the title that reportedly costs over $80 million to make, EA has gone on record to say that they only need 500K subscribers to make a profit on the ambitious title.
"I think [EA] will make a profit," said Pachter. “The revenue split is around 35 percent to LucasArts after EA earns back their investment. That means EA keeps most of the revenue from disc sales (they have marketing expenses and need to staff up the server farms), 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."
That is all after factoring in the projected 35 percent cut that LucasArts will take in for the project. With 1.5 million projected subscribers, that number is looking to be huge. Pachter believes that year one sales should easily hit $80 million in profits.
"Based upon user commentary and consumer surveys, the profit potential for The Old Republic is high. We see little risk of failure for The Old Republic," said Divnich to Eurogamer.
"Kotick's comments are valid in the sense that licensors do take a piece of the pie and is an economical hurdle that entertainment has been struggling with for years. In the same respect, how successful would EA's MMO be without the Star Wars brand?
"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."
