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Electronic Arts Inc. (ERTS) Message Board

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  • moneyblackhole moneyblackhole Aug 1, 2012 4:11 PM Flag

    SWTOR to lose TONS of players in June/July

    Okay that's good enough for me. :)

    That licensing fee is killer, that's why the breakeven cost is so freaking high (500k subs). Here's a breakdown:
    Development cost: 200 million
    boxed sets sold: 2 million
    revenue after retailer cut per $60 box sold at retail: $48
    $48 per box sold times 2 million sold = 96 million revenue
    200 million dev cost - 96 million = 104 million in the hole

    To simplify the math, lets say 2 million subs for 3 months then 1.1 million subs for 3 months.
    2 million - 500k break even = 1.5 million X $15 = 22,500,000 * 3 months = 67,500,000
    1.1 million - 500k break even = 600k subs X $15 = 9,000,000 * 3 months = 27,000,000
    67.5 million + 27 million = 94.5 million
    94.5 million + 104 million retail sales = 198.5 million

    So, they might have broken even on the development cost and are finally making a profit on it. July subs are sure to be in decline so the amount of revenue and profit will decline each month. Also keep in mind that this didn't account for advertising and other overhead expenses, just the 200 million number we know it cost to make. So given advertising costs, even if I estimated too low on the revenue numbers, it should be fairly reasonable.

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