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Electronic Arts Inc. (ERTS) Message Board

  • tony23nyc tony23nyc Feb 2, 2011 8:31 PM Flag

    Disagree w/ the 500k subscriber comment on Star Wars MMO

    "Junior", the ERTS CEO, said only 500k subscribers are needed for it to be profitable. Baloney. I don't buy it. I'm from New York - I'm used to spotting a lie when I first see it.

    It's a shame how no other details were given. Here's how I break it down:

    Let's say 2.5 million people buy the boxed version or downloadable game at retail price, $60 (let's assume EA gets a 75% cut from retail sales). That equals roughly $112.5 million.

    In regards to subscriptions, 500k subscribers times $10 per month times 12 months equals $300 million.

    $112.5m + 300 million = 412.5 million.

    If you've been tracking the development of the Star Wars MMO, you'd remember that EA has spent approximately $400 million on it so far. And this does not include any additional resources committed to development and marketing costs, etc.

    So it's more like they're close to breaking even, no?

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    • Wait, 500k x $10/mo x 12 months = $60 million, not $300 million.

      • 1 Reply to x6unsound
      • Keep in mind the relatively low overall margins of the MMO space. Considering the cost of live team support, bandwidth, co-location facilities, game masters, customer service/account management, SG&A, and the ubiquitous credit card fees involved with recurring billing, the net profit is around 10-15%. This would generate around $2.25 per account in billing each month, $1.125mm net.

        Assuming initial retail net of $25 per box after and a generous lifetime estimate of 3mm sell through for $75mm, the monthly net per account in billing would roll up $13.5mm at 500k subs. If the budget estimates of $300mm are anywhere near accurate, it would take SWTOR over 3 years just to break even at that level.

    • That is some bad info.

      Most reasonable estimates of the cost are in the $100-$150MM range. $300MM was proposed by an internet troll and doesn't make a lot of sense.

      Regardless, it should easily sell a couple million copies to Star Wars and Bioware fans. If it is any good at all (and all indications are that its looks and plays pretty good) it will double that. If unknown properties like Mass Effect and Dragon Age can do this then a Star Wars MMO should have no trouble even without a console presence. Your $60 number is probably correct though there will likely be a collector's edition with a much higher margin as well as a host of other ancillary products and promotions (books, comic books, clothes, toys, etc etc.)

      And any subscription cost will be at least $15 as that is the industry standard so you have to add 50% to your subscription numbers. This all assumes no micro-transactions which would be pure profit.

      And 1 year is a pretty short time period to judge an MMO unless it is an abject failure, which this game cannot be. EA has said they expect 10 years of life out of the game and given the fanbase here, that isn't unreasonable. Even if it fails as an MMO, it should get over a year as a single player experience equating basically to KOTOR 3-10 (8 fully voiced class stories larger than the original KOTOR game).

      I am holding my stock until the beta test when I can judge the quality myself. It really looks like it won't have to do all that much to beat expectations since most analysts really don't understand the market and the factors at play for this game. This isn't Warhammer part 2. There is whole lot more working in favor of SW:TOR.

    • Show us all your source for those make believe figures. The figure of 300 million is a made up one from internet message boards. It's just that idiots like you hear a rumor and report it as fact.

      So just to be clear give us all a link that shows the expense report for SWTOR or go back to hiding under the rock.

      And btw it's not the peoples fault here that you're on the wrong side of this trade. Except your losses like a grown up and try to do better next time.

    • Your math is right and it is bull crap! They have sunk $400MM into it and need to hit it big on that game or down she goes.

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