news\ Dec 2, 2011 at 12:41 pm

Star Wars: The Old Republic Estimated to Earn $80 Million in Annual Profit


Earlier this week, it was reported that Activision Blizzard president Bobby Kotick predicted EA wouldn't get much profit from the highly-anticipated Star Wars: The Old Republic as a result of the LucasArts' licensing agreement.  But when speaking to a handful of analysts, the overall consensus is that EA's profit will be just fine.

When speaking to Eurogamer, video game analyst Michael Pachter said that he expects 1.5 million SWTOR subscribers with EA paying about 35% of the game's earnings to LucasArts, after the publishers has recouped its own costs.

"The revenue split is around 35 per cent 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," Pacther said.

"On an ongoing basis, they will split revenue from running the subscription business. My best guess is that they will attract 1.5 million subscribers paying around $15 a month, so they should generate around $270 million in revenue. If LucasArts gets 35 per cent and if EA incurs around 35 per cent operating expense, they make 30 per cent, or around $80 million per year, in profit. That's not bad."

Pachter also confirmed EA CEO John Riccitiello's earlier statement that the game actually only needs 500,000 subscribers to be profitable.

"Most MMOs require around 250,000 subscribers to cover the direct operating expense of the server farms. Given LucasArts' revenue split, SWTOR would require around 400,000 subscribers to break even. That means they make money at 500,000 subscribers."

Taking that into account, and the popularity of The Old Republic's beta, it's easy to expect at least 500,000 subscribers at launch. 

EEDAR VP Jesse Divnich also arguedt aht Kotick was underestimating the game's profit.  "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."

Star Wars: The Old Republic is due for a worldwide launch of December 20, 2011.

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