Titanfall's exclusivity based on EA's Xbox and PlayStation sales forecast, not Xbox One's cloud
There's no doubt that Titanfall will be a major success when it ships in just a few months; but, you also can't deny that publisher Electronic Arts is missing out on a huge market of PlayStation gamers by keeping it exclusive to PC and Xbox platforms. With over 80 million PS3s and 4 million PS4s sold (granted, there is some overlapping), that's a lot of money for EA to be turning away from. So what made them decide to go Xbox exclusive?
If you ask Respawn or Microsoft, they'll say it's because of the Xbox One's cloud servers. You may even remember, back in August, designer Fairfax ‘Mackey’ McCandlish calling Microsoft the "Apple of videogames" when it comes to multiplayer and communal gaming -- something Titanfall emphasizes (there's no singleplayer campaign). McCandlish at the time explained the exclusivity was based on Respawn being a small team and having to pick a single platform. "Xbox made the most sense," he said.
Microsoft and Xbox may have made the most sense, but it doesn't look like it was a decision based on console power, community, or cloud servers.
"I think you should assume that we made that decision when it was back a few years ago when we decided to go exclusive," explained EA's Chief Financial Officer Blake Jorgensen when asked if the deal with Microsoft for Titanfall's exclusivity would offset potential sales the game could have had if released on PlayStation.
"We had some forecast at that time from where we thought both Xbox and PlayStation would be and that's what we based our decision on. I think we're still feeling very comfortable with that," he said.
EA may be comfortable with their decision, but there is no denying that their original forecast may have been misguided. Since their release, the PS4 has sold 4.2 million consoles worldwide while the Xbox One sold over 3 million (shipped 3.9 million). It's not a major difference, but I'd like to know what EA's forecast originally estimated. In all likelihood, Microsoft probably paid EA quite handsomely for exclusivity, but is what Microsoft paid enough to make up for the revenue the game could've earned on PS3 and PS4?
Jorgensen continued: "I think -- think about the deal as economically as we made. We told people last quarter that it's a trade-off between The Sims 4, which is the product we moved out when we moved Titanfall in. And the reason that's economically neutral on that deal in this year is that most of the expenses for the development of Respawn's products were expensed along the way, as we do with all of our R&D.
"And thus, when we ship that product, it's fairly high margin for us until we start to share royalties with them. You should assume in FY '15, we'll start to share royalties as the revenue builds, and that will start to reduce the profitability of the product over time. But the initial ship-in at the volumes that we're anticipating and built into our guidance are fairly profitable, and we determine it was a exact trade-off with The Sims profitability if that would've also been in the quarter."
In October, Respawn Entertainment co-founder Vince Zampella confirmed that Titanfall would be an Xbox and PC exclusive for its lifetime, but left open the possibility that future installments could land on PlayStation platforms. If you look at the tweet closely, you'll even notice that he said EA made the decision for exclusivity for the studio, meaning it was never about development or system specs.
Editor's Note: Due to the response of many, we've updated this article to include a more accurate number of Xbox One consoles sold to consumers. The 3.9 million shipped was to retailers. Thanks everyone for your response.