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Analyst: SWTOR could cost EA as much as $80 million to develop

Thursday, 5th May 2011 18:12 GMT By Stephany Nunneley

Wedbush Securities analyst Michael Pachter has estimated that when all is said and done, EA will have invested $80 million in Star Wars: The Old Republic.

This massive number was figured by the analyst by adding together the presumed cost of development, along with EA having to front all expenses for the game, plus pay a royalty to Lucasarts.

“The contribution from the Star Wars MMO is significant,” he said (via Industry Gamers). “Under the terms of its deal with LucasArts, EA is required to pay a royalty, but was required to front all of the development, marketing and distribution costs, as well as the costs of building out servers for the game. We estimate that LucasArts’ share is 33 percent of revenues, AFTER EA recoups its investment in game development.

“Given that the game was in development for over four years, with an estimated 200 full-time developers working on it, we estimate that EA’s investment exceeds $80 million.

“Fortunately for investors, the company expenses R&D spending, meaning that its revenues on sales of the Star Wars MMO DVD will be pure profit. EA will be required to spend marketing dollars on the game, and we estimate total manufacturing, marketing and distribution spending will total around $20 million, meaning that at two million units sold, EA will generate $60 million of operating profit on the DVD sales.”

Pachter went to state that Wedbush expects EA to cover its direct operating costs and breakeven at around 500,000 subscribers, a number he called “exceedingly conservative,” when it is being estimated that the actual breakeven figure will hit around the 350,000 mark.

“With 1.5 million paying subscribers, EA will have 1 million profitable subs,” Pachter continued. “We estimate that the incremental operating cost for each subscriber above breakeven is around $5 per month (also quite conservative), so if the revenue split is 33 percent to LucasArts ($5 per subscriber per month), EA will be left with $5 per subscriber per month in operating profit. At 1 million profitable subscribers over the last six months of its fiscal year, EA should generate $30 million in operating profit from subscribers.”

EA has said many times before that an MMO doesn’t need one million subscribers to be profitable, and last night, the firm seemed confident when speaking of SWTOR during its financial call to investors.

The firm said last night there was an “outside chance” SWTOR could slip into January 2012 (which would be Q4 of the firm’s FY12), but for now, it was still planned for release during the later part of calender year 2011 – meaning Q3 FY12 which encompasses the months of October through December.

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18 Comments

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  1. psybass

    i remember it was 300$ million, no?

    #1 3 years ago
  2. rrw

    ^ rumored and been denied http://www.bit-tech.net/news/gaming/2011/02/02/ea-star-wars-tor-did-not-cost-300-million/1

    also i dont believe patcher. what is dev cost of MMO this day? is 80 million a lot

    #2 3 years ago
  3. CaptKillsteal

    They should use some of that $80 million to remove the clipping issues of the chick’s boob going through her left arm in the photo….

    And maybe her “strong hand” that looks to have two thumbs growing out of the appendage where her right hand should be…

    #3 3 years ago
  4. Erthazus

    80$ Million for this crap? Wow…

    #4 3 years ago
  5. mojo

    lol 4.
    nice and polite as always :D

    #5 3 years ago
  6. YoungZer0

    Good luck, you’re going to need it.

    #6 3 years ago
  7. deathgaze

    I’d be curious to see how Pachter derived his numbers. It sounds like he simply took average dev team yearly wages, multiplied them by 200 and then multiplied them by four. I would posit that it’s a sloppy calculation if that’s indeed what he did.

    For one, most dev teams don’t start active development at their maximum manpower. The game is prototyped and scripted for the first half of it’s development cycle and then during the second half of it’s cycle the actual work gets done. I would estimate that a quarter to half of the final number were on the team during the first two years of it’s development cycle.

    That is also not taking into account the expense involved in contracting. Remember, this is going to be the first MMO featuring a full length, scripted storyline. As such, that means that a great deal of voice work will be going into the game as well. The game could potentially feature a cast of thousands. It could also mean that there might be significant amount of residuals to pay out to actors, dragging Pachter’s break-even numbers closer to a million subscribers.

    All that being said, Pachter is being a little bit cocky with his figures. Without seeing the actual numbers, we’re both just taking shots in the dark.

    #7 3 years ago
  8. Gekidami

    I’d assume theres the price of an ad campaign on top of that. though Pachters numbers are always a bit dodgy.

    #8 3 years ago
  9. blackdreamhunk

    I hear that the game is repetitive at the start like must mmo’s. I hope that is not the case. I highly recommend that they follow anet lead in GW2 and not like every other MMo out there.

    Good news I hear the story and every other thing in the game is pretty hot.

    #9 3 years ago
  10. Dralen

    Pachter fact’s = Wrong

    #10 3 years ago
  11. Grimrita

    SWTOR will be almost the same as WoW in terms of how it plays out. Although there will be a different take on crafting, expect pvp/raids/dungeons to be almost the same but with lightsabers!

    Hell, even the Sith’s armour looks very WoW! I just wish it would have broken the mould instead of just being different with ‘Story’ and voice overs. Only time will tell but I hope it will be engaging but I am not holding my breath

    #11 3 years ago
  12. TheWulf

    All that money and it’s still not going to be as genuinely compelling as Guild Wars 2. As has been pointed out, TOR looks like just another WoW clone, they’re selling it based on the license. Do licensed games ever turn out well?

    Not excited about this, there’s something so much better on the horizon.

    #12 3 years ago
  13. DarkElfa

    Okay Wulf, now you have me interested in that game.

    #13 3 years ago
  14. Grimrita

    Na, I want End of Nations

    #14 3 years ago
  15. ColdCoffee

    The story stuff is very cool in this. Other than the combat feels very much like “been there done that”. It’s not a bad game it should turn a profit. Ill wait on this one.

    #15 3 years ago
  16. viralshag

    @ 12,

    Now don’t get me wrong, I am very excited for GW2, very very excited. But even that video has a load of the same promises nearly every new MMO has.

    I really hope it is a fresh take on MMOs. I’m quite burnt out on them atm and normally don’t make it past the first free month. Rift is a great game but again, lost interest. Same with DCUO.

    I am sceptical about TOR but I think like most people, I will try it simply because of the license on the chance they do get it right, it could be amazing…

    #16 3 years ago
  17. Kabby

    PACHTER!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    *breathe*

    Stop posting his shit please.

    #17 3 years ago
  18. deathgaze

    For historical purposes:

    http://www.gamespot.com/news/star-wars-the-old-republic-cost-200-million-to-develop-6348959

    FWIW: Wow, there were a lot more people working on the game that either I or Pachter imagined! That is a really big number. Has EA gone out of it’s gourd?

    #18 2 years ago