SWTOR Will Fail, With Numbers to Prove It

Tobold thinks SWTOR will fail. Syncaine hopes it will. The common thread is the EALouse scandal that’s got all the MMO Blogosphere up in a tizzy.

And Bioware? Don’t make me laugh. They’ve spent more money making the Old Republic than James Cameron spent on Avatar. Shit you not. More than $ 300 million! Can you believe that?

Now, some of the stuff EALouse has said has been confirmed, if indirectly. Some of the other stuff he said has been strongly implied to be false. The piece quoted above is not confirmed either way, and I don’t know that I’d want to take his word for it without independent information. Certainly, the $300 million figure is higher than the numbers that were already in circulation.

But let’s say, for the sake of the argument, that the real budget for SWTOR, marketing and all, is $200 million. Let’s run some numbers based on that. Bear in mind that we’ll be making some assumptions here: namely, that SWTOR will sell a retail box for approximately $59.99, and charge a monthly sub fee of $14.99. These are both reasonable but not confirmed.

Let us assume further that SWTOR will sell two million boxes, an intentionally very optimistic estimate. I’d be surprised if it surpassed that, but equally surprised if it didn’t sell at least one million. Also, after the first (free) month, half of the people who bought retail boxes will elect to subscribe. After a second month, half of those people will elect to continue paying, and the percentage of subscribers retailed will gradually increase until we hit the 6 month mark, at which point the population will be more or less stable. These are big assumptions, but they are all weighted toward optimism. That’s important.

It’s important because after 12 months of operation, boosted by tremendous box sales, Bioware will have made a bit more than $146 million in gross revenue. That doesn’t count operating expenses like staff salaries or whatever it costs to operate the servers or the cost of developing content moving forward. It doesn’t take into account the very substantial cut (at the very least about 40%,) that will be taken out of the box sales revenue by retailers and distributors. It doesn’t take into account some players paying less than $14.99 per month by buying multi-month packages. It doesn’t take into account a whole bunch of costs that I don’t have enough information to estimate. So let’s take that number, again, optimistically, and say it’ll all go to Bioware. Every last cent.

After 1 year, all this gives us an estimated paying subscriber base of around 151k. This too is optimistic. But it’s a pretty healthy number for an MMO. So after two years, total gross revenue would be a bit more than $173 million. SWTOR would still not have made its budget back. Not until the end of year three would gross revenue top the $200 million mark.

Okay, so it’ll take three years to make its money back and start turning a profit. And maybe that’s not so bad. But I’m making some fantastically optimistic guesses here, and leaving out a ton of costs. What if SWTOR only sells 1.5 million boxes? Then it will take six years to pay off what it cost to make. By then a generation or two of newer games will have shown up to pull interest away. What then?

I think you can see where this is going. If Bioware is going to spend $200 million on SWTOR, let alone the $300 million that EALouse claims, they must be really freaking nuts. On the other hand, if they spend $100 million and sell one million boxes, and my retention estimates are anything like accurate, it’s back to three years.

My guess is that the budget is likely going to hit at least $100 million when the final tallies are made. If that’s true, Bioware is almost inevitably going to take a bath on the project. Things aren’t looking good, whether you think the game will be outstanding or not.

ADDENDUM: It’s possible that SWTOR will go with some kind of minipay system rather than subscriptions. If that’s the case, the player numbers are likely to be much higher but the amount sent by the average player into Bioware’s coffers is likely to be lower. Either way, I think my estimate of roughly $1.2 million in monthly gross revenue is like to not be too far off.

It’s also possible that SWTOR’s budget is in fact closer to $50 million than $200 million. If that’s the case, the situation looks a whole lot rosier for the game and for its long-term sustainability. My gut feeling is that total budget will end up being in the $100 million range at minimum, however, and that’s where we start to tread in the dangerous waters that this post talks about. If you spend more than that, you need numbers at least comparable to WoW or you’ll faceplant.


22 responses to “SWTOR Will Fail, With Numbers to Prove It

  1. There is a dev quote that has been bandied about where the dev says something to the effect that they need 1 million subs to make money.

  2. I think it is a bit pessimistic. I figure 2 million copies at $59.99 the first month with a steady 5 million in less than a year. Some people will leave but not a subscription base of 500k in 2 months. I’m sure they will be at an average of 1.5mil subscribers a year and will grow the second year. Box sales Alone after a year will gross almost $300 million.

    I feel I’m being a bit optimistic in my numbers. Of course, it is all my opinion though.

  3. I think MMO’s are a bit all or nothing, the biggest aspect a for a lot of people is the people they play with. If loads of friends play it, they’ll play it to, if not, then they wont. The more popular its seen to be the more people who will try it, the worse it looks to be failing the fewer people will give it a go.

    I have doubts that SWTOR could do a kind of ‘middle ground’, with the amount of hype its had and the money put into it I think it’ll either do very well, or flop very hard. I’m not sure which it’ll be, but I really cant see it doing ‘okay’

  4. @Scarybooster: And I though I was being optimistic, for the sake of making the argument. I predict lower numbers than I’ve suggested here – you suggest numbers two or three times higher. If the title’s budget is anything like EALouse suggests, though, they’d still need a couple of years to pay it all off. So if it’s true, then I hope for Bioware’s sake that you’re right and I’m wrong, because SWTOR will need numbers like that to even be sustainable.

    @Yanas: This is the issue with the huge budgets we’re looking at to launch AAA MMOs now. You either make and retain huge numbers (which no title since WoW has done,) or you choke. There really isn’t a middle ground when you’re talking about games with budgets of $50+ million.

    @Sleepysam: If that’s accurate, then it lends credence to EALouse’s $300 million figure. That isn’t a good sign.

  5. way too much credit given to this ea louse guy. I mean he thinks warhammer had poor marketing. talks out of his butt about sanya weathers. how are we supposed to trust anything he says about swtor? he’s just some anonymous dude with a grudge. if he’s not a hoax.

    by presenting the crazier scenarios of 300 million or 200 million budgets first, you’re offsetting the more sane realities with sensationalism.

  6. Good analysis about SWTOR budget failures, but in the industry it is not all about making money from customers alone. Good merchandising and advertisements campaigns can go a long way to pay for things particularity when we are talking about Star Wars. Besides they can always fire some people to make the books look good, right?

  7. Offline games can cost 50+ million to make (for example GTAIV cost 100 million). If any PC game can do well enough just on box sales to justify that kind of budget (debatable), I would think SWTOR could.

    • Well, GTAIV was of course cross-platform, and don’t forget that the console platforms are much bigger business than PC games. The success of a $100m console game doesn’t prove that you can make money with a $100m PC game.

      But the way I see it, no need to crunch numbers. To make money, SW:TOR is going to have to, at least, be the second-most successful MMO in history, and a LOT more successful that whatever the current #2 is.

  8. Box sales trickle in but the initial month will at least sell a million or more copies. It’s easy for them to sell 3-5 million in a year. Guild Wars made a killing on just box sales. That is not taking into account for the 100 K of CEs at $100. It is a Star Wars IP the most well known IP in the world. They have a stable lackluster game at launch and they will sell 2 mil boxes in their sleep. There are thousands of people that just play Star Wars games and not MMOs. Then there are the SWG fans Pre-NGE and post, that can’t wait to get their hands on TOR. I would feel comfortable if our numbers met in the middle. Any lower and the game should never have been made. $300mil is about $240-$270 mil more than WAR when released. If BioWare can blow that kind of money and not make a game just 2X better than WAR, they have no place in the business. EALouse was a sad man.
    I don’t see Darth Hater (the most knowledgable and most hands on source) investing their time and effort in a game that sucks. They have played the game extensively and only have good things to say about it. I’m going to take their word over a guy that can’t handle being fired and place the blame on everybody around him. He just sounds pathetic.

    Btw I love your blog and this post. It’s great place for me to rant lol.

  9. Pingback: Quick Thought « Shadow-war

  10. First of this guys has not worked or does not state he worked at BW on TOR. He just got the boots and ranted about a game that fell way short of its target. So 2nd hand hearsay at a ranting guy with no face or name to place him, at the events he claims. For all we know this is a guy that rage quit.

    Now to numbers, I have been following TOR for quite time now, and though I have a few things they have added seem, well strange. Over all the game seems to be going in the right direction. BW has a big fan base, and a great deal of fanboy followers, slapping there name on the side of a will sell 1million + boxes without evn knowing what the game is about.

    They have won best MMO + RPG at a number of gaming conventions. TOR has for the 1st time since WOW, got none MMO players excited about playing the game. Also I would dare say that every SWG player over the years will pick this up. Ok SWG had no way in the numbers that WOW has, but over the years of different people playing it, those numbers would be quite respectable by todays standards.

    Many a WOW player sick of the endless gear grind are looking at TOR also. This will not be a flood from one to the other but they all add up.

    Also BW and EA are really pushing to get rid of the most is not all the bugs before the game hits, this 1 aspect of above all is what has payed a heavy price, on most of the so called promising games that have hit of late.

    So do we take EA Louse at his word ?
    A guy who has not even played the game, let alone worked on it ?

    I would take his statement with a pinch of salt, its a rant from someone who got fired for a job, by a company that has a great past in doing what they have done to him.

  11. If SWTOR only has 151k subs after a year, that will mean it will have only half the population that SWG had. I don’t think that’s realistic at all. SWTOR will garner at least the population of SWG, if not significantly more now that MMO’s are more mainstream. And since a whole new generation of gamers have been exposed to the mythos through the Lego games and Clone Wars cartoons.

    Also, the point about GTAIV is interesting. It was well known how much it cost to make by virtue of its size and that number was marvelled over by verious outlets. I think if SWTOR had topped that number, it would have been in the news by now.

  12. Yeah, I’m thinking SWTOR is going to be a bigger success box sales and subscription wise than a lot of people are giving it credit for. What really bothers me about “the sky is falling posts” is that to some extent, they already muddy the waters with negativity before the damn game is even out.

  13. The MMO market is a First Past The Post system. One game is regarded as The Game, everything else is niche.

    EA is taking a stab at wresting the top spot from Activision. WoW will be 7 years old almost when SWTOR launches and Blizzard’s secret MMO is uncertain. If they win they spend $300m to win $1b per year for a number of years. Even if they lose they’ll recoup some of that investment.

  14. Pingback: Gaming News: EA Louse denounces WAR + SWTOR, Lolapps unplugged, DA2 Signature Edition, SC2 single player bans, Valve announces DoA2 « Welcome to Spinksville!

  15. You are forgetting the costs of HOSTING the SWTOR servers. The rented bandwidth the 24/7 support, guaranteed uptime, software licences, software configuration, system monitoring, system security, Online store, and credit card authorization, network gear, security gear

    Customer Service Reps – training, workspace, PC, call center phone switch, 24/7 coverage, admin tools, CSR tools, CSR call tracking software (or you can outsource it so someone in China can have admin/csr access to accounts… nobody has ever had problems with that)

    Oh, and you need to PAY for this all up front or have a lease agreement where someone gets a high percentage to take the lease risk…

    Yep once a game gets above 200 mill dev cost you have a big nut to make back

  16. The simple fact is, with WoW out there, MMOs NEED to put something on the table that will beat it. Does SWTOR have anything that they can put up there to keep the subscribers?? I don’t know…..the gross lack of information, and news and marketing where SWTOR is concerned doesn’t make me, as an MMO subscriber and consumer, optimistic.

    Will it fail? Probably. Just like all the others after WoW that couldn’t put anything up that beat it. LOTRO, Warhammer, Age of Conan, D&D Online.

  17. Some people actually seem mad because Bioware is working on Sw tor.
    Almost like some people dont want them to release this mmorpg, i wonder why that is ?
    Well. take a look at Bioware, they already have followers, as do the IP Star Wars.
    If they indeed have put in that much money, they will only get it back faster.
    They need to put in enough budget on this mmo, in order for it to succed.
    They cant do another War, tacky gameplay and bugs in millions & terrible game mechanics.
    They NEED to put in enough money in this project to make it work perfectly from get-go.
    I think they will have 500 sold copies the first 24 hours, after 2-3 days they will be up in the million mark, after that (If it is a solid mmorpg) they will start to get good rep, and that will only increase the playerbase.
    after 2-3 months they will have sold well over 1.5 mil copies. Without a doubt.
    They will have around 1 million subs, and growing as the months goes by.
    Im not optimistic, im looking at the budget, im looking at the dev team, im looking at the ip.

    Oh. Mythic is working on PvP (Mythic knows what PvP and RvR really is) Thats a hughe + for the PvP lovers out there 🙂

  18. Interesting article, but IMHO I think your numbers are far more conservative than overly optimistic. Not only does TOR have one of the biggest sci fi IPs of all time behind it, it also is carrying the name Bioware. Both Mass Effect and Dragon Age sold millions of copies, so I’m betting that most fans of those games will at least pick up TOR to see what the fuss is about. I’d bet total sales in the first year would be closer to the 3.2 million copies of Dragon Age sold. Also, I have to believe that longterm TOR can support at least EVE Online’s number of 300K subscribers. LOTRO is another big IP game that supposedly has 1 million active players. Granted, that was after the game went free to play, but it does show that a quality game and a popular IP can make a non-Blizzard MMO a financial success.

  19. You’re forgetting just how angry, bitter and let-down this EA Louse would of been when he typed this up. Step back, see the context and take it for what it is – a biased but not entirely useless insight.

    In my opinion, someone like this who’s known nothing but failure – albeit more mediocrity than failure at all – is going to be somewhat jealous of his Bioware counterparts who have a bigger budget; very successful games and perhaps a better group/hierarchy.

    Regardless, I can see TOR selling very well in Europe and NA based on the world famous IP of SW and the sheer reputation of Bioware. Star Wars is less of a geeky niche than Game’s Workshop’s Warhammer by some stretch.

    As well as this, BW’s cross-platform games are going to do enough to at least lure a minority of console gamers to their new showing; if you couple this with EA’s potential marketing power (take Fifa’s endless ad campaign for instance) it looks decidedly rosy for BW when it comes to drawing in an untapped MMO market which WoW’s terrible social stigma couldn’t hope for.