There’s been some heat over my recent pieces of commentary on Star Wars: The Old Republic’s prospects for profitability. Brent took me to task for this on the last Shut Up We’re Talking, not listening to which would be an unforgivable crime. In retrospect, I’ve probably been a bit too glib with the “fail” label, although I still think my actual point holds up, based on the best information we had at the time.
However, as of toady, we have some new info that should be accounted for, from the comments made my EA CEO John Riccitiello on Star Wars: The Old Republic’s ability to turn a profit. What he’s essentially said is that at 500K subscribers, SWTOR would be modestly profitable, and that with “anything north” of a million
subs would make WTOR “very profitable.” He also says that the EALouse $300 million figure is “vastly higher than anything we’ve ever put in place.” This changes my projections pretty dramatically.
How much SWTOR is costing is hard to pin down from the numbers we have, because there’s a big gap between the $100 million that EA seems to think WoW cost and the $300 million that rumor said EA is spending. I’ve tried to run the numbers and they just don’t fall out unless EA thinks SWTOR will sell 3.5 million copies, or if the budget is less than $100 million. I don’t think either scenario is terribly likely. What’s more, profitability analyses have been wrong before, and it may well turn out that the game won’t retain 500K subs – market history suggests it won’t, in fact.
Nevertheless, we do have a flat denial that the currently-touted $300 million figure is close to correct. Between that and the 500K subs quote, that’s a lot more than we had before. And it makes SWTOR’s prospects for profitability much rosier than my earlier analysis indicated, especially considering that some form of in-game cash shop is going to be in place as well, in addition to the subscription fees. There’s a lot of room between $100 million, which is about the smallest believable budget for SWTOR, and $300 million, which is just crazy. IF SWTOR’s budget is “only” $225 million, for example, it’s still going to be very difficult for EA to turn a profit on it, regardless of what Riccitiello says.
However, my wild guess (and that’s all it is,) based on the quotes, is to take SWTOR’s budget as being something like $125-150 million. Which is still an awful lot of money, but makes it possible for SWTOR to be profitable without being some kind of success that’s either a huge paradigm shift or an outright overthrow of the market leader. This I think is very likely, as I suspect that SWTOR will do about 2 million in retail sales in the first month, plus or minus half a million. This is a huge but conventional success. So maybe SWTOR won’t fail. I’ve said all along that I hope it doesn’t, but $300 million made that seem almost inevitable.