EA Share Price Slides Over Old Republic Concerns
- Thread starter Andy Chalk
- Start date
really?
huh ....
spending stupid amounts of money on a high risk game isn't working out as planned
who'd a thunk it *rolls eyes*
huh ....
spending stupid amounts of money on a high risk game isn't working out as planned
who'd a thunk it *rolls eyes*
I think there are quite a few people who want to invest in this MMO, but they just can't or won't. I'm broke, so I can't afford a subscription to something like this, and even if I could afford it I wouldn't buy it because EA is making us use Origin to play it. Doing away with Origin and making TOR stand-alone, like every other MMO out there, I think their sales would improve.
Congratulations to everyone who managed to figure out how to have a conversation about EA's fortunes as they relate to TOR without turning things into yet another idiotic fanboy flame war. And thanks to the rest of your poor, oppressed souls for giving me my morning laugh.
It's easy to dismiss what analysts do as mere guesswork, but the fact is that these are, generally speaking, very smart, educated and knowledgeable people who really know their shit. Things get murky in a hurry when you start piling one estimate on top of another, but there has to be some sort of guidance for investors when they don't have any real information to go on. And in this case, if EA sunk $500 million into creating and marketing the game, and if it doesn't serve up fried gold on demand to every single person who plays it, then there's a good likelihood that it will be one mighty heavy albatross hung around EA's neck for a long, long time. There's a lot of supposition there, but when it comes from professionals who do this for a living, investors tend to take notice.
It's easy to dismiss what analysts do as mere guesswork, but the fact is that these are, generally speaking, very smart, educated and knowledgeable people who really know their shit. Things get murky in a hurry when you start piling one estimate on top of another, but there has to be some sort of guidance for investors when they don't have any real information to go on. And in this case, if EA sunk $500 million into creating and marketing the game, and if it doesn't serve up fried gold on demand to every single person who plays it, then there's a good likelihood that it will be one mighty heavy albatross hung around EA's neck for a long, long time. There's a lot of supposition there, but when it comes from professionals who do this for a living, investors tend to take notice.
Welcome to the world of MMO discussion.Andy Chalk said:
SWTOR is the most divisive MMO to launch since WoW, for a number of very good reasons - I'll give just two, neither of which, in accordance with this thread, will touch on the quality of the game itself.
1. Bioware have been acting like arrogant pricks over this, for months. In typical EA style they've spent as much time saying why other MMOs are bad as why theirs is good. This has not endeared them to many MMO players.
2. Idiot TOR fanboys have been clogging up global channels and game forums for months telling everyone how "this game is dead once TOR comes out", with 'this game' being whichever MMO they are actually playing at the time. Again, this has not endeared the game to many MMO players.
People get heated when discussing games that they may very well play, or have been playing, for years. If you can't handle critical discussion of TOR then don't run stories on it.
Well, let's make up some numbers and do some math here:Sixcess said:
Star Wars: The Old Republic retails for $60, and you get a 1 month subscription with that. You can buy the thing straight from Origin, so retailers don't necessarily get a cut, and there are also a collector's edition and "security key" thing that you can buy. Ultimately, let's say they average to $50 profit per sale for the first month (I think that's probably low). It has now been a month, and, while EA/Bioware haven't released precise sales figures, current estimates place subscriptions at 1.5 million, and are expected to reach 3 million by the end of the year.
Which means EA/Bioware have currently made $75 million on the game, and will probably make $150 million by the end of the year on initial sales alone. I can't cite actual figures of MMO dropout rates, but, for the sake of mathematical simplicity (and because the numbers happen to line up that way), let's say that every time someone drops out, another person takes their place, so, at the end of the year, with 3 million initial sales, there will still be 1.5 million current subscribers. 1.5 million $12/month (they have deals, so we take the low number) for 11 months (initial month came with the game) comes out to about $200 million. Which means that, after one year, they'll have made back around $350 million.
For a non-MMO, this would be very bad. A non-MMO would need to make its money back, plus profit, basically on launch day to be considered a success, but EA/Bioware are, obviously, in this for the long haul. With 1.5 million subscribers following the first year, they'll hit the half a billion mark around August 2013, but that's assuming zero dropouts and zero newcomers. Every newcomer is $50 additional profit plus $12/month, while every dropout is only $12 loss per month. After that, everything is pure profit while they work on expansions, and expansions are much cheaper to make and easily make back their money quickly while getting new subscribers and encouraging veteran subscribers to stick around longer.
I expect EA and Bioware are perfectly happy with their sales figures. A year and a half ROI isn't bad, if you're thinking about the long term, and after that they're making millions a month while doing very, very little.
I see plenty of worthwhile conversation taking place in here. If you can't handle an "MMO discussion" that doesn't involve acting like a pissant howler monkey, then maybe you're in the wrong thread.Sixcess said:
I don't know what the margins are on digital but I can assure you that EA isn't making anywhere near $50 per unit at retail. I have no idea what sort of markup EA would bring in but retail margins are very tight. There are also maintenance costs to cover, salaries, possibly ongoing licensing costs and god knows what else. I don't think it'll be quite as easy to cover off its investment as you say.Azuaron said:
I'd love to see EA release some hard numbers in its next quarterly report, but I doubt that'll happen unless it becomes a runaway success. "Sure, we spent half a billion dollars on it, but we're making 17 quazillion every year! We're GENIUSES!"
25-30% ($15 to $18) tends to go to the retailer, making each retail sale $42 to $45 profit for EA/Bioware, but anything through Origin only has to pay credit card merchant fees which are 2.5% + $0.30 ($1.8), making each Origin sale profit $58. Between the large number of preorders (which were mostly through Origin because that allowed play 48 hours before official release) and the collectors' edition's $150 price tag, $50 per unit average seems about right.Andy Chalk said:
Retail margins are thin, but for the retailers, because the publisher takes so much (which is why Gamestop loves selling used games: no cut to the publisher).
Sounds like investors in an mmo yet again went in with stupidly optimistic expectations. Just because blizzards mmo makes silly money doesn't mean yours instantly will.
Kind of on topic, but does anyone remember wow's launch? Jeez, they would have been lynching blizzards dev team if it had released like that today.
Kind of on topic, but does anyone remember wow's launch? Jeez, they would have been lynching blizzards dev team if it had released like that today.
I guess it's just another case of someone having WoW sized stars in their eyes. Not every MMO (aka pretty much no MMO other than the perfectly timed lightning in a bottle that is WoW) will have 10 million+ subscribers. It's just not going to happen.
Then againd, given the amount that EA is rumoured to have spent plus the respectable but not in any way remarkable number of day 1 subs, I'd probably be a tad concerned too. Most brand spanking new MMOs these days gather in the neighbourhood of 500K subs at launch, if not more, and given the muscle of both Star Wars and Bioware, I would say they are trending rather lower than they "should" be.
Then againd, given the amount that EA is rumoured to have spent plus the respectable but not in any way remarkable number of day 1 subs, I'd probably be a tad concerned too. Most brand spanking new MMOs these days gather in the neighbourhood of 500K subs at launch, if not more, and given the muscle of both Star Wars and Bioware, I would say they are trending rather lower than they "should" be.
i like the game
i only got it yesterday and am still playing all the classes i find interesting to 10 but still.
i hope that the game will walk the fine line of not failing but still giving EA enough of a headache to make them think about the stance on their customers.
i only got it yesterday and am still playing all the classes i find interesting to 10 but still.
i hope that the game will walk the fine line of not failing but still giving EA enough of a headache to make them think about the stance on their customers.
Nothing generates mature and civil conversation more than opening with "Nobody gives damn what you think". I look forward to seeing what specific aspects of future articles/news stories the user base is or is not allowed to comment on in the future. I can only hope Mr Chalk is kind enough to continue pointing it out to us because he obviously knows what the every single user of the Escapist considers interesting or valid opinions/topics.Andy Chalk said:
