LucasArts fee for Star Wars MMO put at 35%

LucasArts fee for Star Wars MMO put at 35%

By Rob Crossley

December 1st 2011 at 3:54PM

Analyst Michael Pachter claims the arrangement is still favourable for EA

LucasArts will take a 35 per cent revenue cut from Star Wars The Old Republic due to its license agreement with EA, a high-profile games analyst has said.

Michael Pachter, of Wedbush Morgan, said LucasArts will begin taking its cut the moment EA fully recoups its development expenses for the MMO.

“That means EA keeps most of the revenue from disc sales,” Pachter (pictured) told Eurogamer.

His comments after Activision Blizzard CEO Bobby Kotick downplayed the commercial potential of The Old Republic.

"LucasArts is going to be the principal beneficiary of the success of Star Wars," Kotick said this week.
 
He continued: "We've been in business with LucasArts for a long time and the economics will always accrue to the benefit of LucasArts, so I don't really understand how the economics work for Electronic Arts."

Kotick also played down EA’s chances outright: "If you look at the history of the people investing in an MMO and achieving success, it's a small number.”

Pachter, however, believes EA can make a profit. He estimated that the MMO will pull in around 1.5 million subscribers, representing around $80 million a year in profit.

"My best guess is that the game will attract 1.5 million subscribers paying around $15 a month, so EA should generate around $270 million in revenue,” he said.

“If LucasArts gets 35 per cent and if EA incurs around 35 per cent operating expenses, they make 30 per cent, or around $80 million per year, in profit.”

He added: "Keep in mind that EA expensed the development cost when incurred, so much of the disc sales revenue will be profit."