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Analyst predicts 3 million subscribers by next June; says Kotick is wrong about ToR's profitability
popinjay
Member Posts: 6,539
LucasArts to take "around 35%" of Old Republic revenue - report
EEDAR VP Jesse Divnich:"Divnich pegged The Old Republic's potential user base a little higher than Pachter, predicting it will attract three million subscribers by next June.
"Taking into account multiple years in service and expansion packs, $500 million in total revenue is not a far stretch. If an MMO can't be profitable at $500m in revenue, than we are all doomed."
Another analyst says ToR only needs 400K subs to break even and will pull in 1.5 million subs:
Wedbush Morgan analyst Michael Pachter:
Pachter estimated that the MMO will pull in around 1.5 million subscribers, representing around $80 million a year in profit.
"On an ongoing basis, they will split revenue from running the subscription business. My best guess is that they will attract 1.5 million subscribers paying around $15 a month, so they should generate around $270 million in revenue. If LucasArts gets 35 per cent and if EA incurs around 35 per cent operating expense, they make 30 per cent, or around $80 million per year, in profit. That's not bad."
"Most MMOs require around 250,000 subscribers to cover the direct operating expense of the server farms. Given LucasArts' revenue split, SWTOR would require around 400,000 subscribers to break even. That means they make money at 500,000 subscribers."
So whether it's 1.5 million subs or 3 million subs by June, ToR fans should disregard any of the naysayers as far as the 'doom' projections on these or any other forums. There simply isn't any factual basis to it by any PROFESSIONAL estimates.
Even Blizzard CEO Kotick has been shown wrong by both analysts about ToR's ability to make a profit.
Comments
I think the game will be profitable for sure.
But all these reports and what not mean nothing IMO. The masses of MMO players are a fickle bunch. Some "analyst" who probably does not even play MMOs cant possible predict sub numbers with any accuracy.
In any case it will be interesing to follow in the coming months when I am having slow days at work. Like today - where R U 5pm?-
Professional opinions already stated.
"TO MICHAEL!"
Indeed.
I am interested to see how my " citizen" opinion will stack up to the " professional " one
Time will tell.
Sorry I wasnt gushing over the positive spin. Maybe someone else will and you can post a happy face too.
Michael Pachter has been wrong so many times.
First of all, 250k subscribers to offset server costs? Either those servers are made of pure gold or management for that part of the operation defecates into pure gold bowls.
Secondly, no chance in hell SWTOR will have 1.5 mil permanent subscribers 6 month down the road. 600k - likely, which will make it financially successful, still.
This is, of course, just a pathetic opinion of a pathetic citizen, but we'll see who's right.
No problem. I was just pointing out that you as a private person can opinionize all you want (just made that word up, hehe) but that has no bearing in the 'real world' of finance or business. Example:
I was walking down the street couple years ago and I saw some people building a third Dunkin Donuts within a mile of the other two, which are already here. Now clearly to me as someone who lived here for years, I realized this was folly. They are bound to fail because we already have two Dunkin's already. There is no way they are going to be profitable.
I know that consumers can be a "fickle" bunch and stop buying Dunkin overnight and buy Starbucks or Krispy so imo, I think those people are wrong.
Guess what? All three stores are still running. My personal opinion doesn't mean crap because I don't actually have enough business expertise to stack up vs professionals who's job it is to do so.
I doubt you're an analyst which is why I said you're entitled to your "private" opinion. It doesn't have to be "rosy", lol.
"TO MICHAEL!"
If I were a betting man, I'd bet on what professional who make money to do this say vs what a "pathetic citizen" says. That's the point of the thread.
Wouldn't you? /shrug
"TO MICHAEL!"
Does anyone doubt that this game is going to turn a profit? Using basic math it isn't hard to see that if the trend continues this game is going to be a huge money maker. Making some assumptions lets have fun with math.
Development Cost: $150 million (I'm over estimating on purpose)
Box Sale Profits: per box sale $30 (understimating here)
Direct Download Profits: per DDL $50 (understimating here and not accounting for DDE
Current Pre-orders: 1 million box sales
Current Pre-orders: 500,000 DDL's (probably gross underestimate)
Pre-Order Profit : $55 million at launch.
Again, these numbers are most likely a gross underestimate of the profit per sale and the number of digital pre-orders. Even using these numbers the game could potentially recoup up to 1/3 of their development cost the minute the game releases. If Bioware only spent $100 million on development they'd recover over half of that cost. If this game launches as bigger than I'm estimating you can see how close they are going to come to recouping all of their development budget within weeks of launch just through the box/DDL sales of the game.
If I'm missing something here let me know but I don't think anyone should doubt that the game is going to make money.
No matter what you do/say you are never going to convince the "haters" that this game isn't going to F2P in a year.
It's like sports fans, no matter what you are going to support your team and hope the other team fails.
Team sandbox, team mmorpg.com are all hoping for TOR to fail because TOR is not their kind of game.
As any sports fan knows, you win some and you lose some.
Well, the "end-game" really does not have to be that amazing. Just look at WoW for example. Most of the time your end-game consist of standing in the main city of the latest expansion and queueing to various PvE or PvP intances. Your activities beyond that are mainly about grinding this or that reputation, or collecting some crafting stuff to support your PvE or PvP actitivites.
"The person who experiences greatness must have a feeling for the myth he is in."
I sure wouldn't bet on someone with a biased opinion.
I have not seen much hate in this thread for TOR. If anything its criticism of "professional analyst".
For all I know and hope he is correct and TOR will turn a huge profit. But analysts are as often wrong as they are correct. And something like predicting MMO subs down the road has a huge margin for error.
Side note - I personally hope they do well. No hate from me at least.
One that might not be included in your list is Lucas Arts licensing. I can imagine that would be rather pricey.
The only real way to settle things is to view what the professionals, who's job it is to monitor the industry, trends and financial side of running a mmo think... not what 'developers' think, or 'fans/haters' think, or even rival companies like WoW's Kotick think.
Analysts aren't paid to give favorable opinions because their REPUTATION and job depend on it. If someone was paid to say "Warhammer will be great, so will FFXIV and Shadowbane" and they flop.. he won't be working there for long or his opinions as a pro will be tacked to his chest.
The only way to rebut any argument is to go with what professionals say and honestly, we've seen quite a few analysts saying already that TOR will be very successful and profitable beyond 'break even'.
I still have yet to see someone, ANYONE, post an analyst review of this game that says "I don't think this game will sell more than 1 million boxes nor will it retain more than 150K and be F2P in one year" which is what most of these clown citizens say on internet forums.
"TO MICHAEL!"
Think it's funny to see the fanbois jumping on the guy that says he thinks SWTOR will be profitable but couldn't care less what a "pro" has to say about it..
My theme song.
It's funny because people like you OP dissed analysts when they called this game a WoW clone.
So it's okay to put these analysts' reviews on a pedestal when it's favourable to your agenda and as soon as things look different, you'll disregard them?
Cool.
"Never argue with a fool; onlookers may not be able to tell the difference."
I need to take this advice more.
Would that be like the other "professional's" who ran many of the banks and financial places that built up the housing mess? But then again, they seem to have came out ok after getting the politicians to bail them out didnt they?
They do seem to be able to take care of themselves, but saying they know what they are talking about? Seems to be a stretch to me. The only sure thing i would bet on, is that absolutely no one has any clue what people will do. Put it this way, where were these magical analysts when WOW came out?
That's actually a good point and I read somewhere that LA is getting %35 of the profits. Maybe it was in this thread. lol Anyway, that does need to be taken into account as far as profits go.
Precisely.
If I were a betting man, I'd bet on what professional who make money to do this say vs what a "pathetic citizen" says. That's the point of the thread.
Wouldn't you? /shrug
I sure wouldn't bet on someone with a biased opinion.
Thank you! This is what I'm trying to say. Someone finally gets it. /clap
Analysts don't have biased opinions, they are doing their jobs. They are paid to predict what will happen for their companies, not for internet readers.
This is why I would take their opinions AS A WHOLE over what anyone on a forum said, and why you should actually read the article linked since you value those opinions as well.
"TO MICHAEL!"
One that might not be included in your list is Lucas Arts licensing. I can imagine that would be rather pricey.
That's actually a good point and I read somewhere that LA is getting %35 of the profits. Maybe it was in this thread. lol Anyway, that does need to be taken into account as far as profits go.
PLEASE READ the link. If you had you guys wouldn't asking that question.
"TO MICHAEL!"
The adjusted profit minus LA's 35% cut is $35,750,000 which is still a healthy profit at launch. Again, I still feel like the pre-order sales on the digital download is a very gross underestimate of how many digital sales they have but there's no way to actually know that. If the digital sales are as high as I think they are, the numbers as far as profits go are way way lower than I have listed here.
I don't think this is true. I don't see where any analysts have said "X mmo will sell X boxes and have X subs" and it didn't turn out that way so far as a WHOLE. And buy 'whole' I mean more than ONE opinion from one analyst.
"TO MICHAEL!"
Sorry Popinjay you were right and it is clearly stated that LA only starts taking 35% after EA recoups their investment cost. My bad.
1. LA gets a % of profits (not revenue).
2. Development costs are nearly entirely expensed out as R&D, they are not relevant to the discussion of profitability.
I have absolutely NO idea what you are referring to.. sorry.
I have not seen any "analyst" call this game a WoW clone.
"TO MICHAEL!"