Now over to Thruster Torq at the sports desk. Looks like the Frogdogs took another beating ..."
Warning: the following post contains boring financial numbers and analysis. You have been warned!
Today was a big day, folks. Electronic Arts had their quarterly financial call; in this call they laid out their financial results for investors as well as spun this new forward to the next quarter, and what stockholders can expect in the next three months. As you can imagine, one of the most hotly anticipated bits of news was the financial health of The Old Republic. EA bet a lot of money on this property (upwards of $150 million if reports are to be believed) and their stockholders were (understandably) very nervous about its performance.
They needn't have worried.
Darth Hater has the breakdown of what the call said about TOR, but I'll try to put it in layman's terms.
2 million copies sold.
1.7 million current subscribers.
99.5% server uptime.
Server population caps increased.
March 1st Australia launch.
Asian launch this year.
Two million copies of SWTOR so far. This is important. Even if every single person ordered just the standard $60 version of the game, this equates to $120 million in revenue. This single line item could almost completely pay off the rumored development costs. That is an astonishing number. Of course not all $120 million goes directly to Bioware; roughly 60% of those sales were through brick and mortar stores, so they have to give a portion of those sales dollars away. We don't know exactly how much, but this states between 25% and 30%, which seems reasonable. So, let's do some quick napkin, non-scientific math.
2,000,000 * 60% = 1,200,000 (sold in stores) *$60(minimum price) = $72,000,000 (total revenue) * 70% (the high side of the retail take) = $50,400,000
Of the remaining 40% of sales, they were all done through their first-party Origins digital service. This means absolutely no fees whatsoever. Now, Origins itself will have expenses like development and maintenance, but that will be consolidated on the Origins-only sheet. Let's take a look at the pure revenue of those direct sales.
2,000,000 * 40% = 800,000 *$60(minimum price) = $48,000,000
So, take those two numbers and you get $98,400,000. Just off of sales alone. EA says that they currently have 1.7 million subscribers, but they get a tad tricky about it. They term a 'subscriber' as anyone that has credit card information on file or a timecard and is currently paying for the sub OR in the 'trial period' of 30 days. Now, we all know that means that they don't have 1.7 million subs. But in the notes, they say of the 1.7 million players, 'most' of them have subscriptions and have paid. So, let's think about the term 'most.' What defines most? I'd say 'most' is definitely more than half. 'Most' implies that it's way more than half, but not quite 'almost all.' Using a very scientific process known as 'guessing', I will determine that 'most' means 75%. Yep, science worked!
Since 'most' of the subs are paying members, that means we can assume that all of 'most' players have already paid their first month. After all, it's well past the 30 day free trial period. And the standard subscription rate is $15, although lower plans are available. However, for simplicity's sake (and because I've raped the numbers so far, why stop?) we'll just go with the easy $15/month. So, more quick napkin, non-scientific math.
1,700,000 * 75% = 1,275,000 * $15 (monthly fee) = $19,125,000
Ok, so revenue so far is (by my very crude, very unscientific methods) $117,525,000. That's quite a chunk out of the supposed $150 million budget of the game, eh? Now, if reports are to be believed, LucasArts has a 30% stake in the game's profits once the initial game budget is covered. It looks like TOR will cover its budget by month three. Thusly, if all this flimsy math holds true, the profitability of the game looks to be secure from March on. Now, of course, expansions and patches will cost money and this will need to be weighed against any future revenue, but the financial health of TOR is looking very good indeed.
After revenue, they were obviously very excited about their server uptime stats. 99.5% seems very stable, but let's take a look at what it really means. Since early access through yesterday, the servers have been running for 50 days. That's 1200 hours of possible server uptime, per server. Now, as far as I can tell, the server count jumped form 90 to 120 on around the 17th of December (again, not sure on that, but hey it works). So, if you take all the possible hours for all the possible servers, the total you get is 141,120 hours. 99.5% uptime means that you had a grand total of 706 hours of downtime, divided amongst 120 servers, and that's 5.88 hours per server for 50 days. Further divide that out by 50 days and it comes out to be 7 minutes of downtime per server, per day. Now that's an incredibly rough look at the server uptimes, but it gives you a good idea of what type of efficiency this new MMO is running with. Of your daily 1,440 minutes of possible play, 1,433 of them can be spent playing, on average. Hmm.
Speaking of servers; remember that big hullabaloo about 'activity charts' in TOR declining? Yeah, about that. There are some sites out there that track population density according to the 'light, standard, heavy, very heavy, and full' designators that the TOR homepage puts on their server status page. While it's a very useful tool to measure trends, it turns out that it wasn't exactly all that accurate. Like, at all. Apparently, sometime after launch, according to Frank Gibeau (President of EA), server capacity doubled:
"I want to take a second to correct the reports which speculated that a lack of congestion was a sign of slow participation. Shortly after launch, we doubled the efficiency of each server, allowing us to handle twice as many players and remove the waiting lines. The lack of congestion is a function of great engineering."
The next big item is what the Bioware guys described as 'low-hanging fruit.' Australia can expect to see a TOR release on March 1st, bringing the Force down under for the first time ... on their own servers. Australians currently play on other servers, usually West Coast servers. Since the game isn't region-locked, that means that Australians who wanted to play the game could be doing so already. I don't really know how many players this will bring to the game, but what it does is provide Bioware a good stepping stone into the Asian market. And oh yes, how they want to get into Asia. This old article from Tobold makes the case that upwards of half the WoW community was in the Asian market. If The Old Republic can get into Asia before year's end, then they could be looking at a possible doubling of their playerbase. Now, doubling the playerbase does not mean doubling the profits; in China, you must go through a licensed Chinese company that distributes your game. Rules work very differently there; WoW players can buy and sell characters or accounts, time is bought through time cards only, and the Chinese distributor takes a lion's share of the revenue. However, even with limited revenue possibilities, the potential increase in subscriber count is far too tasty to ignore.
Going forward, The Old Republic has some very specific challenges.
1) Can the game keep players interested when all their story options are exhausted?
2) Can the game provide compelling end-game content for max-level players?
3) Can the game weather a tough 2012 MMO market; the release of Guild Wars 2, Mists of Pandaria, and Diablo 3 (not an MMO, but close enough)?
4) Will the LucasArts licensing deal negatively affect future profits?
Only time will tell, I guess. For now, the health of TOR is pretty assured. Rest easy, sentients. Rest easy.