Activision CEO and Analysts Comment on EA/LucasArts Deal for The Old Republic

No doubt as part of their ongoing mutual mudslinging campaign, Activision CEO Bobby Kotick expressed doubts over the possibility of EA profiting out of their upcoming MMO Star Wars: The Old Republic, arguing that only LucasArts will reap the economic benefits of this experience:
Kotick not only downplayed the notion that EA could steal users from "World of Warcraft" but also questioned whether his rival would make money off the "Star Wars" game since it has to pay Lucas Arts for the licensing rights.

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

Meanwhile, Eurogamer rounded up comments from three analysts, two on the favorable side and one a bit more cautious:
"I think [EA] will make a profit," said Pachter.

"The revenue split is around 35 per cent to LucasArts after EA earns back their investment. That means EA keeps most of the revenue from disc sales (they have marketing expenses and need to staff up the server farms), so they should earn a nice profit there.

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


Screen Digest's Piers Harding-Rolls was rather more circumspect, arguing that the title will need to be well marketed and of a high quality straight out of the gate if it hopes to succeed.


"The risk accumulates the higher the upfront investment," he continued, "and in that context The Old Republic must be considered high risk, although EA has a number of factors on its side, which helps mitigate that risk.


He added that the specifics of the LucasArts deal will also be key to EA making a profit, as will its willingness to "change the service if it is not working, specifically with regards to business models."