im not sure if anyone mention this so far since after page 10 it got repetive and i skiped to the end.

there are 4 Qs in a year for those who didnt know. 1st Q, which this press release was from, ends in MARCH this before legacy and the 30 day free trial from the legacy patch lvl 50 gift. also this is before the game went to the 38 countries. so expect a ncrease in subs in Q2 which ends next month though that data wont be released till late july- early august. also as many people have said you have to compare it to other mmos which shows swtor is doing realy well but again the MMO market is very tricky since games like FFXI is still P2P and has a loyal community and it has serously droped in subscribers, though its one of the older mmo's in todays markets, and yet 17+ MMO have gone F2P from massive drops in there community .

The game just started until maby next year when the game community stabilizes and a trend emerges will we know if swtor is doing well or not. SO UNTIL THEN STOP SAYING ITS DOING HORRIBLE OR WONDERFUL

Okay, I've got a little bit of background in economics/finance, so I'm going to infodump in the hopes that it's helpful. I fully expect to be flamed for this, but the past week has driven me mildly insane. So stuff it.

 

 

 

The development costs of SWtOR are, frankly, irrelevant to the decision of whether or not to keep it running. The dev costs are what is called a 'sunk' or unrecoverable cost. Costs that cannot be recovered are left out of the decision to maintain or shut down an operation. That leaves the cost of keeping the game running, what is referred to as the marginal cost. So long as the marginal return is greater than or equal to the marginal cost, they will keep the game running. Projected returns are what determine which projects to fund, not so much which ones to keep running. Once it's going, it's a matter of MC=MR. And, according to the shareholder report itself, SWtOR is still far from that point.

 

"Our Q1 non-GAAP digital revenue will continue to grow year-over-year, particularly given the

benefit of a full quarter of Star Wars: The Old Republic, and continued momentum in

microtransactions and digital services. This quarter, we expect to launch 11 digital titles and one

packaged good title. "

 

"The 143% growth in subscriptions, advertising and other revenue was driven by the

December launch of Star Wars: The Old Republic. "

 

"Star Wars: The Old Republic now has 1.3 million subscribers, with a much higher mix of

ongoing credit card consumers, but on a lower absolute number of subs. The service is

stable, profitable and we have strong plans to grow it in fiscal 13."

 

"Star Wars: The Old Republic was the most successful subscription MMO launch in history

and is now firmly established as the #2 MMO in the west. The service is extremely strong

on the operations level."

 

"Headcount – As of March, our headcount was roughly 9,200 with about 70% of that in R&D,

and we expect to increase total headcount to 9,700 by the end of fiscal 13. "

 

Considering that they still have quite a few possible things they could do to reduce MC if necessary (reduce # of active servers, trim less profitable staff members, reduce development of new content, etc), and it certainly doesn't seem like these are the actions of a company desperately trying to keep the game alive.

 

2. Stocks and Accounting (Translation: tl;dr ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ!!!!!)

 

Yeah, I know, everyone hates this part. But here it is: linky

 

This is the series of slides that came with the shareholders' meeting. Now, you'll notice that the end there contains something that'll knock you out faster than a lethal dose of Ambien- Ledgers. Now, what we want to look at is a section called 'operating expenses' under the Q4 FY12 & Q4 FY11 slides. What might give us a clue as to the ratio between marginal cost & marginal revenue is the second column there, which is the percentage of total revenue of the expense. There's a 10 point drop in the percentage of revenue used for operating expenses. Now this doesn't directly tell us SWtOR's specific MC/MR relationship, but taken with the above evidence from the stockholders' reports, it doesn't tell the story of a game on her last legs.

 

Finally, I'd like to point out something that others may not have noticed- EA's stock repurchasing initiative. Now, when corporations make a profit, the decision is between reinvestment or paying dividends. Stock repurchasing technically falls under the former category, but it's more or less a company becoming a shareholder of itself (which could lead to an amusing recursive paradox if you're as pathetic a geek as I, but anyhoo). It has to do this with money it could use to invest in other projects/capital (increasing the (par) value of the stock) or pay dividends, so purchasing stock in itself doesn't confer a whole lot of benefit to the shareholders. Because of this, a company will usually refrain from doing so except for a specific condition- significantly undervalued stock. They'll buy the stock at the undervalued price and sell it back later when the price rises back to its normal value. This is in lieu of merging stocks, which is what companies in dire straits are more prone to doing.

 

Now, it's quite possible that they're just posturing in the hopes that investors will reach that conclusion and buy up, but they risk incurring a loss by doing so (particularly at such high amounts: "EA repurchased 27.7 million shares for $529 million through March 31, 2012, and as of

the call, the $600 million share repurchase program has been completed."). "What do you mean a loss? They could just sell the stock at the value they bought it and be no worse for wear." Well, to explain that, I'd have to go a little more into finance, and I'm about to pass out. Let's just say that there's a time-value of money, an opportunity cost for holding it and time-preference. Whatever you decide to do with your money, the 'opportunity cost' of doing so is whatever else you could have done with it at the time. Any profits EA could have made from putting their retained earnings into other developments instead of repurchasing stock would be lost. If you could put them into the same projects later, you're still earning your profits later & more slowly.

 

(tl;dr for this section): They could be faking, but the complications of doing so make it rather unlikely.

 

(tl;dr for whole post): The sky's not falling. The game's not failing. EA's not doing poorly. They aren't disappointed with or planning to dismantle SWtOR. You don't like the game? Fine. Nobody's forcing you to. You want to see it succeed & beat WoW's subscriber count? That's very noble of you. But doomsday predictions are a dime a dozen around here. If you want to be taken seriously, back your statements up with evidence. As far as I can tell, there's no evidence in the accounts to support claims that either SWtOR or EA are in trouble. There's no dip in net or gross revenues, no significant increase in operating costs, and no behavior on the part of Bioware or EA that would indicate that the game's in trouble. At best, SWtOR has fewer subscribers than projected, but that indicates unearned potential profits rather than serious peril (which would explain why EA's actions seem to be dedicated to bringing more attention to content updates and free trials). Now, can we try to be constructive?

 

Didn't think so. :-P

 

PROTIP: Read entire shareholders' report, press release, & accompanying materials before beating your chest. Sure, you might ruffle a few feathers at first, but it'll only last until someone insane enough to wade through the financial BS comes along. You know what they say; Truth is far more convoluted and less interesting than the preferred fiction.

I'm going to make a bet with myself- I have to spray myself with a skunk & put it on youtube if nobody refers to either my post or the info in it within 3 days. :-P

Honestly, I don't understand why people insist on talking about this subject while not even looking at the actual financial records or shareholder reports. It's like it's more important to fight with each other and throw around buzz words than actually have any kind of constructive conversation. What the hell is this? Congress?

funny thing is i heard same team made SWTOR also made Warhammer

Funny thing is you shouldn't believe everything you read on the interwebz.

It lived up to and exceeded the hype for me, but what does that have to do with SWTOR's poor numbers?

"Poor" numbers? Well, most developers only dream of having such "poor" numbers, including a mere 25% decrease.

"Poor" numbers? Well, most developers only dream of having such "poor" numbers, including a mere 25% decrease.

"Mere" in this case amounted to 400,000 subscribers--a number other games would love to have as their total population. That's quite a chunk of people.

Dead my ***.

Yeah and now we take away all those who got the 30 free days and we are down to.... oh my god....

"Mere" in this case amounted to 400,000 subscribers--a number other games would love to have as their total population alone. That's quite a chunk of people.

So is the 1.7 million WoW just lost, which actually barely makes a dent for Blizzard. Your point?

Okay, I've got a little bit of background in economics/finance, so I'm going to infodump in the hopes that it's helpful. I fully expect to be flamed for this, but the past week has driven me mildly insane. So stuff it.

First, thanks for the chuckle. Nice presentation.

Second, thank you twice for posting a very lucid and informative analysis that should put alot of the message board experts out of business (it won't, but it should).

I'm closing my umbrella now. The sky is not falling. ;p

ps....put the skunk down and slowly back away.

So is the 1.7 million WoW just lost, which actually barely makes a dent for Blizzard. Your point?

Where have I defended WoW?

25% of your subscribers moving on? I don't see how that can be anything but bad news.

Holy **** and this before the "fail" of 1.2 for pvp-players.

Also Swtor has 188? Server. With 1.3 Mio subs that's 6900 people per server.

More than half of the servers are at light at prime time. That's like 70? People on the whole server, both sides.

How the hell can that be.

Also the free month they gave with the Legacy did count. We got the free month at "April 24, 2012, 11:59PM CDT/ April 25, 2012, 4:59AM GMT".

Someone should really go short on EA stocks... Though it is too late

Yeah and now we take away all those who got the 30 free days and we are down to.... oh my god....

these numbers are before the 30day gift STOP USING THAT to say the number is inflated

I'm going to make a bet with myself- I have to spray myself with a skunk & put it on youtube if nobody refers to either my post or the info in it within 3 days. :-P

 

Honestly, I don't understand why people insist on talking about this subject while not even looking at the actual financial records or shareholder reports. It's like it's more important to fight with each other and throw around buzz words than actually have any kind of constructive conversation. What the hell is this? Congress?

I read your post. It's the best post in this entire thread. I just took an accounting class so I actually knew what you were talking about.

You better start looking for a skunk.

EA just released their earnings and Star Wars subs are down 25% for the quarter. This can't be a good thing. Can we get server mergers ASAP?

 

Added link

 

http://www.marketwatch.com/story/ea-sales-beat-targets-star-wars-takes-hit-2012-05-07?siteid=yhoof2

Nearly 25%. 400,000 people. http://kotaku.com/5908338/star-wars-the-old-republic-loses-400000-subscribers

Holy **** and this before the "fail" of 1.2 for pvp-players.

Also Swtor has 188? Server. With 1.3 Mio subs that's 6900 people per server.

More than half of the servers are at light at prime time. That's like 70? People on the whole server, both sides.

How the hell can that be.

Also the free month they gave with the Legacy did count. We got the free month at "April 24, 2012, 11:59PM CDT/ April 25, 2012, 4:59AM GMT".

Someone should really go short on EA stocks... Though it is too late

1st quarter ends in march which these numbers are from. this is also before 1.2 and releasing in 38 countries

these numbers are before the 30day gift STOP USING THAT to say the number is inflated

The 1.3 million figure is as of the end of April--which means the figure could include some percentage, but certainly not all of those who received the 30 days free.

Through the end of the quarter, approximately 2.4 million units have sold through. In our last call we indicated that we had 1.7 million active subscribers, and as of the end of April we now have 1.3 million, with a substantial portion of the decrease due to casual and trial players cycling out of the subscriber base, driving up the overall percentage of paying subscribers.

http://files.shareholder.com/downloads/ERTS/1675578999x0x566984/c10f605c-3487-488e-ad86-b5bb74fe2408/Q4_FY12_Script.pdf

Bioware isn't innocent in all of this, they're just as bad as EA now. Bioware cared a lot more about their fans in 2003 than they do in 2012, I can tell you that.

 

When Bioware announced origin exclusivity for ME3, PC fans outraged, Bioware reacted with an attitude of "go ahead, don't buy our game, you won't be missed, we're a household name now, we're gonna get the call of duty audience, we don't need you anymore, you'll be replaced"

 

That's when my respect for Bioware completely evaporated.

I saw ME3 being available on http://www.impulsedriven.com

Holy **** and this before the "fail" of 1.2 for pvp-players.

the pvp was fail before 1.2 though,i dont see how 1.2 would have anything to do with keeping the pvp playerbase

im curious to see how bad there ilum revamp goes though.cant wait for the day i step into ilum and watch the epic fail it will become when the loot driven wow crowd ruins it again

im not sure if anyone mention this so far since after page 10 it got repetive and i skiped to the end.

there are 4 Qs in a year for those who didnt know. 1st Q, which this press release was from, ends in MARCH this before legacy and the 30 day free trial from the legacy patch lvl 50 gift. also this is before the game went to the 38 countries. so expect a ncrease in subs in Q2 which ends next month though that data wont be released till late july- early august. also as many people have said you have to compare it to other mmos which shows swtor is doing realy well but again the MMO market is very tricky since games like FFXI is still P2P and has a loyal community and it has serously droped in subscribers, though its one of the older mmo's in todays markets, and yet 17+ MMO have gone F2P from massive drops in there community .

The game just started until maby next year when the game community stabilizes and a trend emerges will we know if swtor is doing well or not. SO UNTIL THEN STOP SAYING ITS DOING HORRIBLE OR WONDERFUL

Eh, wrong. From the wikipedia article on Fiscal Years under the United States heading:

"For example, the United States government fiscal year for 2012 ("FY 2012" or "FY12") is as follows:

1st Quarter: October 1, 2011 - December 31, 2011

2nd Quarter: January 1, 2012 - March 31, 2012

3rd Quarter: April 1, 2012 - June 30, 2012

4th Quarter: July 1, 2012 - September 30, 2012"

Now that's just for the US government. According to the shareholder report, it's referring to Q4 of FY12, which ended in March 31 of this year. Apparently, EA counts the months of Jan, Feb, & March as the fourth quarter. Each company is allowed to use a different system if it so wishes. However, this part of the shareholder press release seems to refer to the claim of 1.7 million shareholders that was made around April:

"Through the end of the quarter, approximately 2.4 million units have sold through. In our last

call we indicated that we had 1.7 million active subscribers, and as of the end of April we now

have 1.3 million, with a substantial portion of the decrease due to casual and trial players

cycling out of the subscriber base, driving up the overall percentage of paying subscribers."

So we may have to wait for a statement from EA or a dev to clarify just what is being counted in the Q4 FY12 reports. Personally, though, I don't expect many people to listen. The ones who don't need to be reassured don't need to hear it, and many of the ones who do (on this forum, anyway) seem to be convinced already. It's almost as if their only motivation for digging into the shareholders' materials was to find dirt.

1st quarter ends in march which these numbers are from. this is also before 1.2 and releasing in 38 countries

Through the end of the quarter, approximately 2.4 million units have sold through. In our last call we indicated that we had 1.7 million active subscribers, and as of the end of April we now have 1.3 million,

I read your post. It's the best post in this entire thread. I just took an accounting class so I actually knew what you were talking about.

 

You better start looking for a skunk.

Nah, you referred to my post, so I'm saved from blasting myself in the face with skunk spray.

Accounting (and Finance to a certain extent) is one of those classes that is almost always a pain until you start using it IRL. Think that scene from 'Karate Kid'. :-P

The 1.3 million figure is as of the end of April--which means the figure could include some percentage, but certainly not all of those who received the 30 days free.

 

http://files.shareholder.com/downloads/ERTS/1675578999x0x566984/c10f605c-3487-488e-ad86-b5bb74fe2408/Q4_FY12_Script.pdf

ok i stand correct o wait i dont the 30 day free play starts at the end of april since you pay at the begining of the month. though i should correct other things i said like it was not including the 38 countries or 1.2

Okay, I've got a little bit of background in economics/finance, so I'm going to infodump in the hopes that it's helpful. I fully expect to be flamed for this, but the past week has driven me mildly insane. So stuff it.

 

 

 

The development costs of SWtOR are, frankly, irrelevant to the decision of whether or not to keep it running. The dev costs are what is called a 'sunk' or unrecoverable cost. Costs that cannot be recovered are left out of the decision to maintain or shut down an operation. That leaves the cost of keeping the game running, what is referred to as the marginal cost. So long as the marginal return is greater than or equal to the marginal cost, they will keep the game running. Projected returns are what determine which projects to fund, not so much which ones to keep running. Once it's going, it's a matter of MC=MR. And, according to the shareholder report itself, SWtOR is still far from that point.

 

"Our Q1 non-GAAP digital revenue will continue to grow year-over-year, particularly given the

benefit of a full quarter of Star Wars: The Old Republic, and continued momentum in

microtransactions and digital services. This quarter, we expect to launch 11 digital titles and one

packaged good title. "

 

"The 143% growth in subscriptions, advertising and other revenue was driven by the

December launch of Star Wars: The Old Republic. "

 

"Star Wars: The Old Republic now has 1.3 million subscribers, with a much higher mix of

ongoing credit card consumers, but on a lower absolute number of subs. The service is

stable, profitable and we have strong plans to grow it in fiscal 13."

 

"Star Wars: The Old Republic was the most successful subscription MMO launch in history

and is now firmly established as the #2 MMO in the west. The service is extremely strong

on the operations level."

 

"Headcount – As of March, our headcount was roughly 9,200 with about 70% of that in R&D,

and we expect to increase total headcount to 9,700 by the end of fiscal 13. "

 

Considering that they still have quite a few possible things they could do to reduce MC if necessary (reduce # of active servers, trim less profitable staff members, reduce development of new content, etc), and it certainly doesn't seem like these are the actions of a company desperately trying to keep the game alive.

 

2. Stocks and Accounting (Translation: tl;dr ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ!!!!!)

 

Yeah, I know, everyone hates this part. But here it is: linky

 

This is the series of slides that came with the shareholders' meeting. Now, you'll notice that the end there contains something that'll knock you out faster than a lethal dose of Ambien- Ledgers. Now, what we want to look at is a section called 'operating expenses' under the Q4 FY12 & Q4 FY11 slides. What might give us a clue as to the ratio between marginal cost & marginal revenue is the second column there, which is the percentage of total revenue of the expense. There's a 10 point drop in the percentage of revenue used for operating expenses. Now this doesn't directly tell us SWtOR's specific MC/MR relationship, but taken with the above evidence from the stockholders' reports, it doesn't tell the story of a game on her last legs.

 

Finally, I'd like to point out something that others may not have noticed- EA's stock repurchasing initiative. Now, when corporations make a profit, the decision is between reinvestment or paying dividends. Stock repurchasing technically falls under the former category, but it's more or less a company becoming a shareholder of itself (which could lead to an amusing recursive paradox if you're as pathetic a geek as I, but anyhoo). It has to do this with money it could use to invest in other projects/capital (increasing the (par) value of the stock) or pay dividends, so purchasing stock in itself doesn't confer a whole lot of benefit to the shareholders. Because of this, a company will usually refrain from doing so except for a specific condition- significantly undervalued stock. They'll buy the stock at the undervalued price and sell it back later when the price rises back to its normal value. This is in lieu of merging stocks, which is what companies in dire straits are more prone to doing.

 

Now, it's quite possible that they're just posturing in the hopes that investors will reach that conclusion and buy up, but they risk incurring a loss by doing so (particularly at such high amounts: "EA repurchased 27.7 million shares for $529 million through March 31, 2012, and as of

the call, the $600 million share repurchase program has been completed."). "What do you mean a loss? They could just sell the stock at the value they bought it and be no worse for wear." Well, to explain that, I'd have to go a little more into finance, and I'm about to pass out. Let's just say that there's a time-value of money, an opportunity cost for holding it and time-preference. Whatever you decide to do with your money, the 'opportunity cost' of doing so is whatever else you could have done with it at the time. Any profits EA could have made from putting their retained earnings into other developments instead of repurchasing stock would be lost. If you could put them into the same projects later, you're still earning your profits later & more slowly.

 

(tl;dr for this section): They could be faking, but the complications of doing so make it rather unlikely.

 

(tl;dr for whole post): The sky's not falling. The game's not failing. EA's not doing poorly. They aren't disappointed with or planning to dismantle SWtOR. You don't like the game? Fine. Nobody's forcing you to. You want to see it succeed & beat WoW's subscriber count? That's very noble of you. But doomsday predictions are a dime a dozen around here. If you want to be taken seriously, back your statements up with evidence. As far as I can tell, there's no evidence in the accounts to support claims that either SWtOR or EA are in trouble. There's no dip in net or gross revenues, no significant increase in operating costs, and no behavior on the part of Bioware or EA that would indicate that the game's in trouble. At best, SWtOR has fewer subscribers than projected, but that indicates unearned potential profits rather than serious peril (which would explain why EA's actions seem to be dedicated to bringing more attention to content updates and free trials). Now, can we try to be constructive?

 

Didn't think so. :-P

 

PROTIP: Read entire shareholders' report, press release, & accompanying materials before beating your chest. Sure, you might ruffle a few feathers at first, but it'll only last until someone insane enough to wade through the financial BS comes along. You know what they say; Truth is far more convoluted and less interesting than the preferred fiction.

/end thread. This man has said it all. Lets go back to playing our game.

ok i stand correct o wait i dont the 30 day free play starts at the end of april since you pay at the begining of the month. though i should correct other things i said like it was not including the 38 countries or 1.2

That's not true either. Subscribers pay on the day their subscription was started. If you started your subscription started on the 6th of April, you'll pay to renew on the 6th of May. Not everyone pays on the same day; my subscription renewal day is the 18th.