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EA Earnings Call Sheds Light On Financial Agreement With Respawn, DLC Confirmed
During EA's third quarter 2014 earnings call, the company revealed more about how the finances behind Respawn's Titanfall have been negotiated. EA is projecting Titanfall to sell "conservatively" because it's a platform exclusive on consoles. However, we now understand a bit more about how expenses and revenue related to the project are arranged.
EA moved The Sims 4 out of this fiscal year in favor of Titanfall partially because the publisher has been funding expenses evenly over the development cycle. When Titanfall ships, EA will exclusively reap revenue up to an undisclosed sales threshold. The publisher does not expect to start having to share revenue with Respawn until some time in fiscal year 2015, which begins on April 1, 2014.
EA also says that it expects Titanfall to have significant "additive" impact in fiscal year 2015. Respawn hasn't yet announced a season pass for the title, but EA CFO Blake Jorgensen says that DLC is already in development. "We're planning extra content already for the product," CEO Andrew Wilson said. "I think that that will evolve over time as we see how the player base evolves through the year." Respawn already stated that Titanfall will not include microtransactions.
Our Take
We've been interested in how EA and Respawn negotiated the finances to bring Titanfall to market and, afterwards, how the revenue will be split. While this doesn't give us exact details about the threshold for revenue sharing, it does show the framework for the deal. With DLC and season passes extending the tail, the news that DLC is already in the works is no surprise.
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