EA-LS-SMay 7, 2013 • A month after LucasFilm, now under new management at the Walt Disney Co., announced that LucasArts would no longer be in the business of internal game development, Electronic Arts secured the exclusive license rights to create and market core video games in the Star Wars franchise. Disney Interactive picks up the rights to develop new titles for mobile, social, tablet and online game platforms. The deal is described as multi-year, yet neither the length nor the financial terms were disclosed. EA already has broad experience with the Star Wars IP through its BioWare division, which has been behind the Old Republic series. Although the publisher’s Pandemic Games division had seen success with its Star Wars: Battlefront franchise, Pandemic has since been shuttered. In addition to BioWare, both the DICE and Visceral studios have also been assigned future core Star Wars titles. In related news, the Fédération Internationale de Football Association (FIFA) announced an extension of their existing licensing agreement with EA Sports until December 31, 2022. The latter maintains exclusive rights to release FIFA-branded action and management video games, as well as exclusive rights to official FIFA World Cup titles. EA Sports has held the FIFA license since 1993.

Impact: The last piece of the LucasArts puzzle has fallen into place. The big question had been whether Disney would farm out Star Wars games in total, or piecemeal. Farming out the license was never a question in our minds as Disney has expended far too much effort in recent years to extract itself from the traditional AAA retail business model. Disney Interactive’s mandate has been to pursue the online, social and mobile ends of the business where investment costs are much less.  With the EA announcement we also learn that Disney Interactive is officially taking on the Star Wars IP to leverage across the platforms it services. So no political intrigue within the House of Mouse is forthcoming from the LucasArts legacy. We are very curious, however, how many years Electronic Arts has to manage the Star Wars IP for core games. Knights of the Old Republic was a big hit, yet the Old Republic MMO did not reach the early success that was expected. While the transition to free-to-play has been effective, and there are clear signs that F2P monetization is providing encouraging returns in revenue and active users, we can best describe The Old Republic as a slow build for all concerned. Therefore, we would expect there to be reasonable questions on how well EA can execute on the license. A five- year term would be in line with the original agreement signed with the National Football League. Anything less would suggest questions on how well Electronic Arts can execute. EA Sports’ 20-year success with the FIFA license is an example of how well these deals can be played, but updating sports league games follows a far easier recipe than producing individual hit titles based upon dramatic storytelling.

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