Biker Scout - Hasbro - Legacy Collection [2] (2015)
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Rumor: The Real Reason The Mandalorian Game Was Cancelled

As you may remember EA very recently cancelled a first person shooter Mandalorian game which was in development by Respawn Games. It has since been revealed that a sizable chunk of the game was already pretty far ahead in development, yet EA decided to cancel the game nonetheless.

At the time this seemed like a typical EA thing, with some hints that EA wants to release fewer licensed games and focus on own IPs. YouTube Channel Star Wars Theory now reports that according to one of his sources, who is with EA or works for EA in some capacity, the real reason EA cancelled the Mandalorian game is that Disney suddenly decided to retroactively raise the licensing fees for all upcoming games and even games already in development: from already insane 22% to now ludicrous 33%. Click through for more!

Is Bob Iger behind the cancellation of the EA Mandalorian game?

33% licensing fees are too much for EA (or for basically anyone). They will still develop the 3rd Jedi game, but if this report is true you can expect EA to pull out of Star Wars altogether. But that is apparently just exactly what Disney wants. According to the rumor this new directive comes directly from Bob Iger who has a plan. Disney recently invested $1.5 billion in Epic Games, this news broke in early February, who are known for things like Fortnite and even more importantly, Unreal Engine. A few weeks ago Iger was quoted as saying that it’s “possible, that certain things will be released exclusively on Epic Games”. In fact, it seems Disney wants Epic Games to create a Disney Fortnite “metaverse”, or even something akin to a digital theme park with exclusive content.

Disney’s “Volume”, the computer powered virtual set, uses Unreal Engine for the real time in camera effect, and the Volume is used more and more for shows and movies, since it often replaces more expensive on location shooting thus saving some money. And apparently Iger wants to have an exclusive deal with Epic Games with guaranteed access to Unreal Engine and some stake in the company behind the tool, which is not only used for the Volume aka Stagecraft but is of course one of the most used game engines for video games. LEGO has a similar exclusive deal with Epic Games and LEGO Fortnite. But Disney still has existing licensing agreements with various other game publishers, how to get rid of them as quickly as possible so Disney can give Epic Games exclusive access to Star Wars, especially now that Disney has invested $1.5 billion? Tighten the thumb screws so the other studios pull out. Or so the theory goes now. I assume Disney would have to pay a fine to the publishers if they suddently decided to terminate the licensing agreement, so it’s better to annoy the publishers so much that they pull out instead. 

If the 22% and now 33% royalty rates are in fact accurate this would also negate any theories I had that after the collapse of all movie plans Disney may actually give their licensees somewhat better deals than before. Disney did raise Star Wars royalty rates at least for Hasbro to 20+% just before The Force Awakens was released.

According to the rumor the only video game publisher not affected by the licensing fee hike is of course Epic Games who will pay exactly 0% royalties to Disney. I have to wonder if Disney is eyeing a potential acquisition of Epic Games even. Video games are a major market, in fact, video game revenue vastly eclipses the movie industry, maybe Disney wants to get a bigger share of the video game pie?

Of course this is just a rumor. So keep that in mind, this could all be nonsense. That being said it at least seems somewhat plausible. Disney / Lucasfilm are famous for their insane licensing fees and the very expensive license was quoted before as one of the reasons EA developed not all that many Star Wars games and mostly sat on the license. Now I am no lawyer so I cannot say if raising royalty rates just like that even for things already in development and with agreed upon terms and conditions is even legal or if this latest rumor is inaccurate. Maybe if a lawyer who specialises in licensing deals reads this he or she can comment on this.

If the rumor is true I believe this would put all upcoming games, other than Ubisoft’s Outlaws, which is close to the finish line and about to get released in 2024, and the 3rd Jedi game, which is still in development, in grave danger. Quantic Dream’s Eclipse could be over now, we haven’t heard anything from that game in ages anyway, but if all studios / publishers other than Epic Games are now to pay 33% royalty rates you can easily see how that would make things much too expensive for the developers, especially for smaller studios like Quantic Dream.

EA will probably still make some money with a 3rd Jedi game as will Ubisoft with Outlaws, but given how expensive AAA games have become to produce (top tier AAA games cost more to make than even the most expensive Hollywood movie, production costs of $300 million and more are reported for some of the top tier games) a 33% royalty rate will substantially lower margins for publishers like EA or Ubisoft, making new Star Wars games just not worth it anymore really. Especially when publishers like EA or Ubisoft have their own IPs which they fully own that require no licensing payments and can earn them so much more money. So Ubisoft would certainly focus on things like Assassin’s Creed (and the upcoming AC Infinity live service and AC titles like the one set in Japan and medieval Germany) and probably not bother to ever make an Outlaws sequel, even if the game proves to be successful.

But we will see. The report could be wrong, sadly, we won’t know for quite a long time if publishers like EA or Ubisoft really pull out of Star Wars because of the insane royalty rates and if Disney wants to give Epic all exclusive access to Star Wars video games and other digital content.

Watch the rumor report by Star Wars Theory on YouTube

A Forbes article about the Disney and Epic Games deal with some background info and analysis

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