[nightshade]

Big Huge games developers of Kingdom of Amular had to close down because the game wasn't a financial success. They revealed that in order to break even they needed 2.5 million sales, it means it probably cost them about the same as Future soldier but looking at the game it doesn't has the tech R&D like Future Solider, neither does it has a development time that long and nor does it has a marketing campaign as aggressive as Ghost Recon, yet somehow it costs about the same. How?

http://uk.ign.com/articles/2012/05/2...f-entire-staff

[Shifty Geezer]

They were developing an MMO at the same time. I think they mean 3 million for the company to break even or something, with KOA being used to generate funding for the MMO. If they really, honestly, budgetted for a 3 million seller in KOA, they were damned fools. What's the point of spending that much and throwing that money away, unless you have a VERY good reason to think that you'll sell many more million and make a lot of profit?

[Rodéric]

They aren't a developer-publisher like UBISoft, so their share on a unit sale is likely 8-10, not 20.

[Shifty Geezer]

Whatever their returns were, they should have budgetted more realistically. "We're gonna sell at least 5 million copies of this game, so we can blow the first three million sales worth on development," is a dumb way to run a business. Looking at games sales this gen, 3 million would have been a good sales number for a new IP, so budgetting for half that would have been a more sensible investment.

[Prophecy2k]

Originally Posted by Shifty Geezer

Whatever their returns were, they should have budgetted more realistically. "We're gonna sell at least 5 million copies of this game, so we can blow the first three million sales worth on development," is a dumb way to run a business. Looking at games sales this gen, 3 million would have been a good sales number for a new IP, so budgetting for half that would have been a more sensible investment.

Perhaps they were looking to get publisher funding for their MMO and things simply didn't work out. I dunno... there could be many reasons.

I did think that KOA did pretty well though. Thought it broke at least a million worldwide. I played the demo and thought it was great. Still yet to buy it though (yes i'm part of the problem).

There have been lots of studios folding this gen due to mismanagement. I can understand why companies are becoming more risk averse, and why it's become so hard to keep a studio afloat making AAA games.

[Shifty Geezer]

It sold ~1.5 million. As you say, that's not bad. So budgetting for a 3 million sales breakeven point was ludicrous; the decision of someone completely out of touch with the market and expectations. I think they just threw money at the project expecting the more they spent to result in a better product and more sales. Reading of employees who lost their health insurance with no forewarning makes me angry (they found out when an employee's pregnant wife was in hospital that they had no insurance). IMO upper management should be beholden to their employees just as it is the other way round. Upper management cocking everything up and then running off without being accountable for their mismanagement means this isn't an isolated story and won't be the end of it.

[Cornsnake]

Originally Posted by Shifty Geezer

They were developing an MMO at the same time. I think they mean 3 million for the company to break even or something, with KOA being used to generate funding for the MMO. If they really, honestly, budgetted for a 3 million seller in KOA, they were damned fools. What's the point of spending that much and throwing that money away, unless you have a VERY good reason to think that you'll sell many more million and make a lot of profit?

I thought the whole making an MMO, a new IP, with a new developer was a pretty stupid idea to begin with. It's probably the most expensive and high risk game you can make. Even if they were somehow able to make a great game, there was still great chance it would fail like others with a lot more brand recognition have.

[Rodéric]

I don't know when they started, maybe the market seemed sustainable at the time.
After STWOR though, I'd bet investors are going to think long and hard before investing in MMOG.

[RobertR1]

It's pretty safe to say that in this generation, making games isn't cheap.

[Shifty Geezer]

There are lots of different tiers of games. It can be as cheap/expensive as the publisher.developer chooses., thansk to downloads elliminating the $60 minimum game price. They could have gone with a cheaper, smaller game and sold episodic content, tested the waters, and built up to the full game. Then for a larger reach they could have bundled that all together for a disk title. Then they could have added MMO elements, or at least had an audience to sell the MMO to.

The very close-minded thinking of modern game development is holding the industry back. In part that's due to the awkward regulations of the gaming networks, with patches and changes costing the developer money, but mostly I think it's due to short-sighted management.

My testcase for this is Snowblind Studios. They've released one game in 5 years, LOTR:WITN, which was mediocre. They made a name for themselves with BGDA and similar 3rd person top-down action games, especially with coop. They could have started this gen writing a simple BGDA/CON-esque download game, like Dungeon Hunters:Alliance and Dungeons and Dragons:Heroes, only much better. They could have tested new gameplay elements knowing they had a solid userbase who would buy a game in that vein, helping to fund technological research and whatever large-scale AAA project they'd want to move on to. Okay, SB Studios had business issues and a cancelled project and a change of hands, and perhaps with a large headcount already they didn't think it was worth risking. But personally I've seen the download market as a perfect place to create small 'tester' products and build up a fanbase to fund more securely future projects. This just isn't happening though. Someone decides to do a big game and throws money at it and crosses their fingers.

[Silent_Buddha]

Originally Posted by Cornsnake

I thought the whole making an MMO, a new IP, with a new developer was a pretty stupid idea to begin with. It's probably the most expensive and high risk game you can make. Even if they were somehow able to make a great game, there was still great chance it would fail like others with a lot more brand recognition have.

They aren't a new developer. They've been around for over a decade (first game released in 2003). So they know about proper budgeting, sales projections, management, and expectations.

But even with that, companies can and do fail. I think the cancellation of the MMO project is what really did them in. MMOs are hugely expensive to create. And the gameplay area in KoA was MMO-esque. It wouldn't surprise me if they'd meant to reuse some of the levels and art assets in the MMO, hence spreading the expense across 2 games.

With no MMO being released however, KoA suddenly had to bear the responsibility of recouping all of the developement effort.

Regards,
SB

[Cornsnake]

Originally Posted by Silent_Buddha

They aren't a new developer. They've been around for over a decade (first game released in 2003). So they know about proper budgeting, sales projections, management, and expectations.

BHG that made KOA wasn't a new developer, but 38 studios, who were making the MMO was. Development on the MMO started first. KOA only came in the picture after BHG was bought from THQ.

http://en.m.wikipedia.org/wiki/38_Studios

[Shifty Geezer]

Originally Posted by Silent_Buddha

They aren't a new developer. They've been around for over a decade (first game released in 2003). So they know about proper budgeting, sales projections, management, and expectations.

Adding to Cornsnake, even if the MMO hadn't been cancelled, budgetting a game to sell 3 million to break even is ridiculous. BHG's success was Rise of Nations, selling around a million with expansion pack going by Wiki. It's unclear what this "3 million sales to break even" number is talking about, but if 38Studios were hoping KoA would sell 3 million and bail them out of the financial hole of the MMO, that was a wild gamble, and if the 3 million really was just for KoA, they were doomed from the start.

[rekator]

Originally Posted by Shifty Geezer

Adding to Cornsnake, even if the MMO hadn't been cancelled, budgetting a game to sell 3 million to break even is ridiculous. BHG's success was Rise of Nations, selling around a million with expansion pack going by Wiki. It's unclear what this "3 million sales to break even" number is talking about, but if 38Studios were hoping KoA would sell 3 million and bail them out of the financial hole of the MMO, that was a wild gamble, and if the 3 million really was just for KoA, they were doomed from the start.

It's not rely ridiculous, future tell us.
38Studio dev MMO tech, so high cost/risk, for investors not very attractive, but very easy to sell to public found due to employment and the WoW effect on basic people. So if we'll see a company, with founds from a Big One (generally in relation with the primal private founds), buying the tech behind the MMO for peanuts and win another publics founds if keeping some employment, the bankrupt of 38Studio was part of the plan. It's a very common practice in some industries… First time I'm seeing this in game industry, but the big amount of public founds go to thinking of it.
So future will tell us if it was bad managing decision or a financial montage … with bad ethic.

[ERP]

Originally Posted by Shifty Geezer

Adding to Cornsnake, even if the MMO hadn't been cancelled, budgetting a game to sell 3 million to break even is ridiculous. BHG's success was Rise of Nations, selling around a million with expansion pack going by Wiki. It's unclear what this "3 million sales to break even" number is talking about, but if 38Studios were hoping KoA would sell 3 million and bail them out of the financial hole of the MMO, that was a wild gamble, and if the 3 million really was just for KoA, they were doomed from the start.

One of the hardest things to do when you start a game studio is to decide you're not going to build a AAA game.
It's what every developer wants to do.
If you can get the funding, you go for it, and either you succeed or you kill the studio.
Until you fail it's difficult to be objective.

[Mobius1aic]

I think MS and Sony made the HD experience more expensive by conceding to the idea that their systems needed more RAM. Yes, they are still RAM starved, but to think that decent 720p graphics wouldn't have been achievable on the current systems with the original planned 256 MB of RAM is ludicrous I think. There are instances of Xbox games that had some textures that were too high in resolution to be of benefit, since they were stuck on SD resolutions mostly. I do wonder though how Xbox 360 games would've looked on half the RAM. Certainly texture resolution would've suffered, though it could still look good I'm sure, and possibly much of the shader quality could be lost, but outside of that, I don't see the geometry being all that much less. I do think perhaps we would've seen more 60 FPS games though, and I guess developers wouldn't be spending so much time developing over-sized textures that I guess are so critical to the HD experience

Looking towards the past on PC, it's impressive what can be done in 128 or 256 MB of VRAM, where a console game doesn't have to put up with the same kind of memory implementations as a PC (assets stored both in system RAM and VRAM, heavy OS footprint). Many of the 2004 and 2005 PC titles I think would be fine examples of what we could've expected on the 360 graphically, like Black and White 2, FEAR 1 and Far Cry could've been ported I bet without hardly a change. Some more recent titles like those based in Source (TF2, L4D, Portal), they look decently good, and probably could've ran just fine in 256 MB with some tweaking.

[Silent_Buddha]

Originally Posted by Shifty Geezer

Adding to Cornsnake, even if the MMO hadn't been cancelled, budgetting a game to sell 3 million to break even is ridiculous. BHG's success was Rise of Nations, selling around a million with expansion pack going by Wiki. It's unclear what this "3 million sales to break even" number is talking about, but if 38Studios were hoping KoA would sell 3 million and bail them out of the financial hole of the MMO, that was a wild gamble, and if the 3 million really was just for KoA, they were doomed from the start.

I took a brief look at the reports about what happened and there's all sorts of shady stuff going on.

The sales number to break even was basically a quote from the governor of RI. RI being a major investor in 38 Studios. The governor wanting to put himself in a good light by placing all the blame on the game studio, and in the process allegedly scaring away a publisher who was interested in publishing and providing additional funding for the MMO.

The money that was borrowed from the state (a loan to attract games developers to the state of RI, a bad idea in itself) mostly went to funding the developement of the MMO. Again, a bad idea to invest tens of millions of taxpayer dollars into a relatively unproven game studio (38 Studios).

And, evidently the state got antsy and wanted the first game released by 38 Studios to basically recoup all or most of the loan. When that didn't happen, in steps the Governor to put his stamp of disapproval on it in the strongest way possible.

Hence, KoA, got to be the political scapegoat. There was no way it was going to recoup the investment money (most of which went to fund the MMO which Big Huge Games had no part of).

So, none of this was due to any mismanagement on BHG's part (the developers of KoA, 38 Studios didn't contribute to the developement of KoA in any significant way other than funding). I dare say that KoA itself was most likely profitable in terms of the money invested in its developement. Unfortunately, it was saddled with the baggage of having to also recoup development costs of the significantly more costly MMO that was under developement. An MMO that may have been a bit too ambitious as it was supposed to launch before KoA (it had already been delayed 1-2 years from the original internal target date, IIRC).

It's unfortunate that despite doing a stellar job with KoA, BHG ended up sinking with the parent company, 38 studios. Hopefully, this will discourage states from trying to get into the game funding business. And even more importantly, hopefully this scares away game companies from using taxpayer dollars to develope their games.

Even more unfortunate as KoA 2 was in developement with changes to gameplay based on player feedback. But now the state of RI will likely end up with ownership of its IP, and the game will likely never get made. Rumor is that RI is asking too much for the IP for KoA.

Regards,
SB

[Richard]

On the OP, are 2.5 million sales really that outlandish for a PC/XBOX/PS title? Last figure I read about Marketing/Development distribution was 50/50 but if big names are now putting 70% into marketing surely they've heard about diminishing returns?

But I agree with previous posters, 50 million euros is quite a bit over the industry average that we know about, especially since most figures of this sort are given in dollars even.