Article : Only 30% of games even break even!

[Carl B]

Look at the financials of diff companies involved in gaming today. Take away Nintendo and it's not a pretty picture for the industry. Someone put the whole list together on neogaf and it was clear.

When you see these companies report, it's evident that things are nearly always hit driven at the third-party publishers.; steady income is not in any way shape or form secured/guaranteed.

If you can port that list over though Robert, I think that'd be cool to have here. Obviously strip out any GAF'ish flare/flourishes if they've worked their way in there.

 

[obonicus]

If you can port that list over though Robert, I think that'd be cool to have here. Obviously strip out any GAF'ish flare/flourishes if they've worked their way in there.

I can add it in dynamically! 'They don't get it', 'HD gaming is dead', 'They should make more 2d retro games'.

 

[PARANOiA]

When you see these companies report, it's evident that things are nearly always hit driven at the third-party publishers.; steady income is not in any way shape or form secured/guaranteed.

If you can port that list over though Robert, I think that'd be cool to have here. Obviously strip out any GAF'ish flare/flourishes if they've worked their way in there.

I think he was referring to this article. Here's the image in question:

 

[RobertR1]

I think he was referring to this article. Here's the image in question:
http://www.edge-online.com/files/profit_or_loss.gif

No there was a recent one on gaf which the most recent financials. It was well done but I can't search on gaf since my account hasn't been authorized.

 

[Carl B]

XBD, my only argument is that there is no magical formula. I have already waxed poetic in PM to you about having a green metacritic, print ads, online ads, Live dashboard ad placement...and still not breaking even.

Oh I know what you were referring to in the specific, I just wanted to present a generalized mold. I think in your particular situation, it was the hype/media-attention that was the missing ingredient.

 

[TheMightyPuck]

Like everything good in the world, it all comes down to fat tails.

 

[Rangers]

This fails the common sense test. If 70% of games were failing, I think the business would be pretty untenable, and essentially you wouldn't see any more games developed. Or conversely, the remaining 30% must be such spectacular financial successes as to finance the 70% of losers AND turn a healthy profit for the industry as well. Which seems unlikely, but even if it is true, still means the industry is thriving.

Theres way too much doom and gloom talk in game development, spearheaded by the ridiculousness of some of Dennis Dyack's comments. It's this simple, if games weren't profitable, there would be so many of them made. And the number of games being made shows absolutely no signs of abating.

 

[Shifty Geezer]

Or conversely, the remaining 30% must be such spectacular financial successes as to finance the 70% of losers AND turn a healthy profit for the industry as well.

Yes, that's how it works. Same in movies, and books. And Music. In fact I think all creative industries/arts. The big successes are so big as to finance the ongoing efforts of the rest of the biz. Though I didn't realise it was such a high failure rate, not even breaking even. I expected more to manage at least that. I guess budgets are higher on average than I appreciated.

This also gives more insight into what we call successful games, too. A lot of the time people only count a successful game as selling 500k or whatever. It almost seems as though that is the requirement. I wonder what the average break-even sales amount is for a title?

 

[obonicus]

Yes, that's how it works. Same in movies, and books. And Music. In fact I think all creative industries/arts. The big successes are so big as to finance the ongoing efforts of the rest of the biz. Though I didn't realise it was such a high failure rate, not even breaking even. I expected more to manage at least that. I guess budgets are higher on average than I appreciated.

This also gives more insight into what we call successful games, too. A lot of the time people only count a successful game as selling 500k or whatever. It almost seems as though that is the requirement. I wonder what the average break-even sales amount is for a title?

It would depend on the platform, wouldn't it? Common wisdom says that HD games cost about an order of magnitude more to make than last-gen games, but they're only 1/5 more expensive. Maybe that's why the ~200k result people suggested in the Wii third party thread just isn't that bad. It also explains the lack of HD shovelware, for the most part.

 

[eastmen]

It would depend on the platform, wouldn't it? Common wisdom says that HD games cost about an order of magnitude more to make than last-gen games, but they're only 1/5 more expensive. Maybe that's why the ~200k result people suggested in the Wii third party thread just isn't that bad. It also explains the lack of HD shovelware, for the most part.

Wasn't the Gears of War budget 10million? I don't think games are as expensive as you think when done properly. I just think currently there is alot of waste in the industry. Companys don't destroy all movie sets, normaly they reuse it. However it seems to me that the majority of Game companys create brand new assets between games almost everytime they make a new game. Companys like EA should have a library of art assets that are reused in each game. Make the assets once per gen and make them right from the start.

 

[tongue_of_colicab]

That was only for the content, they didnt include UE3 in that. That is why it looks relative cheap.

I think EA reuses alot of stuff btw. I doubt they create all new player models each year for their sports games. In others games its harder I think. You cant just say oh well this game sort of has the same setting and art direction lets toss in half the models and textures from our previous game. People are going to notice and probably wont be to happy about it.

 

[obonicus]

Wasn't the Gears of War budget 10million? I don't think games are as expensive as you think when done properly. I just think currently there is alot of waste in the industry. Companys don't destroy all movie sets, normaly they reuse it. However it seems to me that the majority of Game companys create brand new assets between games almost everytime they make a new game. Companys like EA should have a library of art assets that are reused in each game. Make the assets once per gen and make them right from the start.

It's common wisdom, so it's probably wrong, but the big hoopla at the beginning of this gen was the increasing price of development. I have no idea if it's true, but if it is it makes HD development look especially precarious (and DS development especially attractive).

 

[eastmen]

That was only for the content, they didnt include UE3 in that. That is why it looks relative cheap.

I think EA reuses alot of stuff btw. I doubt they create all new player models each year for their sports games. In others games its harder I think. You cant just say oh well this game sort of has the same setting and art direction lets toss in half the models and textures from our previous game. People are going to notice and probably wont be to happy about it.

Yes but UE3 was made and has been liscensed to many others. Even if we put in liscensing costs for th engine to make it fair its what another 5-10m at most for that engine ? Your still looking at 15-20m budget. That was a game that has some of the best graphics of this gen.

As for reusing models , who is going to notice. When you give them beautifull citys do you think someone is going to take a picture and say oh look this texture here was used in Awsome game 1 and this texture next to it was used in Sucky game 4. Esp moving foward to the next gen when both systems should have bluray drives or other mass data storage devices for the games. Why create 40 gigs of new info each game if you can reuse 20 or 30 of that from other games without anyone noticing.

It's common wisdom, so it's probably wrong, but the big hoopla at the beginning of this gen was the increasing price of development. I have no idea if it's true, but if it is it makes HD development look especially precarious (and DS development especially attractive).

I don't know how true it was , it was most likely true at the start of teh gen as developers had no experiance with the new system , however costs should have come down by now. How much more expensive is it to make high res textures vs low res. Aren't they all done in high res and then sample down anyway.

 

[Shifty Geezer]

As for reusing models , who is going to notice.

Who indeed? Artisitic integrity is going to be shot if you reuse textures pic'n'mix from different titles, but I'll wait for Laa-Yosh to explain that one.

 

[Carl B]

I don't know how true it was , it was most likely true at the start of teh gen as developers had no experiance with the new system , however costs should have come down by now. How much more expensive is it to make high res textures vs low res. Aren't they all done in high res and then sample down anyway.

Game development this gen in general requires much larger teams, and that's what makes it expensive.

 

[fearsomepirate]

I disagree except we are talking about shitty games that sell well such as Cooking Mama and that sort of calibre.

Cooking Mama, at least on the DS, is actually quite good at what it does.

Anyway, look at the positive side. Supposing there were only 30% as many games on the shelves as there are now, do you think there would be as many gamers? I don't. Suppose a publisher sells 3 games. Game A is the success at 2m units. Games B and C are failures at 400K units each. However, don't assume that if they hadn't made B and C, that A would have sold 2.8m units. In fact, it may have sold less than 2m, since the lack of games in general will turn customers off to gaming.

 

[eastmen]

Who indeed? Artisitic integrity is going to be shot if you reuse textures pic'n'mix from different titles, but I'll wait for Laa-Yosh to explain that one.

Thats using the same exact scene. if you take say a mail box or a tree no one is going to notice.

Game development this gen in general requires much larger teams, and that's what makes it expensive.

Do you have any numbers to back that up. What was the size of halo 3 team vs halo 2.

 

[dobwal]

Cooking Mama, at least on the DS, is actually quite good at what it does.

Anyway, look at the positive side. Supposing there were only 30% as many games on the shelves as there are now, do you think there would be as many gamers? I don't. Suppose a publisher sells 3 games. Game A is the success at 2m units. Games B and C are failures at 400K units each. However, don't assume that if they hadn't made B and C, that A would have sold 2.8m units. In fact, it may have sold less than 2m, since the lack of games in general will turn customers off to gaming.

I agree even failures profit wise have value to the overall market place by adding variety and diversity to the software library of a console. Just because the majority of the market doesn't find a title worth purchase, doesn't mean that it doesn't help maintain the gaming apetite of the few who do find worth.

A gaming market where only profitable titles were released would be rather small and homogeneous. It would be like going to a book library where they only maintain titles that were read regularly.

While the gaming market is rather volatile in terms of turnover and profit. It still represent great opportunities in terms large payoffs for titles that get it right.

 

[upnorthsox]

Cooking Mama, at least on the DS, is actually quite good at what it does.

Anyway, look at the positive side. Supposing there were only 30% as many games on the shelves as there are now, do you think there would be as many gamers? I don't. Suppose a publisher sells 3 games. Game A is the success at 2m units. Games B and C are failures at 400K units each. However, don't assume that if they hadn't made B and C, that A would have sold 2.8m units. In fact, it may have sold less than 2m, since the lack of games in general will turn customers off to gaming.

Are B and C really failures? At 400k they're both near the break even point wouldn't you say? Now if B was at 400k and C was at 100k then yea C is pretty much a failure. I generally agree with the rest of what you say (except Cooking Mama = Bad!! ) but would add the 3 game publisher is hoping to come near breaking even on all 3 games with one of them being a hit. The next time around game B version 1 which nearly broke even at 400k may be the 2 mil hit at version 2.

 

[Carl B]

Do you have any numbers to back that up. What was the size of halo 3 team vs halo 2.

Here ya go: http://www.xbox360degrees.com/2005/03/08/News/bungie-doubles-development-team-for-halo-3.html

That was an easy game you picked fortunately.

I want to emphasize also that for multiplatform titles, it's even rougher in terms of team sizes, as often there are certain members that are on the project solely to aid in development on one platform or another. Believe me, after years of interviews and dev comments indicating that greatly increased costs are the trends, I don't think it's on those claiming such to prove it - it's the new reality. Look at Electronic Arts quarterly numbers for all the evidence you need that even at the most prolific publishing houses, the profits are hit-driven.