KZ2 and game budgeting in general *spin-off

[Laa-Yosh]

Mod Edit: This thread is a spin off of the NPD March thread. If the discussion seems a bit incoherent at the beginning, that is due to me cutting and pasting the parts of the discussion here. Sorry for the inconvience. StefanS

Holy sh*t, now that I think about it, KZ2's 50+ million are guaranteed to turn into an unbelievably huge loss. They could be what, 20% done with the 1 million units they've sold so far?

And Sony's lost a fortune with Lair, and probably a lot with Heavenly Sword and some other first party titles we've forgotten about... I wouldn't expect any more AAA games from them for a long time...

 

[obonicus]

Holy sh*t, now that I think about it, KZ2's 50+ million are guaranteed to turn into an unbelievably huge loss. They could be what, 20% done with the 1 million units they've sold so far?

Let's skip over the 50 million number, but how do you figure 20% on 1 million games sold? Are you saying that off the $60 dollar price tag on a first-party game, Sony makes $10? Imagine how much third parties make, they have to pay licensing fees!

And Sony's lost a fortune with Lair, and probably a lot with Heavenly Sword and some other first party titles we've forgotten about... I wouldn't expect any more AAA games from them for a long time...

What was Lair's budget? Or Heavenly Sword's?

 

[Vic]

Just to clarify...I think it looks good and I think the game is good, I just don't think it's the best game out on both gameplay and visuals, so the sales numbers aren't a huge shock to me. Incidentally the sales numbers aren't bad for what the game is, the only reason they are perceived as bad is because they have 50+ million to recoup, and because the hype was way out of proportion. If KZ2 was a more typical 20 million dollar game with typical hype then it would be a success.

Where does this $50m figure come from?

You say the hype was out of proportion, but what are Sony supposed to do, come out and say, 'well actually our game isnt that good?'

It was exactly the same when GOW and Zelda came out. If Sony didnt promote the game as much as they possibly could, they wouldnt be doing their jobs properly. IMO, all the 90%+ reviews further justify their approach.

 

[Vic]

Holy sh*t, now that I think about it, KZ2's 50+ million are guaranteed to turn into an unbelievably huge loss. They could be what, 20% done with the 1 million units they've sold so far?

And Sony's lost a fortune with Lair, and probably a lot with Heavenly Sword and some other first party titles we've forgotten about... I wouldn't expect any more AAA games from them for a long time...

What, until GOW3 and GT5 drop..? Not to mention MAG, and the inevitable KZ3.

 

[betan]

Holy sh*t, now that I think about it, KZ2's 50+ million are guaranteed to turn into an unbelievably huge loss. They could be what, 20% done with the 1 million units they've sold so far?

Sony gets more than $40 per full priced game sold to _retail_ in NA alone, surely more in PAL territories (According to one Epic guy profit margins are doubled there IIRC, for non platform holder devs presumably).
How did you calculate 20%?

In fact 1 million sold to customer covers any 50 million rumor pretty well, I'd say.

 

[joker454]

Where does this $50m figure come from?

I'm going by what I read online. It's not an unreasonable number though given how many years it's been in development, given the team size, and given the marketing. Paying a team of 100 to 200 for 4 years ain't cheap.

You say the hype was out of proportion, but what are Sony supposed to do, come out and say, 'well actually our game isnt that good?'

It was exactly the same when GOW and Zelda came out. If Sony didnt promote the game as much as they possibly could, they wouldnt be doing their jobs properly. IMO, all the 90%+ reviews further justify their approach.

Sony is supposed to generate hype, nothing wrong with that. The problem is that the hype level ultimately didn't fit the game (going by sales numbers). The result is that you now see people puzzled why everyone isn't buying the game when it got so much non stop hype.

 

[Vic]

I'm going by what I read online. It's not an unreasonable number though given how many years it's been in development, given the team size, and given the marketing. Paying a team of 100 to 200 for 4 years ain't cheap.





Sony is supposed to generate hype, nothing wrong with that. The problem is that the hype level ultimately didn't fit the game (going by sales numbers). The result is that you now see people puzzled why everyone isn't buying the game when it got so much non stop hype.

The hype did fit the game (going by the reviews).

 

[betan]

I'm going by what I read online.

Paying a team of 100 to 200 for 4 years ain't cheap.

GG has a GDC presentation. I suggest you have a look at it, slightly more credible than rumor blogs, one would think.

 

[aselto]

Holy sh*t, now that I think about it, KZ2's 50+ million are guaranteed to turn into an unbelievably huge loss. They could be what, 20% done with the 1 million units they've sold so far?

And Sony's lost a fortune with Lair, and probably a lot with Heavenly Sword and some other first party titles we've forgotten about... I wouldn't expect any more AAA games from them for a long time...

I always wonder about that as well. While Microsoft and particularly Nintendo regurarly release heavy hitters, Sony don't seem to have as much luck this generation with a number of big flops or only "decent" successes. Many third party publishers posted huge losses in recent years and when you think that Sony's games have the highest production values...

Not exactly sure if Sony will totally resign from AAA titles, but they have to rethink their publishing strategy, for both PS3's and Sony Worldwide Studios' bottom line' sake.

Well, both Halo games have continued to sell pretty well all through the Xbox1's life cycle, so it shouldn't really be a surprise.

I wonder if ODST's release will finally slay Halo 3's sales or will the game continue to sell throughout 360's lifespan?

 

[Rangers]

I always wonder about that as well. While Microsoft and particularly Nintendo regurarly release heavy hitters, Sony don't seem to have as much luck this generation with a number of big flops or only "decent" successes. Many third party publishers posted huge losses in recent years and when you think that Sony's games have the highest production values...

Not exactly sure if Sony will totally resign from AAA titles, but they have to rethink their publishing strategy, for both PS3's and Sony Worldwide Studios' bottom line' sake.


I wonder if ODST's release will finally slay Halo 3's sales or will the game continue to sell throughout 360's lifespan?

Sony recently said they have as many first party developer employees as MS and Nintendo combined, by way of perspective. I too wonder if a pullback isnt in the offing. Without profit and loss knowledge though, cant tell. Maybe they are doing fine.

Considering how well Halo Wars sold, the fact that it tops "most anticipated" type lists that I've seen, a probably $40 price point, how much can ODST sell? You would have to think something like 2 million first NPD? That's my first gut feel anyway.

 

[obonicus]

I'm going by what I read online. It's not an unreasonable number though given how many years it's been in development, given the team size, and given the marketing. Paying a team of 100 to 200 for 4 years ain't cheap.

Even if their team got that big, they surely had a period of pre-production during those 4 years, no? Are you suggesting that they've been in full-blown production ever since the E3 BS trailer?

 

[StefanS]

Even if their team got that big, they surely had a period of pre-production during those 4 years, no? Are you suggesting that they've been in full-blown production ever since the E3 BS trailer?

IIRC (and I might be wrong), they had about 50 employees a bit after the E3 trailer and two years later they were around 200. But please don't quote me on that.

 

[StefanS]

Sony gets more than $40 per full priced game sold to _retail_ in NA alone, surely more in PAL territories (According to one Epic guy profit margins are doubled there IIRC, for non platform holder devs presumably).
How did you calculate 20%?

In fact 1 million sold to customer covers any 50 million rumor pretty well, I'd say.

Ehm, revenue is not profit. Other factors to be considered are marketing, transportation, etc. I don't think Sony makes $ 40 dollars profit on a 1st party game. Mind you, they are certainly making more profit than on your average third party game, but $ 40 dollars seems a bit "optimistic"

Also keep in mind when the Epic comment might have been made, since the British pound, Swedish Krona, Euro dropped against the US dollar during the last few months. So the Euro margins might not be that good anymore (still better than the US margins though I believe).

 

[obonicus]

Ehm, revenue is not profit. Other factors to be considered are marketing, transportation, etc. I don't think Sony makes $ 40 dollars profit on a 1st party game. Mind you, they are certainly making more profit than on your average third party game, but $ 40 dollars seems a bit "optimistic"

He didn't say profit, though, other than in reference to the Epic comment -- clearly the profit on a game depends on the game's budget. If Sony does get about $40 per copy, that's $40 million in revenue to offset the supposed $50 million budget (does that include marketing?). You could argue that KZ2 may not make that money when all's said and done (whatever gains from incorporating KZ2 tech into PhyreEngine are probably hard to determine, as is the amount of labor saved by sharing tech within SCEWWS), but I find it hard to believe that they won't make back $50 million - considering they've claimed to have sold (I imagine this does not mean shipped) over a million.

 

[StefanS]

He didn't say profit, though, other than in reference to the Epic comment -- clearly the profit on a game depends on the game's budget. If Sony does get about $40 per copy, that's $40 million in revenue to offset the supposed $50 million budget (does that include marketing?). You could argue that KZ2 may not make that money when all's said and done (whatever gains from incorporating KZ2 tech into PhyreEngine are probably hard to determine, as is the amount of labor saved by sharing tech within SCEWWS), but I find it hard to believe that they won't make back $50 million.

I don't know about the $ 50 million number, so I'll stay clear of that. It's probably extrapolated from other big budget titles.

But the regardless of the number I am fairly sure that that budget didn't included shipping, etc. Marketing not so sure, but given the amount of marketing it might not be factored in (I am only judging from heresay as I haven't seen a single KZ commercial over here.). [I'll gladly be corrected by someone with publisher experience]. So the point I am trying to make is (even if you leave out the game budget) the "profit" (the return you see after above factors have been subtracted) is not $ 40 per game.

 

[joker454]

I don't know about the $ 50 million number, so I'll stay clear of that. It's probably extrapolated from other big budget titles.

We can guesstimate based on what has leaked out. Dev time has varied between 3 and 5 years depending on who you believe, so average it to 4 years. Team size has varied between ~50 near acquisition by Sony, to ~200 at peak. We can average that out as well just for the sake of argument. So a guesstimate at say $50,000 average yearly salary might be:

Year 1, 50 people = 2.5 mil
Year 2, 100 people = 5.0 mil
Year 3, 150 people = 7.5 mil
Year 4, 200 people = 10 mil

So a naive guesstimate might be 25mil spent on salaries. However, were there any outsourcing costs, like art perhaps? Any overtime costs? Any external team costs, like perhaps parts of Sony q/a or Sony tech teams? Any perk costs like team trips, in office masseuse, free food and sodas, etc? Yearly rent and utility costs? Marketing and advertising costs? The euro probably factors in as well since I suspect a $50,000 US yearly salary guess is likely low. After the game is done there are still shipping costs, blu-ray disc replication costs, as well as payments for better placement in stores, etc. It all adds up real fast.

 

[obonicus]

We can guesstimate based on what has leaked out. Dev time has varied between 3 and 5 years depending on who you believe, so average it to 4 years. Team size has varied between ~50 near acquisition by Sony, to ~200 at peak. We can average that out as well just for the sake of argument. So a guesstimate at say $50,000 average yearly salary might be:

Year 1, 50 people = 2.5 mil
Year 2, 100 people = 5.0 mil
Year 3, 150 people = 7.5 mil
Year 4, 200 people = 10 mil

So a naive guesstimate might be 25mil spent on salaries. However, were there any outsourcing costs, like art perhaps? Any overtime costs? Any external team costs, like perhaps parts of Sony q/a or Sony tech teams? Any perk costs like team trips, in office masseuse, free food and sodas, etc? Yearly rent and utility costs? Marketing and advertising costs? The euro probably factors in as well since I suspect a $50,000 US yearly salary guess is likely low. After the game is done there are still shipping costs, blu-ray disc replication costs, as well as payments for better placement in stores, etc. It all adds up real fast.

There was also something from the Netherlands claiming the game had cost over 40 million Euro and was the country's biggest media production ever, or somesuch. But this was also a guess, even if an educated one.
Game budgets are even more mysterious than film budgets, and people get those wrong all the time. It's not like anyone who has actual knowledge at Sony is going on record with a budget, especially if it's going to give the impression that a given game hasn't made money.

 

[StefanS]

Guys, we strayed far from the original topic, I am about to create spin-off thread.

 

[NRP]

I guess it's just shocking to me in light of that interview the other day on Gamespot where the Nintendo guy (Reggie whatever his last name is) said that even Wii games need to sell a million copies to make money. Most on this forum seem to think that Wii development is the cheapest and PS3 development is the most expensive, so that is basically why I am shocked and dissappointed by KZ2's sales. WTF are those millions of PS3 owners doing with their consoles!?!

 

[Mboojigga]

I guess it's just shocking to me in light of that interview the other day on Gamespot where the Nintendo guy (Reggie whatever his last name is) said that even Wii games need to sell a million copies to make money. Most on this forum seem to think that Wii development is the cheapest and PS3 development is the most expensive, so that is basically why I am shocked and dissappointed by KZ2's sales. WTF are those millions of PS3 owners doing with their consoles!?!

I recall that Reggie clarified his statement about Wii games NEED to sell a million cipies to make money.