The business of game development *spawn

[obonicus]

Mod: Spawned from the Insomniac Multiplatform thread. This thread is a discussion about what businesses should be pursuing when developing games. It's more about financials and corporate doohickory than gaming and technology.

Insomniac did.Quantic dream is on its way to ,too.Sucker punch fairs pretty well also.(they want to stay a small human sized company )

Do we have information on their financials? We probably shouldn't bring them out as cases of success. Conversely, what of Factor 5? Free Radical? Is Silicon-Knights doing well?

Epic also isn't a terrific example, since they have a whole side business and they do develop a multiplatform engine.

I'm not saying that single platform is a way to ruin, but rather that Ghostz entire argument is flawed from the beginning, since he's arguing on a bunch of stuff that isn't public knowledge.

 

[eastmen]

I think I already mentioned Epic Games, a third party, doing a 360 exclusive, owns the IP to Gears of War - low cost development, high return. Valve is another one, for years, have worked on this philosophy. Bioware. What's their biggest IP? Mass Effect! Bigger than Dragon Age, will end twice the revenue, you can't get that on Ps3. Then, of course, there's Insomniac.

Epic who has one of the most popular engines on the market today ? Does Insominac have popular liscenses ?

Also bioware was bought by EA they are no longer a small third party developer and are now multi platform.

They were allways multiplatform btw. I've only ever played Mass effect and kotor on my pc.

 

[Ghostz]

Do we have information on their financials? We probably shouldn't bring them out as cases of success. Conversely, what of Factor 5? Free Radical? Is Silicon-Knights doing well?

Epic also isn't a terrific example, since they have a whole side business and they do develop a multiplatform engine.

I'm not saying that single platform is a way to ruin, but rather that Ghostz entire argument is flawed from the beginning, since he's arguing on a bunch of stuff that isn't public knowledge.

Flawed argument? Where have I heard that one before?

Epic Games is one example. We have a title that has had 2 releases and sold 10 million units. Of course you are going to dismiss it because it doesn't aline to your notion. This is literally blind ignorance. If this assumption is false ( Gears of War 1&2 have sold roughly 10), then you have yet to prove that it is false.

What does their engine being multi-format have to do with Gears of War selling 10 million units? It hasn't sold 10 million units over the Ps3 and 360, it sold 10 million units over the 360 only.

Remind me, who's argument is "flawed" again?

 

[Ghostz]

Epic who has one of the most popular engines on the market today ? Does Insominac have popular liscenses ?

Also bioware was bought by EA they are no longer a small third party developer and are now multi platform.

They were allways multiplatform btw. I've only ever played Mass effect and kotor on my pc.

First of all, the Pc and 360 is a platform; a single platform this is well understood. If we were to follow your logic, then the Pc has several platforms because each set of hardware is different.

Besides that, Mass Effect, is a 360 title. Bioware isn't wasting resources and man power developing [in-house] a Ps3 sku. The team is moving on to DLC and post release content and/or Mass3. This maximizes the talent and thus their revenue stream.

 

[obonicus]

Flawed argument? Where have I heard that one before?

Wherever you pulled this argument last?

Epic Games is one example. We have a title that has had 2 releases and sold 10 million units. Of course you are going to dismiss it because it doesn't aline to your notion. This is literally blind ignorance. If this assumption is false ( Gears of War 1&2 have sold roughly 10), then you have yet to prove that it is false.

No one's arguing that Gears has sold a lot. You're not arguing that either. You're talking about their financial success as platform exclusive developers. How can you do that when: a) as a private company, Epic's finances are none of our business and b) they have a whole side business developing multiplatform engines.

All you have is LTD numbers, and from there you're constructing a whole story that has a shaky basis in reality at best.

What does their engine being multi-format have to do with Gears of War selling 10 million units? It hasn't sold 10 million units over the Ps3 and 360, it sold 10 million units over the 360 only.

It has to do with your arguing that Epic is successful because of their developing platform exclusives. They have a whole side which may or may not be extremely profitable on its own.

Remind me, who's argument is "flawed" again?

Yours. You're arguing stuff you don't know. And no, bringing up LTDs that we all know doesn't change them. Hell, I've even given you counter-examples to your initial argument and you'd rather stick to the Epic argument, where at least you have some grounding, even if it's mushy.

 

[obonicus]

First of all, the Pc and 360 is a platform; a single platform this is well understood.

No it's not. Not on B3D at least. I'm not sure what passes for a platform where you're from, though.

If we were to follow your logic, then the Pc has several platforms because each set of hardware is different.

No, that doesn't follow from his logic at all. If 'PC' is too vague, then let's use 'Windows PC' instead.

Besides that, Mass Effect, is a 360 title.

And PC.

Bioware isn't wasting resources and man power developing [in-house] a Ps3 sku.

They are for Dragon Age, though. Did they lose money on that? Did they make less money by putting the game on PS3?

 

[DuckThor Evil]

I think Ghostz has taken the idea too far, but imo it's true that multiplatform titles won't have the same halo as easily on top of them than exclusive have, and in some cases that can actually lead to lower sales. GTA 4 or MW2 definitely aren't such games though. Exclusivity will gather interest especially now that they are quite rare.

 

[Ghostz]

Wherever you pulled this argument last?



No one's arguing that Gears has sold a lot. You're not arguing that either. You're talking about their financial success as platform exclusive developers. How can you do that when: a) as a private company, Epic's finances are none of our business and b) they have a whole side business developing multiplatform engines.

All you have is LTD numbers, and from there you're constructing a whole story that has a shaky basis in reality at best.



It has to do with your arguing that Epic is successful because of their developing platform exclusives. They have a whole side which may or may not be extremely profitable on its own.



Yours. You're arguing stuff you don't know. And no, bringing up LTDs that we all know doesn't change them. Hell, I've even given you counter-examples to your initial argument and you'd rather stick to the Epic argument, where at least you have some grounding, even if it's mushy.

I've pointed out that exclusive platform developers can be more successful. Epic Game being one of them, Insomanic being another, noting we they don't have to chase market conditions to be successful. You are talking about a whole side of an argument I didn't even bring up. The success I am referring to is Gears of War, not their engine development, for Insomanic their ability at being more efficient than a multi-target developer.

 

[Silent_Buddha]

Flawed argument? Where have I heard that one before?

Epic Games is one example. We have a title that has had 2 releases and sold 10 million units. Of course you are going to dismiss it because it doesn't aline to your notion. This is literally blind ignorance. If this assumption is false ( Gears of War 1&2 have sold roughly 10), then you have yet to prove that it is false.

What does their engine being multi-format have to do with Gears of War selling 10 million units? It hasn't sold 10 million units over the Ps3 and 360, it sold 10 million units over the 360 only.

Remind me, who's argument is "flawed" again?

And then you conveniently ignore the fact that they make as much or more profit off their multi-platform engines as they do the Gears IP.

Remind me, who's argument is "flawed" again?

Let's add to that Madden NFL perhaps. Or FIFA soccer/football. Bioware was previously a single console platform developer that is now developing for both consoles. Square-Enix has choses to go multiplatform with FF XIII. Capcom has taken RE multi-platform and reaped the rewards. They are also going to take the Dead Rising IP and make it multiplatform. As well taking Lost Planet Multiplatform. As mentioned before, Gearbox has done exceptionally well for a small dev house going multiplatform.

A large chunk of each platforms best selling games are multi-platform. With many of the top selling exclusives going multi-platform.

Regards,
SB

 

[Colourless]

Funny thing about Bioware. Mass Effect uses the Unreal engine, known to be platform portable and is only on 360 and PC. However for Dragon Age, they wrote their own engine for PC, 360 and PS3. If releasing on PS3 didn't make sense, they wouldn't have spent the time and money to port the engine to PS3.

 

[Ghostz]

And then you conveniently ignore the fact that they make as much or more profit off their multi-platform engines as they do the Gears IP.

Remind me, who's argument is "flawed" again?

Let's add to that Madden NFL perhaps. Or FIFA soccer/football. Bioware was previously a single console platform developer that is now developing for both consoles. Square-Enix has choses to go multiplatform with FF XIII. Capcom has taken RE multi-platform and reaped the rewards. They are also going to take the Dead Rising IP and make it multiplatform. As well taking Lost Planet Multiplatform. As mentioned before, Gearbox has done exceptionally well for a small dev house going multiplatform.

A large chunk of each platforms best selling games are multi-platform. With many of the top selling exclusives going multi-platform.

Regards,
SB

What a microscopic view - you are only talking about profits. I am talking of efficient use of man power and its associated costs: ( Manpower * C / Profit = Revenue. Multi-target developers spend more money for higher profits. Higher profit does not equate to more revenue. Why do you think EA stocks price are at a all time low? Sales are up, so is their spending and their revenues are down some 30 percent generation over generation.

 

[Shifty Geezer]

What a microscopic view - you are only talking about profits. I am talking of efficient use of man power and its associated costs: ( Manpower * C / Profit = Revenue. Multi-target developers spend more money for higher profits. Higher profit does not equate to more revenue. Why do you think EA stocks price are at a all time low? Sales are up, so is their spending and their revenues are down some 30 percent generation over generation.

I'm missing something here. Maybe you're using revenue in a different technical manner to that I'm used to, but as far as I've always understood, revenue is a pretty irrelevant figure and it's profitability that matters. Which is the more successful business - one that generates revenue of $1 trillion a year for profits of $1 million, or one that generates $100 million a year from $1 billion revenues?

Also, though I accept history is full of examples where the learned masses have been wrong and an independent thinker has shown a better route, every developer is going cross-platform these days, even if it's just PC+XB360. One of the greatest features of CryEngine 3 is the realtime cross-platform development and update. Does every single accountant and producer in these companies not see the wood for the trees, and is missing that single platform, fewer sales is more profitable and generates more revenue? Let's take Sacred 2 for example because we've had Tobias talking about the multiplatform effort. VGChartz lists it as 300k sales on PS3. Those are quite probably make-believe, so let's grab a 100k figure. That's ~$6 million extra game revenues. The cost of porting was ~2 developers for a couple of years. Basically a fraction of a million, likely well shy of 5% total revenues from my make-believe-but-quite-possible figure. You'd be looking at a $1 million+ for the publisher net profit with conservative figures, and more realistically several million. What exactly could those couple of developers done to increase profits if the game had been single platform?

 

[Ghostz]

I'm missing something here. Maybe you're using revenue in a different technical manner to that I'm used to, but as far as I've always understood, revenue is a pretty irrelevant figure and it's profitability that matters. Which is the more successful business - one that generates revenue of $1 trillion a year for profits of $1 million, or one that generates $100 million a year from $1 billion revenues?

Also, though I accept history is full of examples where the learned masses have been wrong and an independent thinker has shown a better route, every developer is going cross-platform these days, even if it's just PC+XB360. One of the greatest features of CryEngine 3 is the realtime cross-platform development and update. Does every single accountant and producer in these companies not see the wood for the trees, and is missing that single platform, fewer sales is more profitable and generates more revenue? Let's take Sacred 2 for example because we've had Tobias talking about the multiplatform effort. VGChartz lists it as 300k sales on PS3. Those are quite probably make-believe, so let's grab a 100k figure. That's ~$6 million extra game revenues. The cost of porting was ~2 developers for a couple of years. Basically a fraction of a million, likely well shy of 5% total revenues from my make-believe-but-quite-possible figure. You'd be looking at a $1 million+ for the publisher net profit with conservative figures, and more realistically several million. What exactly could those couple of developers done to increase profits if the game had been single platform?

Hrmm... ...when EA goes to wallstreet, they report annually earnings in revenue. Gross and profit margins, assets inflows and outflows make up revenue earnings. Shareholders increases or decrease their holdings into a company based on these financial statements, profitability is only one value to the equation. If EA went to wallstreet as a smaller, higher earning company their stock prices would be higher. This is basic economics.

Do you think EA wants 6 different platforms? No. This increasing their spending. Everyone is seeing the addressable market of the Ps3 and 360. Right now, everyone is chasing MW and GTA, that's the meme.

Ok so you keep bringing up examples of developers maximizing a single product, a single release window over 4 years. Where are your examples of developers doing multiple products within a window of a year? You [and they] simply aren't accounting for the higher spending to achieve that end of addressing multiple markets. EA isn't accounting for the higher spending ( well, they are now ). Clearly, we are already seeing a solution they've been adapting - which is minimizing company outflows to increase company revenue inflows. This is happening at the macro-level first. They've been maximizing the output of their highest earning studios. This would eventually lead EA to kill their "EA partners" program to those they have to invest considerable amount of capital.

Lets take the Metro 2033 example. If memory serves me correctly, I remember an article in eurogamer where one of the programmers? or producers commented on THQ not wanting to invest into a Ps3 version of that game because of all the associated cost to it. Maybe some other publisher will pick it up later. I think you are going to be seeing a lot more examples such as that. A more efficient developer will maximizing the potential and thus their revenue stream over one platform, then two; two more then three.

 

[Laa-Yosh]

This debate is still going on, seriously?
Multiplatform is a no-brainer unless Sony/MS offers license fees that are a fraction of the standard to compensate. And even in that case it's not a done decision. There are so many advantages I don't even know where to start...

 

[London Geezer]

I'm missing something here. Maybe you're using revenue in a different technical manner to that I'm used to, but as far as I've always understood, revenue is a pretty irrelevant figure and it's profitability that matters. Which is the more successful business - one that generates revenue of $1 trillion a year for profits of $1 million, or one that generates $100 million a year from $1 billion revenues?

Actually you'd be surprised by the amount of companies that go after revenue and don't really mind small profits. A $1 trillion (rev) company is still much, much, much bigger than a $1billion (rev) company, even though the 1trillion one might have smaller profits than the smaller company. Having such a huge business has its own obvious advantages compared to the smaller - but more profitable - business.
The 1trillion company might have 90% market share, and they have all the potential to cut costs down the line and make a profit.
The 1billion company might have the remaining 10% market share and has an uphill struggle to even get close to the size of the larger business.
The 1trillion company would be able to launch a product like the Wii, the PS3 and the X360 all at once (technical limitations permitting). The 1 billion company couldn't.
All very general examples, and there are many others, but i'm just trying to prove that revenue is not irrelevant at all and that profits are not the only important thing in the world.

EDIT: Having said that, really it's a no brainer that pretty much anyone should go multi-platform these days, if porting a game from one platform to the other costs you less than the projected revenue the port would bring.
I would expect that would be the case as most of the costs are spent on the original version (design, art, all the R&D), while porting it is (or should be) a relatively simple change of code to make the game work on the other platform.
Even a game that wasn't ported very well (FFXIII) will bring Squenix so much money. Looking at how they ported it, they probably spent 2p and a couple of pizzas on the port. It's like printing money.

 

[Ghostz]

Actually you'd be surprised by the amount of companies that go after revenue and don't really mind small profits. A $1 trillion (rev) company is still much, much, much bigger than a $1billion (rev) company, even though the 1trillion one might have smaller profits than the smaller company. Having such a huge business has its own obvious advantages compared to the smaller - but more profitable - business.
The 1trillion company might have 90% market share, and they have all the potential to cut costs down the line and make a profit.
The 1billion company might have the remaining 10% market share and has an uphill struggle to even get close to the size of the larger business.
The 1trillion company would be able to launch a product like the Wii, the PS3 and the X360 all at once (technical limitations permitting). The 1 billion company couldn't.
All very general examples, and there are many others, but i'm just trying to prove that revenue is not irrelevant at all and that profits are not the only important thing in the world.

Exactly, and the problem is, only 1 percent of those companies are going to be 1 trillion dollar companies, most will, in fact, be 1 billion dollar companies. That's the reality. Chasing the 1 trillion and you'll see most of them fail.

 

[Rolf N]

Hrmm... ...when EA goes to wallstreet, they report annually earnings in revenue. Gross and profit margins, assets inflows and outflows make up revenue earnings. Shareholders increases or decrease their holdings into a company based on these financial statements, profitability is only one value to the equation. If EA went to wallstreet as a smaller, higher earning company their stock prices would be higher. This is basic economics.

Revenue is the money that flows in. Expenses are the money that flows out. EA reports both of these, yes, but they also explicitly report the difference, which is profit (or loss when it's negative). Profit is the important thing to the investors and the company itself, because it is required for further investment and growth.

Do you think EA wants 6 different platforms? No. This increasing their spending. Everyone is seeing the addressable market of the Ps3 and 360. Right now, everyone is chasing MW and GTA, that's the meme.

They don't actively want a multi-segment market, but they see that it exists and serve it as well as they can, as a decent business should.

They don't gain anything from trying to kill off select platforms by neglect. They alone do not have the power to pull that off and, fortunately, no other single publisher has it either.

 

[London Geezer]

They don't gain anything from trying to kill off select platforms by neglect. They alone do not have the power to pull that off and, fortunately, no other single publisher has it either.

They kinda did with the Dreamcast... But that was a long time ago.

 

[Ghostz]

Revenue is the money that flows in. Expenses are the money that flows out. EA reports both of these, yes, but they also explicitly report the difference, which is profit (or loss when it's negative). Profit is the important thing to the investors and the company itself, because it is required for further investment and growth.

They don't actively want a multi-segment market, but they see that it exists and serve it as well as they can, as a decent business should.

They don't gain anything from trying to kill off select platforms by neglect. They alone do not have the power to pull that off and, fortunately, no other single publisher has it either.

Not entirely true, you only have half of it. Profitably has to be sustainable for continued investment. Nobody is going to increase their holdings into a company that can't maintain solvable earnings. Riddle me this: Why was EA's profitably up the last quarter, yet their stock prices continued to fall?

 

[Cheezdoodles]

Actually you'd be surprised by the amount of companies that go after revenue and don't really mind small profits. A $1 trillion (rev) company is still much, much, much bigger than a $1billion (rev) company, even though the 1trillion one might have smaller profits than the smaller company. Having such a huge business has its own obvious advantages compared to the smaller - but more profitable - business.
The 1trillion company might have 90% market share, and they have all the potential to cut costs down the line and make a profit.
The 1billion company might have the remaining 10% market share and has an uphill struggle to even get close to the size of the larger business.
The 1trillion company would be able to launch a product like the Wii, the PS3 and the X360 all at once (technical limitations permitting). The 1 billion company couldn't.
All very general examples, and there are many others, but i'm just trying to prove that revenue is not irrelevant at all and that profits are not the only important thing in the world.

This is completely flawed reasoning!
Profits is what matter in the eyes of the owner of the firm, and in part what matters to the priority stakeholders aswell (debtholders would like firm to so it can pay its debts). The only one who cares about revenues are Managers, they would prefer to manage the 1 trillion $ firm ofc, since empire building is fun.

Nobody cares about revenues. The example that your stating is completely flawed, because what your saying is that the trillion dollar firm has EXPECTATIONS OF HIGHER PROFIT IN THE FUTURE.

1 trillion in revenue by itself is worthless. Your example says that blah blah cost cutting blah blah -> will lead to profits.

1 trillion in revenue and 0 profits and no outlook for improving this is worthless to everybody except for the manager.

(not accounting profits either which can be positive while stakeholders are still loosing, but financial profits (meaning positive NPV when discounted for RROI). )

Now give me a second to rip some other arguments here to shred.