Ubisoft: A 50 million Euro game takes 2.5 million sales to break even

[RobertR1]

This is taken from the neogaf on someone who listened to the investor call. http://www.neogaf.com/forum/showpost.php?p=37923076&postcount=1542

I found this to very interesting as we have rarely had good insights to what it takes for a game to break even.

If this was the complete budget for a game like Ghost Recon: Future Soilder, it's also safe to assume that much larger production titles are likely to be even more expensive.

 

[babybumb]

I dont there are many 50 million euro games outside the very few. Maybe with advertasing

 

[Jedi2016]

I know games are getting more expensive, but I'd really need to see the complete listed budget for a game to see where that 50M is going. And just production, not marketing.

 

[Albuquerque]

Yeah, that does seem like quite a bit of coin. I too am curious if they lump all the PR and marketing materials into that figure -- which might make more sense. Actually, if they do, I wonder what the breakout is between marketing / pr budgetary items and actual code / technology items.

Does the UK allow for capitalization / amortization / depreciation of research, development and QA costs of the code (as an asset)? I know the US does, within some limits... Interesting tax benefits arise from being able to "build" your own $50MM asset and then write it down over five years.

 

[Laa-Yosh]

So the game doesn't have to earn the marketing money back and can break even without covering those costs? Come on now, it's part of the budget in terms of investment. It's also one of the reasons why a lot of games got canceled in the past years.

 

[Shifty Geezer]

There was a post a while back suggesting more should be spent on marketting than development, and we have that old thread about 70% of games not making back their investment. It's the way the business has gone.

 

[Mobius1aic]

When game development has become as uninspiring as it recently has, yeah 70% marketing cost is completely necessary to get your audience to become interested.

Uninspiring gameplay and design goals
Large costly development teams
In house engine and software development
Sweat shop like working conditions that don't increase productivity or creativity.

Why would programmers have any real interest in developing cookie cutter titles? It's depressing I'm sure for them. They won't have the passion or drive a developer like Naughty Dog's team will have in creating a good product. The effective output of a worker at ND is probably two-fold that of a worker at some EA or Ubisoft studio working the same amount of time because the ND worker can work his creative juices and collectively as a team effort in a much better working environment that results in an excellent product that consumers like to play and sells very well making ND plenty of money.

The EA and Ubisoft model usually results in mediocre software that requires advertisement on a grand scale to get less informed people on board with the game and I guess in a way "suckered" into purchasing it.

 

[tuna]

When game development has become as uninspiring as it recently has, yeah 70% marketing cost is completely necessary to get your audience to become interested.

Uninspiring gameplay and design goals
Large costly development teams
In house engine and software development
Sweat shop like working conditions that don't increase productivity or creativity.

Why would programmers have any real interest in developing cookie cutter titles? It's depressing I'm sure for them. They won't have the passion or drive a developer like Naughty Dog's team will have in creating a good product. The effective output of a worker at ND is probably two-fold that of a worker at some EA or Ubisoft studio working the same amount of time because the ND worker can work his creative juices and collectively as a team effort in a much better working environment that results in an excellent product that consumers like to play and sells very well making ND plenty of money.

The EA and Ubisoft model usually results in mediocre software that requires advertisement on a grand scale to get less informed people on board with the game and I guess in a way "suckered" into purchasing it.

What makes the working environment at Naughty Dog so much better than the different UBI and EA studios? What is the difference in making Uncharted 3 versus Assassins' Creed 3?

 

[Jedi2016]

What makes the working environment at Naughty Dog so much better than the different UBI and EA studios? What is the difference in making Uncharted 3 versus Assassins' Creed 3?

We'd have to see the place to tell you that.

At a basic level, I can probably safely say that it's a matter of perspective on the title. ND seems to do things because they genuinely want to make something cool and special, whereas Ubi just wants to churn out the next sequel and watch the money come in. For the guys actually doing the work, that difference in mindset is a huge factor in how much they enjoy what they do, which directly impacts how well they do their job, which directly impacts the quality of the final product.

And in companies where all decisions are made by a group of suits in a boardroom, the guys actually doing the work have practically zero say in changing something that sucks. But when the guys in charge are actually artists and designers themselves, they're far more open to input from the crew, which can only improve the product.

Also bear in mind we're probably looking at some Hollywood accounting, too. They love to go on and on about how they're barely breaking even, all the while buying up lake houses and Ferraris.

 

[Sonic]

Video games is an industry that relies on the free market like so many others. If the shit that sells are rehashes of old games with improved graphics and minor tweaks to gameplay then that is what will be developed. You need money in order to survive in the world, especially if you want a good quality of life, and if rehashes is what pays the bills well then there you go. But there will always be innovative and new titles that come out, and will be a success and make the developers a lot of money. I feel that the argument that Mobius has presented is tired and has been around for generation after generation.

Meh, but there are examples of many companies just not inspiring or being innovative as they used to be. SEGA is the prime example of that.

 

[RobertR1]

We'd have to see the place to tell you that.

At a basic level, I can probably safely say that it's a matter of perspective on the title. ND seems to do things because they genuinely want to make something cool and special, whereas Ubi just wants to churn out the next sequel and watch the money come in. For the guys actually doing the work, that difference in mindset is a huge factor in how much they enjoy what they do, which directly impacts how well they do their job, which directly impacts the quality of the final product.

And in companies where all decisions are made by a group of suits in a boardroom, the guys actually doing the work have practically zero say in changing something that sucks. But when the guys in charge are actually artists and designers themselves, they're far more open to input from the crew, which can only improve the product.

Also bear in mind we're probably looking at some Hollywood accounting, too. They love to go on and on about how they're barely breaking even, all the while buying up lake houses and Ferraris.

Uncharted
Uncharted 2
Uncharted 3
Uncharted Golden Abyss (oversaw the project)

Assassins Creed
Assassins Creed 2
Assassins Creed Brotherhood
Assassins Creed Revelations


Might want to take a different route...

 

[sebbbi]

Uninspiring gameplay and design goals
Large costly development teams
In house engine and software development
Sweat shop like working conditions that don't increase productivity or creativity.

Why would programmers have any real interest in developing cookie cutter titles? It's depressing I'm sure for them. They won't have the passion or drive a developer like Naughty Dog's team will have in creating a good product. The effective output of a worker at ND is probably two-fold that of a worker at some EA or Ubisoft studio working the same amount of time because the ND worker can work his creative juices and collectively as a team effort in a much better working environment that results in an excellent product that consumers like to play and sells very well making ND plenty of money.

Naughty Dog also has "In house engine and software development" and "Large costly development teams" compared to huge amount of smaller developers out there. Many of the bigger publishers / developers are actually using licensed engine technology, and I personally feel that developers who create their own engines often have slightly more creativity in their games as well. If you create your own technology, you have more creative freedom because you are less bound by existing technology and existing content creation models. The wildest ideas (the big changes) often require new technology.

It's a really bold claim to say that Naughty Dog is the only big studio that has creative atmosphere and good team spirit. I agree that they create great games, but great games do not always correlate 1:1 with great work environment or "two-fold" personnel efficiency gains. How much personal work history in games development do you have to back up these claims?

 

[Mobius1aic]

Naughty Dog also has "In house engine and software development". A very decent engine I must add. Many of the bigger publishers / developers are actually using licensed engine technology, and I personally feel that developers who create their own engines often have slightly more creativity in their games as well. If you create your own technology, you have more creative freedom because you are less bound by existing technology and existing content creation models. The wildest ideas (the big changes) often require new technology.

It's a really bold claim to say that Naughty Dog is the only big studio that has creative atmosphere and good team spirit. I agree that they create great games, but great games do not always correlate 1:1 with great work environment or "two-fold" personnel efficiency gains. How much personal work history in games development do you have to back up these claims?

No personal work history what so ever

As for the game engine and software bit, I'm sure it eats up quite a bit of budget, but yes a custom engine will be better designed for the developers needs and will be better understood, assuming they get a proper engine up and running that meets their needs.

And I was using ND as an example. I was speaking on a probable basis on working conditions. I think a good working environment has the capacity to lead to better products plain and simple, which of course means having good leadership to make things happen. ND and SpaceX (I know they are not a software company) I think are good examples of this.

Of course quality doesn't always lead to great sales figures, but quality hopefully creates rapport and helps to bring in later success.

 

[Jedi2016]

Uncharted
Uncharted 2
Uncharted 3
Uncharted Golden Abyss (oversaw the project)

Assassins Creed
Assassins Creed 2
Assassins Creed Brotherhood
Assassins Creed Revelations


Might want to take a different route...

Not really. For one, the first three Uncharted games are made by the same team and not "farmed out" to other subsidiaries the way Ubisoft did with ACB and ACR. That's why the increase in interest in AC3, because it's actually made by the team that made AC and AC2, not the team that the last two sequels were farmed out to. The last two AC games were made by a completely different team with orders to "spit out another AC game". They weren't the game's original creators and had no vested interest in the franchise. And I'm talking about the programmers and content creators, not management.

Historically, this is the point where Naughty Dog will ditch the Uncharted franchise and move on to something else, and another studio will begin pumping out inferior Uncharted sequels for the rest of eternity. It's happened with every other franchise they've made, after all. The first three games are made in house, and they're all very good, then they get farmed out and go to hell in a handbasket.

My point stands, I think. The motivation and desire to create a good product, beyond a paycheck, yields better results. That's why the Uncharted franchise has gotten better from 1-3, while the AC franchise has gone the other way since AC2.

 

[tongue_of_colicab]

I don't think you are being fair. I'm sure the majority of developers would want to create the best product they can. However to do so you need money. And lots of it. A lot of studies just are not capable of securing tens of millions in funds to build a game that a) nobody knows if it will turn out a good game and b) even if it's a good game, in the sequels rule the world age you might not even sell so much. Good luck finding investors.

How many truely independant studios are there that have to cash to do whatever they want?

Valve, Blizzard and Epic are three I can think of. ID as well? ND is a 2nd party dev right? So they probably have Sony paying for their nice little developer enviroment.

 

[ERP]

Naughty Dog are Sony 1st party not second.

No one ever sets out to make a bad game, or even a generic game.
There are lots of ways to spend XX million, some produce better games than others, a lot depends on time pressure.
IME the more people you throw at a game the less efficiently the money is spent, but if for whatever reason there are tight time constraints sometimes throwing people at the problem is the only option.

 

[Prophecy2k]

Sometimes though publishers just like to waste money anyway.

I think about an example like the newest Syndicate game, where the dev studio was frustrated so much by the publisher to the point where all the good studio staff left and the game ended up being a bit of a shambles. Yet the publsher still decided to pump stupid money into getting big name hollywood actors/actresses to do the voice work. And spend a crook tonne on marketing the game they knew beforehand wasn't actually very good.

The problem is that some publishers spend more of their game development budgets on sh!tty superfluous things that simply aren't necessary, all the while starving the developers of the games of enough time to actually concept, build, develop & polish a superb product. It's mismanagement on the publisher side, and it is almost always reflected in the quality of the final product.

You only need to look at developers like bioware, volition, starbreeze etc to see what I'm talking about.

 

[Laa-Yosh]

Apart from a short schedule on DA22, what exactly is wrong at Bioware?
ME3 is a critical and commercial success; as it was expected, the internet rage was about like 1% of the gamers or so, blown out of proportion because of various forums (people basically combined each others complaints, including things that never really bothered them on their own)

 

[Prophecy2k]

Apart from a short schedule on DA22, what exactly is wrong at Bioware?
ME3 is a critical and commercial success; as it was expected, the internet rage was about like 1% of the gamers or so, blown out of proportion because of various forums (people basically combined each others complaints, including things that never really bothered them on their own)

Short schedule on DA2, ME2 & 3 compared to DA:O & ME1. I didn't say that Bioware don't make great games anymore, or that their games weren't critical successes. Just that the shorter dev times were reflected in the end products, which is undeniable. Either way It was just an example to prove a point, I could have more specifically named the games I had in mind and not the developers but it would have served the same purpose.

I'm not bashing bioware Laa-Yosh so no need to be so sensitive.

My point was more that publisher mismanagement adversely affects game quality, and game developers too, hence pubs needing to spend more on useless stuff like voicework and marketing stunts to sell the game. And yet the same complain about spiralling dev costs when if they allowed more of the dev budget to actually go to the game developer, i.e. allowing more time for concepting, pre-production, essential iteration and last minute polishing, then they would have to spend less on marketing because the quality of the games themselves would be enough to sell the games (no better marketing tool than rave reviews and a 95+ metacritic score).

 

[Laa-Yosh]

Short schedule on DA2, ME2 & 3 compared to DA:O & ME1.

I completely disagree - the ME sequels had 2+ year schedules, and that's the industry standard for superior sequels in general. UC2/3, KZ3, CODX, and so on.
This is perfectly enough time to finetune an existing engine and build content for a game on it using experience from the first chapter's R&D and production stages.

ME1 needed more time because they made a huge jump from the KOTOR games. Dynamic lighting and shadows and normal mapping and multithreading and so on. ND spent at least as much time if not more - how long was it between the first UC demo and the game's release? Also, with the first chapter there's no way to reuse any existing assets or designs or game mechanics.
Thus ME1 and 2/3 are not comparable in any way. Not to mention that since Bioware relied on licensed engine tech, completely starting from scratch for the sequels was not an option anyway (especially considering the need to transfer the character and decision data).

Just that the shorter dev times were reflected in the end products, which is undeniable.

It is deniable. Both sequels exceeded ME1 by far in everything that relies on development time - stability, performance, content variety and quality, gameplay difficulty and so on.

If you were to mention the AC2 series, there I would probably agree; and I also don't have anything to support DA2 (even though I haven't played those games, it was obvious that the sequel was rushed.

My point was more that publisher mismanagement adversely affects game quality, and game developers too, hence pubs needing to spend more on useless stuff like voicework and marketing stunts to sell the game.

The ME series is a very bad example for your argument, again - sales and critical response were both getting better and better. Also, ME3 was even delayed for a few months to give the devs enough time.
So it is actually a counter-example, a sequel done right with minimal publisher interference. EA didn't intervene even after the overblown online controversy issue and let Bioware handle it as they wanted to (free! DLC rich in expensive art content).