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

[Silent_Buddha]

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]

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]

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]

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]

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]

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.