You heard it here first.

[Farid]

$2000 for the console and $300 for one game is as much as I am willing to pay for such thing. Any higher than its probably better to get the arcade machine instead.

Why Sega will do such a thing? How many games could they sale with such business model?
Even the "500$ console/100$ game"model is not an interresting model compared to the "Mainstream console (whoever the manufacturer)/ Port to that machine"model.
Except if Sammy/Sega wants to be the craftsmen of videogames, this is not a great path to choose if you're on the way for making money.

Specially since the differences between the arcades games and the consoles games are so slim, today, the best arcade system available now is, iirc, the Sega's Chihiro wich is based on the Xbox hardware.
Soon We'll get to the point of diminishing returns from all the hadwares available, so even if this "home arcade system" has an über-tech , in 2010 nobody will the differences with the others consoles.

The only solution for money making will be (like megadrive already stated in this topic) a VR system with glasses and all that stuff, that will have serious advantage over anything else.

 

[PC-Engine]

$2000 for the console and $300 for one game is as much as I am willing to pay for such thing. Any higher than its probably better to get the arcade machine instead.

Why Sega will do such a thing? How many games could they sale with such business model?
Even the "500$ console/100$ game"model is not an interresting model compared to the "Mainstream console (whoever the manufacturer)/ Port to that machine"model.
Except if Sammy/Sega wants to be the craftsmen of videogames, this is not a great path to choose if you're on the way for making money.

Specially since the differences between the arcades games and the consoles games are so slim, today, the best arcade system available now is, iirc, the Sega's Chihiro wich is based on the Xbox hardware.
Soon We'll get to the point of diminishing returns from all the hadwares available, so even if this "home arcade system" has an über-tech , in 2010 nobody will the differences with the others consoles.

The only solution for money making will be (like megadrive already stated in this topic) a VR system with glasses and all that stuff, that will have serious advantage over anything else.

You're missing the point. My proposed business model assumes SEGA only games on the system and that doesn't mean all SEGA games. Only the the top franchises will be exclusive to the system. Want to play VF5? Buy the system! You don't even have to spend money to market the system. The R&D costs of the system is negligible too because it'll be piggybacking off of arcade hardware which SEGA releases every few years regardless whether or not they plan on making a console with said arcade tech.

The VR thing has been done by many companies and so far VR hasn't really caught on...

 

[Farid]

You're missing the point. My proposed business model assumes SEGA only games on the system and that doesn't mean all SEGA games. Only the the top franchises will be exclusive to the system. Want to play VF5? Buy the system! You don't even have to spend money to market the system. The R&D costs of the system is negligible too because it'll be piggybacking off of arcade hardware which SEGA releases every few years regardless whether or not they plan on making a console with said arcade tech.

I'm not missing the point, the question is simple, how many Virtua Fighter Fans in the world are ready to Pay 1000$ for the console + 100$ to play the Game.
On the other hand how many people are ready to buy an almost perfect conversion of VF5 on a mainstream console for 50$.

If the first possibility makes more money for Sega than the second... then it's good idea.
Btw, the VF series does not sell like it used to do back in the saturn era.

The VR thing has been done by many companies and so far VR hasn't really caught on...

They had never been at the top of the tech. It need at least +70Hz screens on the VR-glasses for a use that doesn't give you a headache. That or new technologie, such as Virtual Retinal Display (it also need a high frequency btw).

 

[PC-Engine]

I'm not missing the point, the question is simple, how many Virtua Fighter Fans in the world are ready to Pay 1000$ for the console + 100$ to play the Game.

My model was $500/$100

SEGA makes money on hardware AND software under my model, (conservative) $50 per console and $50 per game. If they sell (conservative) 500K that's $50 million in profit right there.

On the other hand how many people are ready to buy an almost perfect conversion of VF5 on a mainstream console for 50$.

How many VF4 sold on PS2? How much money did SEGA make from the PS2 version?

That or new technologie, such as Virtual Retinal Display (it also need a high frequency btw).

And you think that kind of R&D is cheap? Even if it's cheap enough what kind of applications are going to take advantage of this and how is it going to work? Got any ideas? So far VR has been a gimick.

 

[CIN]

You're missing the point. My proposed business model assumes SEGA only games on the system and that doesn't mean all SEGA games. Only the the top franchises will be exclusive to the system. Want to play VF5? Buy the system! You don't even have to spend money to market the system. The R&D costs of the system is negligible too because it'll be piggybacking off of arcade hardware which SEGA releases every few years regardless whether or not they plan on making a console with said arcade tech.

The VR thing has been done by many companies and so far VR hasn't really caught on...

I quote.

The system would have to only be a N@omi 3/4 or whatever for the home. NO 3rd party console games. Only arcade ports of N@omi 3 games. That is all.

It would be only for the hardcore gamer. For this reason I would think it would sell quite a few units. They could even make a type of preorder scheme where they see how many people are interested and if it is viable they just make a batch for those people. After all it would be just a N@omi covered in some plastic and with extra controller ports.

 

[CIN]

OH and IIRC DC only cost about 60million to develop. The majority of the money was for marketing the console.

Since N@omi 3 is already in dev...with no need for marketing the dman thing...

 

[Guden Oden]

SEGA makes money on hardware AND software under my model, (conservative) $50 per console and $50 per game. If they sell (conservative) 500K that's $50 million in profit right there.

Profit?

Cost for developing modern, competitive console hardware and manufacture/market it: several hundred+++ million $. Cost for developing cutting-edge games for said console and market them: dozens+++ million $ EACH...

With the prices you suggest versus the established console manufacturers aiming at half that AND being more well-known brands these days, I think Sega should consider themselves lucky if they sell 500k units.

 

[JasonLD]

That kind of business model worked for Neo-Geo but Neo-geo was really popular in Arcade back then..so it worked for SNK..
I can't see Sega taking similar approach since Arcade market is no longer the force it used to be.

 

[cthellis42]

Considering all the lack-of-sales and corporate financial problems, I can't say it really "worked for SNK" either. Perhaps "worked to the degree that it wasn't a money sink" but no so much "worked the the degree that it was a good money engine."

 

[Lazy8s]

Development of the Dreamcast hardware cost SEGA around US $100 million. When trumpeting the marketing budget they were earmarking for the US, then-President Irimajiri revealed the expense breakdown (which totaled $500 million between hardware R&D, software R&D, and launch marketing), musing that the launch of this little box cost as much as releasing a new car model did back with his days at Honda.

The settlement fee to 3Dfx was not a significant contributor to the expense.

 

[JasonLD]

Considering all the lack-of-sales and corporate financial problems, I can't say it really "worked for SNK" either. Perhaps "worked to the degree that it wasn't a money sink" but no so much "worked the the degree that it was a good money engine."

I think SNK was doing pretty good back in 1993, considering Neo-Geo was really popular in Arcade. Home version of Neo-Geo was never meant to be a high-volume seller..just a luxury product that can play perfect version of arcade games at home. SNK's most revenues came from arcade market. What I meant to say was that kind of business model will not work unless arcade market goes back to its glory days.

 

[CIN]

Development of the Dreamcast hardware cost SEGA around US $100 million. When trumpeting the marketing budget they were earmarking for the US, then-President Irimajiri revealed the expense breakdown (which totaled $500 million between hardware R&D, software R&D, and launch marketing), musing that the launch of this little box cost as much as releasing a new car model did back with his days at Toyota.

The settlement fee to 3Dfx was not a significant contributor to the expense.

I think you are correct. I dont know how I remember $60 million though :?

Maybe it was the Shenmue series dev cost?

Anyway I think all the other consoles cost much more than $100 million. I am not sure though.

BTW $100 million is the revenue the DC made on launch day. It was about $98million IIRC. Not bad

 

[Lazy8s]

CIN:

I think you are correct. I dont know how I remember $60 million though

Maybe it was the Shenmue series dev cost?

Anyway I think all the other consoles cost much more than $100 million. I am not sure though.

Right, your numbers were on target; I was just providing a more general breakdown. Design of the DC was rather economical compared with some of the subsequent R&D projects in the industry.

You remembered correctly. Irimajiri's listing specifically had Dreamcast hardware development expense at about $50 to $80 million, software at $150 to $200 million, and $100 million marketing budget in each territory for launch. Shenmue development expense covering multiple chapters reached up there over $60 and $70 million dollars, though the first game and its engine work ranged about $40 million of it.

A small correction to my previous: Irimajiri was actually from Honda, I meant to write.

 

[Megadrive1988]

I quote.

The system would have to only be a N@omi 3/4 or whatever for the home. NO 3rd party console games. Only arcade ports of N@omi 3 games. That is all.

It would be only for the hardcore gamer. For this reason I would think it would sell quite a few units. They could even make a type of preorder scheme where they see how many people are interested and if it is viable they just make a batch for those people. After all it would be just a N@omi covered in some plastic and with extra controller ports.

even the NeoGeo had some 3rd party games.

certainly there would be some third party games on any new Sega console. though they would probably 3rd party Naomi3/4 arcade games like from Capcom Taito, etc.

 

[CIN]

Yes there would be 3rd party titles but they would basically be arcade games using the same hardware. It would be a low volume console so there would not be much profits from games designed only for the home market.

 

[CIN]

CIN:

I think you are correct. I dont know how I remember $60 million though

Maybe it was the Shenmue series dev cost?

Anyway I think all the other consoles cost much more than $100 million. I am not sure though.

Right, your numbers were on target; I was just providing a more general breakdown. Design of the DC was rather economical compared with some of the subsequent R&D projects in the industry.

You remembered correctly. Irimajiri's listing specifically had Dreamcast hardware development expense at about $50 to $80 million, software at $150 to $200 million, and $100 million marketing budget in each territory for launch. Shenmue development expense covering multiple chapters reached up there over $60 and $70 million dollars, though the first game and its engine work ranged about $40 million of it.

A small correction to my previous: Irimajiri was actually from Honda, I meant to write.

I think that N@omi 3 should also be at about that price bracket development wise. Maybe a bit more due to inflation and other things. I can't wait to see the spec sheet.

 

[MODEL 3]

Imagine that you are working inside a Games software company and you just learnt from the usual spying inside the industry that rival SEGA is also going to take earlier, development systems of next generation consoles and that according to forecasted plan probably SEGA is going to develop as launch game, a game in the same genre as your company’s launch game. What would you do? Well it sounds good to me to start spreading rumors that SEGA is going again the hardware route. I bet SONY, MS and NINTENDO are not going to be very happy.
Of course there always is the possibility of someone having just a little bit more than needed imagination.

 

[V3]

Development of the Dreamcast hardware cost SEGA around US $100 million.

Interesting, anyone know the R&D cost for PS2, GC, and Xbox ?

Why Sega will do such a thing? How many games could they sale with such business model?

Well, the model are basically just selling arcade hardware and games to consumers.

Worldwide, I am sure they can sell 10k hardware in its lifetime. Not alot, but they don't need to do extra R&D or alot of marketing. Its basically just something they can make extra on top of their arcade business. Its niche market, like how consumers buys arcade machine for home, they can go with this option instead.

But it has to be something high price like $2000, where they can make $1000 of each console and $300/game. This is a nice extra income on top of their arcade business.

At $500 and $50, its probably not even worth to pursue. Since they're basically competiting with the other 3 consoles.

 

[PC-Engine]

SEGA makes money on hardware AND software under my model, (conservative) $50 per console and $50 per game. If they sell (conservative) 500K that's $50 million in profit right there.

Profit?

Cost for developing modern, competitive console hardware and manufacture/market it: several hundred+++ million $. Cost for developing cutting-edge games for said console and market them: dozens+++ million $ EACH...

With the prices you suggest versus the established console manufacturers aiming at half that AND being more well-known brands these days, I think Sega should consider themselves lucky if they sell 500k units.

You're missing the point. My proposed business model assumes SEGA only games on the system and that doesn't mean all SEGA games. Only the the top franchises will be exclusive to the system. Want to play VF5? Buy the system! You don't even have to spend money to market the system. The R&D costs of the system is negligible too because it'll be piggybacking off of arcade hardware which SEGA releases every few years regardless whether or not they plan on making a console with said arcade tech.

Same with the games. SEGA develops arcade games regardless whether or not a home console version is planned so the cost of development is moot

Also like I said, there's no need to market anything. It'll be a nich market console that will make money on hardware and software. 500K units is easily achievable within 2 years