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[gcfan2k5]

If a typical next-gen game (ie- an X360 or PS3 title) actually needs 1 million units sold just to break even, then it's time to fucking wrap it up. The next-gen business model is fundamentally flawed, and everyone should move their resources to handheld and downloadable development.

That being said, I have serious doubts that most or even many next-gen games need 1 million sold to be profitable. But that being said, I am dumb, and don't really know what I'm talking about.

LOL, i can GUARANTEE that unless a developer publishes its own game itself, or is funded by MS , it isnt breaking even at less than 1 million. Only the biggest of the big companies publish themselves (internal dev teams), and even then SOME of them say they arent breaking even until 1.3mln (UBISOFT).

Honestly If it werent for Wii and DS, ALOT of companies would be going out of business this gen (midway and atari may still go under this gen honestly, due to lackluster next-gen sales).


EDIT@ Segata. Thats probably true actually, however i can bet that given its sales, Microsoft opted to let bizarre go without a fight.

 

[titiklabingapat]

I think its actually accurate, though exagerrated. It may include cost of building an engine from sratch.

It's all irrelevant anyways, a lot of PS3 exclusives are going multi so they will be profitable eventually, but the days of insane profitability with just 1 million units sold may be behind us.

It's all about insane profits at 200k with last gen ports and carnival minigames today.

 

[gcfan2k5]

It's all about insane profits at 200k with last gen ports and carnival minigames today.

Capcom has made more money on RE4 Wii Edition than they likely will on every next-gen title combined. Cost to port cant have been much more than 100 - 150k, and its broken a million and can likely do 300k more over its lifetime. Massive profits indeed.

 

[szaromir]

LOL, i can GUARANTEE that unless a developer publishes its own game itself, or is funded by MS , it isnt breaking even at less than 1 million.

Gaming world would collapse already if that was true.

 

[Draft]

LOL, i can GUARANTEE that unless a developer publishes its own game itself, or is funded by MS , it isnt breaking even at less than 1 million. Only the biggest of the big companies publish themselves (internal dev teams), and even then SOME of them say they arent breaking even until 1.3mln (UBISOFT).

Can you back up that guarantee with facts or with lols?

 

[Graphics Horse]

1.3 million x $48 to retailers = 62,400,000
There is no game in existence that costs 62,400,000 to make. Killzone 2 is the highest amount thus far at 40 million. Now, consider adding 10 million to the marketing budget, which is extremely high as well. That is still only 50 million. I'm going to say that the UBI CFO answered that conference call distracted because there is no way in hell they need to sell that much to break even. No way.

He said a profit, not break even, He might be talking about a substantial profit worth the 4 years of investment, rather than making $1 above break-even.
Anyway, he obviously wasn't talking about 'Imagine Babies'

 

[gcfan2k5]

Can you back up that guarantee with facts or with lols?

Numerous articles of developers stating 1million to break even isnt enough? How about a forbes article stating that Epic was only making $1 per title on Gears? Gears cost $10mln to develop, if they are only making $1 per unit profit (as of december 19th, which means sales of what? 2 million worldwide at that point?) http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames.html.

That article is very telling. The only other notable thing in there is Namco breaks even at 500k on its titles up to that point which included Dynasty Warriors Gundam and Ridge Racer 6 and 7 (and not much else). So you need to sell 500k of a relatively mediocre game to break even on 360/ps3.

The remaining $59 per game goes into many hands. The biggest portion--nearly 45%--goes toward simply programming and designing the game itself. Then the console maker, retailer and marketers each get a cut. Add in manufacturing and management costs, and depending on the type of game, a license fee. Some gamemakers also have to pay a distributor to help get their titles in stores

 

[Deku]

If a typical next-gen game (ie- an X360 or PS3 title) actually needs 1 million units sold just to break even, then it's time to fucking wrap it up. The next-gen business model is fundamentally flawed, and everyone should move their resources to handheld and downloadable development.

That being said, I have serious doubts that most or even many next-gen games need 1 million sold to be profitable. But that being said, I am dumb, and don't really know what I'm talking about.

Mr. Itagaki don't admit defeat. Retract that or you need to change your avatar. :lol

 

[Neo C.]

If a typical next-gen game (ie- an X360 or PS3 title) actually needs 1 million units sold just to break even, then it's time to fucking wrap it up. The next-gen business model is fundamentally flawed, and everyone should move their resources to handheld and downloadable development.

That being said, I have serious doubts that most or even many next-gen games need 1 million sold to be profitable. But that being said, I am dumb, and don't really know what I'm talking about.

The companies will be able to cut costs, because they already have the engines and the experience for a 360/PS3-title now. The time for development should be a bit shorter now, at least for sequels and titles with the old formula.

They still need a massive amount of sold units to break even, though.

 

[Draft]

Numerous articles of developers stating 1million to break even isnt enough? How about a forbes article stating that Epic was only making $1 per title on Gears? Gears cost $10mln to develop, if they are only making $1 per unit profit (as of december 19th, which means sales of what? 2 million worldwide at that point?) http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames.html.

That article is very telling. The only other notable thing in there is Namco breaks even at 500k on its titles up to that point which included Dynasty Warriors Gundam and Ridge Racer 6 and 7 (and not much else). So you need to sell 500k of a relatively mediocre game to break even on 360/ps3.

My God, a dollar per. I don't even know why anyone bothers then.

Mr. Itagaki don't admit defeat. Retract that or you need to change your avatar.

Someone must have hacked my post.

 

[Of All Trades]

Numerous articles of developers stating 1million to break even isnt enough? How about a forbes article stating that Epic was only making $1 per title on Gears? Gears cost $10mln to develop, if they are only making $1 per unit profit (as of december 19th, which means sales of what? 2 million worldwide at that point?) http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames.html.

That article is very telling. The only other notable thing in there is Namco breaks even at 500k on its titles up to that point which included Dynasty Warriors Gundam and Ridge Racer 6 and 7 (and not much else). So you need to sell 500k of a relatively mediocre game to break even on 360/ps3.

You need to actually read the entire article rather than scanning for dollar values and wetting yourself. The article expressly mentions that costs go down over time due to the large upfront costs of the hardware swtich and developing new engines. You can also bet that an article released in mid-December contained numbers from about a month prior at best, otherwise they would have included the 2M sales in their analysis. You also need to stop separating out the developer from the publisher like they're some sort of totally separate beast, because dev/pub relationships come in all shapes and sizes.

I have no idea what Ubisoft's CFO was smoking, but something was off on his numbers or on how they were reported, because 100k for most DS games isn't exactly easy, either, and those have much higher manufacturing costs. If next-gen games (and Wii games that don't look and play like last-gen dogshit) require 1.3M to break even then the industry would have collpased last year.

 

[Gazunta]

I know it was only out a few days in October, but any mention of Viva Pinata: Party Animals in the Oct NPD?

(Also, any mention of The Legend Of Spyro: A New Beginning or The Legend of Spyro: The Eternal Night?)

 

[gcfan2k5]

You need to actually read the entire article rather than scanning for dollar values and wetting yourself. The article expressly mentions that costs go down over time due to the large upfront costs of the hardware swtich and developing new engines. You can also bet that an article released in mid-December contained numbers from about a month prior at best, otherwise they would have included the 2M sales in their analysis. You also need to stop separating out the developer from the publisher like they're some sort of totally separate beast, because dev/pub relationships come in all shapes and sizes.

I have no idea what Ubisoft's CFO was smoking, but something was off on his numbers or on how they were reported, because 100k for most DS games isn't exactly easy, either, and those have much higher manufacturing costs. If next-gen games (and Wii games that don't look and play like last-gen dogshit) require 1.3M to break even then the industry would have collpased last year.

Its because of the PS2, and the DS, and now the Wii, being very easy to make profit on, that companies are pressing forward with next-gen games even with massive losses.

Look at EA, its posted quarterly loss for the last THREE quarters, despite HUGE madden sales etc etc. You cant explain away three consecutive quarterly losses (growing losses in each new quarter i should add). Madden sold huge, it wasnt enough for them to break even on their other 360/Ps3 games (they profited on wii , with $59 million revenue and only 10 releases, average revenue per title is $5.9million, which is WAY more than the cost on their rushed, no talent wii releases last quarter.)

The industry WOULD collapse if PS2 DS and Wii didnt exist, because sales arent leading to profits. Look at Midway and Atari, they are about to die off entirely, largely due to development cost on 360/ps3. UBI already admitted to using the massive wii profits to fund PS3/360 development earlier this year (and is now doing a 180 from that saying its going to bring the quality of its Wii games up to Nintendo standards). Devs already put in the millions to start next-gen development, and they are slow to realise that they are losing money because of it.... And in many cases its far too late to pull out now, they just have to hope for the best.

 

[flsh]

If Namco had to make 500K to brake even on RR7, which is basically RR6+ from what I've read, it's still bad. Especially when you take into consideration the money Microsoft probably payed for the exclusive on 6 (and Sony on 7). And are there any arcade versions?

And what about taxes? Aren't publishers supposed to pay some tax for their revenue? I'm sure that is a major part of it, when you consider how much tax you need to pay for making 60-70 million. Developing the game, manufacturing it, paying royalties, advertising and paying taxes cuts a huge chunk out of 70 million dollars.

 

[sphinx]

I know the disucssion at hand isn't about the Wii but I made a quick search on ebay just to see what's going on . I would have considered using ebay to get a wii if it wasn't for the fact that:

everything is selling for more than at retail!! I can't believe this is the same goddamn scenario of last year!! many auctions at closing at over $400 and even if Wii play is included in the deal, I still think it's it's too much. AND we have to consider people are willing to use around $30 bucks for shipping and handling and insurance stuff....

Nintendo and Co. must have been crying bitter tears of regret every day since launch for having priced the wii at $249.99.

the sum of the ammount of money they are leaving on the table for every single wii sold in US and EU must be on the millions already.

cliché but I really say wow

 

[gcfan2k5]

I know the disucssion at hand isn't about the Wii but I made a quick search on ebay just to see what's going on . I would have considered using ebay to get a wii if it wasn't for the fact that:

everything is selling for more than at retail!! I can't believe this is the same goddamn scenario of last year!! many auctions at closing at over $400 and even if Wii play is included in the deal, I still think it's it's too much. AND we have to consider people are willing to use around $30 bucks for shipping and handling and insurance stuff....

Nintendo and Co. must have been crying bitter tears of regret every day since launch for having priced the wii at $249.99.

the sum of the ammount of money they are leaving on the table for every single wii sold in US and EU must be on the millions already.

cliché but I really say wow

Ill sell you a Wii for $375 shipped :lol I have a few on hand. Factor in Tax and shipping and im only making 65 bucks on the deal.

 

[Kildace]

everything is selling for more than at retail!!

Not really, all the auctions you linked are bundles with much more than the basic Wii, of course they sell for more than $250.

I'm selling my Wii this Christmas, I hope the prices skyrocket again though

 

[Randy Lanzarote]

Why are they all listed as coming with 14 games?

 

[gcfan2k5]

Why are they all listed as coming with 14 games?

Wii Sports + Wii Play = 14 games

 

[Stumpokapow]

Why are they all listed as coming with 14 games?

Wii Sports = 5 games
Wii Play = 9 games.

Yeah, I know.

 

[Kildace]

Wii Sports = 5 games
Wii Play = 9 games.

Yeah, I know.

Oh. Well. My bad then!

I'll guess I'll list my Wii coming with 70+ games then, Wii Sports + Play + Rayman Raving Rabbids

 

[sphinx]

Not really, all the auctions you linked are bundles with much more than the basic Wii, of course they sell for more than $250.

I'm selling my Wii this Christmas, I hope the prices skyrocket again though

take a look at this auction, just one of many

Random Wii ebay auction

it includes JUST the Wii as if bought at retail, nothing else. No wii play, no extra nunchuck, etc.

it's closing as I type.. just wait a minute...

mmhh...

there: final bid $ 380.00 + 34.99 for shipping: $ 414.99 for a fucking wii

you HAVE to be kidding me.

 

[Randy Lanzarote]

Wii Sports + Wii Play = 14 games

In my most wildest dreams I imagined that they might be counting Wii Sports as 5 games, but Wii Play as 9 games?

Ebay, will wonders never cease?

 

[BishopLamont]

Haha 14 games, that reminds me of those 999 games chinese carts, where there's only 10 games and the rest is just a variation of the same games.

Edit: Oh shit, I was searching for Wii on ebay and I found one that was $200 with 25 minutes left, not even a minute later I clicked on it and it went to $430. Damn crazy

 

[sonycowboy]

Numerous articles of developers stating 1million to break even isnt enough? How about a forbes article stating that Epic was only making $1 per title on Gears? Gears cost $10mln to develop, if they are only making $1 per unit profit (as of december 19th, which means sales of what? 2 million worldwide at that point?) http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames.html.

That article is very telling. The only other notable thing in there is Namco breaks even at 500k on its titles up to that point which included Dynasty Warriors Gundam and Ridge Racer 6 and 7 (and not much else). So you need to sell 500k of a relatively mediocre game to break even on 360/ps3.

THere are so many things wrong with your posts it's laugable.

The $1 was for the publisher, not the developer, and that's assuming it's an externally developed game. Secondly, profit is not linear with sales. Once you reach the break-even point, every game sales after that adds to profitability. You can't say, "Well, they only clear $1 per title.

The break-even point has NEVER been a fixed number as game development costs can vary wildly based on a multitude of factors.

Internally owned IP vs licensed IP
Internally owned developer vs independent developer
Licensed content in the game (eg. Songs as in GH3, Rockband, and countless other games)
Scope and size of game
Amount of artwork (artists have to create each bit of artwork you see, more art = more artists)
Voice work (Actors))
Studio time for motion capturing, etc
Marketing costs
Cooperative marketing / exclusivity rights (read: Moneyhats)


EA is getting their ass kicked for a number of reasons. They paid a shitload for exclusive NFL rights even though 2k was just about dead, they bought criterion and hundreds of developers dropped Renderware for this generation, they've laid out big bucks for R&D for this generation and they're still amortizing those funds over each fiscal quarter, they've had a number of bombs (MOH, Godfather, Def Jam) that they spent a ton of effort on.

The break-even for some next gen titles is quite high right now as they are developing engines and that costs alot up front. As the engines get more mature, they'll spend less.
There's no doubt that it's more expensive this generation as the technical and artistic demands continue to go up and up, but it's hardly as simplistic and horrible as you make it out to be.

 

[titiklabingapat]

I know the disucssion at hand isn't about the Wii but I made a quick search on ebay just to see what's going on . I would have considered using ebay to get a wii if it wasn't for the fact that:

everything is selling for more than at retail!! I can't believe this is the same goddamn scenario of last year!! many auctions at closing at over $400 and even if Wii play is included in the deal, I still think it's it's too much. AND we have to consider people are willing to use around $30 bucks for shipping and handling and insurance stuff....

Nintendo and Co. must have been crying bitter tears of regret every day since launch for having priced the wii at $249.99.

the sum of the ammount of money they are leaving on the table for every single wii sold in US and EU must be on the millions already.

cliché but I really say wow

Oh, you should see the Completed Auctions list.

Just the Wii, just the Wii no extra controllers or Wii Play, is selling for $350 plus $30 shipping.

Those bundles with the extra controllers are regularly selling for $400 plus $35 shipping.

 

[Version 3.0]

Lets make a list of games by publisher by platform, see how many reach Ubisoft's "break even" points, and have a "who's going out of business this year" prediction thread.

Those numbers are insane. I think he was exaggerating, or maybe even making them up on the spot. If he wasn't, then there are extenuating circumstances, like developing a next-gen engine, etc, and those numbers will fall with subsequent releases that use some of the same assets.

Or maybe next-gen is a just a giant money sinkhole, and the industry is about to go under.

 

[titiklabingapat]

Look! (these are all final sale prices)

The average for just the Wii was around $320 including shipping just two weeks ago! The horde of angry soccer moms is here!

 

[Dai Kaiju]

I know it was only out a few days in October, but any mention of Viva Pinata: Party Animals in the Oct NPD?

You wish dude

 

[ksamedi]

Its because of the PS2, and the DS, and now the Wii, being very easy to make profit on, that companies are pressing forward with next-gen games even with massive losses.

Look at EA, its posted quarterly loss for the last THREE quarters, despite HUGE madden sales etc etc. You cant explain away three consecutive quarterly losses (growing losses in each new quarter i should add). Madden sold huge, it wasnt enough for them to break even on their other 360/Ps3 games (they profited on wii , with $59 million revenue and only 10 releases, average revenue per title is $5.9million, which is WAY more than the cost on their rushed, no talent wii releases last quarter.)

The industry WOULD collapse if PS2 DS and Wii didnt exist, because sales arent leading to profits. Look at Midway and Atari, they are about to die off entirely, largely due to development cost on 360/ps3. UBI already admitted to using the massive wii profits to fund PS3/360 development earlier this year (and is now doing a 180 from that saying its going to bring the quality of its Wii games up to Nintendo standards). Devs already put in the millions to start next-gen development, and they are slow to realise that they are losing money because of it.... And in many cases its far too late to pull out now, they just have to hope for the best.

I think your a little on the pessimistic side here. The Ubisoft CEO stated 1.3 million break even point for games like Assasins Creed which took years to develop and have a huge advertising budget. Those kind of games cost a lot. I can bet that Metal Gear Solid 4 and Final Fantasy will have the same kind of problem. 100K for a DS title is also very low, which means he was talking about titles like my french coach or Pony island Z or whatever casual titles they are making. For a real DS game with some substance it would take more copies to profit. Not every title is created equal and you can't say that 1 million is a reasoneble number to assume break even, its on a per title basis.

 

[Shaheed79]

All I know is that even from it's first year on the market a few major publishers have credited Wii development for their earnings report being good. Off the top of my head that includes UBI, Majesco, Capcom and 1 or 2 others. That's with lackluster support at best.

 

[A Human Becoming]

Can anyone tell me the hardware sales for Wii, 360, and PS3 just this year as well as the sales for all three last November and December?

 

[titiklabingapat]

I like to call them lip service. They're just covering thier bases.

Or they really are funding HD games with earnings from Wii games :lol

 

[Dai Kaiju]

:lol @ people thinking ME will bomb. Whens the last time a major marketing exclusive game for X360 bomb, none that I am aware of.

Um, last month?

 

[Kildace]

Um, last month?

PGR4 was hardly a major marketing exclusive advertising-wise and the 360 is bundled with Forza.

Mass Effect will not bomb, that's a certainty.

 

[Psychotext]

PGR4 was hardly a major marketing exclusive advertising-wise and the 360 is bundled with Forza.

Did they advertise PGR4 at all? I haven't seen anything.

 

[RBH]

Did they advertise PGR4 at all? I haven't seen anything.

I saw a decent amount of PGR4 ads on ESPN and Spike TV, but the release date just killed this game honestly. Release this game in January or February, and sales would've been much better (at least in the U.S.).

 

[JJConrad]

PGR4 was hardly a major marketing exclusive advertising-wise and the 360 is bundled with Forza.

Mass Effect will not bomb, that's a certainty.

PGR is a high-profile series for Microsoft. There is no justification for these sales. Imagine the shit-storm if Metroid Prime 3 had debuted at 38k.

 

[Beer Monkey]

PGR is a high-profile series for Microsoft. There is no justification for these sales. Imagine the shit-storm if Metroid Prime 3 had debuted at 38k.

Actually, if it came out a week after Mario, I could see that happening.

 

[Slavik81]

Or they really are funding HD games with earnings from Wii games :lol

I always loved that line. They'll use their enormous profits from Wii development to fund expensive and unprofitable next-gen games. Right...

(Not that they're necessarily unprofitable, but in that case it was relatively true.)

 

[Opus Angelorum]

PGR was a high-profile series for Microsoft.

You used the wrong tense

 

[GhaleonEB]

PGR is a high-profile series for Microsoft. There is no justification for these sales.

No, but there is a reason for it: Forza II. Shipped too close to this title, and is bundled with the system now. I think that has (almost) everything to do with PGR4's performance.

 

[Opus Angelorum]

No, but there is a reason for it: Forza II. Shipped too close to this title, and is bundled with the system now. I think that has (almost) everything to do with PGR4's performance.

Absolutely.

The long delayed release of Forza 2 effectively killed any chance of PGR4 selling anywhere near the numbers it should have.

 

[Jiggy]

Nintendo and Co. must have been crying bitter tears of regret every day since launch for having priced the wii at $249.99.

the sum of the ammount of money they are leaving on the table for every single wii sold in US and EU must be on the millions already.

cliché but I really say wow

I'd suggest that a good percentage of the types paying so much on Ebay are in pretty moderate levels of desperation. There's nothing to say that Wii would have sold nearly as well if the standard pricing was even $299.99.

 

[Of All Trades]

All I know is that even from it's first year on the market a few major publishers have credited Wii development for their earnings report being good. Off the top of my head that includes UBI, Majesco, Capcom and 1 or 2 others. That's with lackluster support at best.

That's because of the lackluster support. Porting PS2/PSP games costs little. Games like SMG cost a lot. The "wii dev is cheaper and saving the industry" only matters if you're interested in playing games that are actually significantly cheaper to develop, aka last-gen ports and My Ponyz shovelware.

Games that require effort to make will require $$$ to make.

PGR is a high-profile series for Microsoft. There is no justification for these sales. Imagine the shit-storm if Metroid Prime 3 had debuted at 38k.

PGR4 debuted in September (although it still didn't do well), and directly up against the Ur-Game. It should have been released later to get it away from Halo and further away from Forza. It also supposedly sells well in UK/EU but ehhh... outside of soccer, GT/Forza, and Singstar (games where we have solid numbers) I've never trusted comments like that.

 

[JJConrad]

No, but there is a reason for it: Forza II. Shipped too close to this title, and is bundled with the system now. I think that has (almost) everything to do with PGR4's performance.

I don't fully agree with you. Competing similar games have never killed a game like this, especially when PGR had been the more popular series. The point isn't really about why PGR4 sold the way it did... its about the claim that 'major marketing exclusives don't bomb on the 360' when they can and have.

 

[Kildace]

PGR is a high-profile series for Microsoft. There is no justification for these sales. Imagine the shit-storm if Metroid Prime 3 had debuted at 38k.

If PGR was such a high-profile series for MS they wouldn't have let Bizarre go and they would have made an effort to delay it and release it during the Spring.
Releasing PGR 1 week before Mario and 2 weeks after they started bundling 360's with their first party studio's racer means that they really didn't care about it doing well at all.

The situation is very different with Metroid. A 38k Metroid Prime 3 debut would have been completely understandable if Nintendo had released a 1st party AAA FPS 3 months earlier and bundled it with the console before MP3's release.

 

[Of All Trades]

I don't fully agree with you. Competing similar games have never killed a game like this, especially when PGR had been the more popular series. The point isn't really about why PGR4 sold the way it did... its about the claim that 'major marketing exclusives don't bomb on the 360' when they can and have.

Except PGR4 wasn't a "major marketing exclusive". It's not even one of the games shown in the two new "Jump In" commercials. For whatever reason (I suspect Forza success), MS decided to drop PGR4.

 

[Psychotext]

The PGR4 story is kind of sad really. Almost everyone I've spoken to said they loved the demo, just that there's too much to buy and play right now. I'd count my self in that group as I'm still playing Forza 2 then there's everything else that's been released in the last month or so that I'd want to get through before I even considered PGR4.

Sent to die.

 

[Grecco]

Did they advertise PGR4 at all? I haven't seen anything.

You havent watched TV or Read magazines then. I saw a shit load of adds for PGR4.


Also people expecting stuff like Halo3 to beat SMG in November are insane.