3rd party sales math games!

[fooflexible]

According to Namco Bandai Holdings Inc. president Takeo Takasu you have to sell 500,000 units of a ps3 game in order to turn a profit. And that's the threshold, not the point at which your rolling in the dough. These are the people behind Ridge Racer and Gundam Musou. I'm sure they're already dissappointed by the sales of each. But WAIT! Here is where the article gets interesting. Takasu says games for the ps3 on average cost 8.6 million to produce. So using his 500,000 unit figure game developers make on average $17.20 per game.(Not even close to Kwaad's $39 projection) So where does the rest of the money go? I suggest that Kwaad's assumption that Sony's $8 royalty is wrong. Let's do the math. Nintendo likes royalties like anyone else. But remember they make a profit on the system, so their business model isn't designed to recoup cost of hardware off royalty fees. Sony's is. That's right Sony uses the royalties to recoup cost on hardware sales, nothing we didn't know there, but that allows us to calculate the theshold in which they see a return. Hypothetically if Sony is losing 100 dollars on the ps3 at an 8 dollar royalty the attach rate for the system to break even has to reach 12.5. That isn't going to happen, not ever, the ps2 didn't come close to it. And the bigger kicker in my opinion is that they are losing MORE then a 100 bucks a system. Let's pick a more comfortable number: the attach rate of 5. In order to break even on a system that loses you a 100 bucks with an attach rate of 5 your royalty has to be........$20.00, and if they are losing 150 dollars then the royalty has to be 30 bucks. Huge difference. Now add it together $30 royalty, $17.20 developer's cut, $6 store cut(based on the standard 10%) = $53.20 I can imagine the rest of the cost being accounted for through manufacturing/shipping and such. to make it to $60. Now I don't know if this formula is right(I'm making the assumption that marketing is either included in the budget or marked as overhead cost), but it's what I can surmise from what we know, until at least Kwaad can actually account for his royalty figures. Here is the link: Namco speaks on ps3 budget costs