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bardicverse on 21 May 2008
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Squilliam said:

bardicverse said:
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Lets say we have 3 systems, system A has 26 million units WW sold, and system B has 19 million WW and system C has 13 million. Both system B and C can be ported easily between for a cost of $6million dollars. The total available market on system B and C is 32million.

Lets say a game comes out for either system A or Both system B and C

Now let's factor in development costs. System A costs 12 million dollars to make a game, System B+C costs 24+6=30 million dollars to make a game. For argument's sake, lets say that both systems make $30 for the developer for every copy sold.

System A sells to 10% of its userbase, making a gross income of 78 million dollars, minus 12 million for development, making their profit be 66 million dollars.

System B+C sells to 15% of its userbase, making a gross income of 144 million dollars, minus 30 million for development, making their profit be 114 million dollars. This grater attach rate is because of the more homogonous user base that purchases either console.

Is this more accurate?


I modified the formula.

 

Not really more accurate, considering that if you're going to use actual consoles, Wii development costs between 2-5 million per game. Also, choosing different percentages breaks the balance, if you're trying to make a 2:1 point. 

With that said, system A's net profits would be closer to 75 million, and system B+C at the adjusted equal 10% would be a gross sale of 96 million, with their output profits at 66 million. That's not factoring in the cost of the extra licensing for the 2nd platform. 

So, if you want to argue actual consoles, it costs less to develop a Wii game and even if it flops (10% of userbase purchases), there is still roughly a 750% profit from the 5 mil in development costs (as 5 mil plus 5 mil = 100% profit).

 On the other hand, a combo of XB360 and PS3 development being a flop (10% of overall userbase) would have an approximate 120% profit. Even if you took that profit and applied it to each console, making it be an overall 20% userbase, you're still talking 240% profit, not even half of the profit from developing for system A.

 Less investment and larger profit are what drive CEOs to make decisions.