Interesting thread.

I think there's currently 2 schools of thought within the console makers as to their goals:
1) drive console sales in order to increase potential for advertising and subscription revenue, games are a means to this end
2) drive console sales in order to increase the potential market for games, games are the end to this means

In essence Microsoft and Sony are both operating on the 'subscription model', where games are the carrot used to get gamers onto their ecosystem, where over 5-6 years, the various subscriptions will prove profitable. Losing money on an individual game in this instance, is less important than the hype it generates, or how many people it brings into the ecosystem.

Nintendo, on the other hand, are on the 'games model', where each game is (to some extent) it's own entity and each ideally would be profitable in it's own right. The console itself, ideally, should be profitable from the get-go, and cheap enough to put it in most people's price range.

Obviously, Nintendo's approach is better for gamers, with it's 'games first' mentality, and has historically been extremely successful for Nintendo. The 'subscription model' on the other hand appears to be less consumer friendly, although the competition between Microsoft and Sony is improving the value proprosition for consumers whichever console is chosen.

I think this philosophical split could well be, alongside the PowerPC architecture, one of the reasons why 3rd parties (and especially EA) abandoned Nintendo so soon out of the gate; they saw that the 'games model' is contingent on actually selling games whereas on the 'subscription model' system owners are prepared to subsidise games in order to attract subscribers; taking the pressure off publishers and the games themselves.

Interesting topic, and I've not thought about the difference in approach between Nintendo and Microsoft and Sony in this way before. Thanks OP!

Money always mattered. What's different between now and the past is the cost of developing games, which is getting too high.

So you're surprised some devs and publishers don't pick PS4 over X1 because the first outsold the latter 2:1? Larger installed base doesn't automatically equal better support. Look at Wii, which easily outsold PS3 and 360 combined for years and still got neglected.

OP must think such deals are a new thing, and Google might help



that or flawed logic which is usually residual

Not to mention the inflation, 60$ back in 1995 was way more than 60$ is now.

I think the issue is that publishers aren't content with minor successes.

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/02/anatomy-of-a-60-dollar-video-game.html

Using this (getting old) breakdown. $27 out of a $60 game goes to the publisher.

http://kotaku.com/how-much-does-it-cost-to-make-a-big-video-game-1501413649

And Kotaku has a relatively current look at the cost to make a game. Watch Dogs cost $65 million and for no good reason I'll use that as a baseline. (OK, the reason is that it was a big AAA release and is a reasonable upper limit for probably 95% of console retail titles).

$65 mil/ $27 = 2.41 million sales

In other words, for a game to be profitable in it's own right,

Shit, lost half my post to a fucking less than simple. Damn HTML!

Essentially the latter half of my post is that publishers aren't content with a game that only makes a small percentage back of it's costs as profit, they want each game to be a blockbuster and have returns to match. Platform holders are happy to step up and provide that as it encourages consumers to choose their subscription machine over their competitor's.

the "development budget exceeds 50million €", meaning the advertising budget isn't included in that

but advertising is extremely expensive (and gets more expensive each year), especially for a game like Watch Dogs, so I wouldn't be surprised if advertising the game was more expensive than developing it

and ofcourse they want a return of investment that justifies the huge risks they take by pumping all that money into the project - otherwise they could just take that money and invest it into some stable stocks/funds to have a good 4-8% roi each year while risking very little

an 8% ROI from stocks/bonds would be equivalent to 2.6 million sales

and obviously marketing muddies everything, but that's why I used the WD figures, to allow that space for marketing costs. Borderlands 2 costing $35 million is probably close to the mark for many games, and that would allow a $30 million or 85% margin for marketing.

I'm not saying that publishers shouldn't want to make more profits and shouldn't want games to runaway successes. That's like saying that bands shouldn't want to go platinum or that film makers shouldn't want to have sell out showings.

What I'm saying is that publisher's have expectations that are simply too high to be realistic and are therefore too quick to dismiss profitable games as failures.

Tomb Raider, for instance, based on the 4.83 million sales on by VGChartz, will have brought in approx. $130 million in revenue. Which based on $65million represents a 100% ROI.

Apparently Squeenix consider Tomb Raider to be a commercial flop. Either their marketing budget was ridiculous (and given that they appeared on stage at the MS E3 conference, assistance from MS can be assumed), or their expectations were far too high and simply unrealistic.

I honestly believe this has been going on for a while. Game developers have no soul any more. They merely make games to get rich instead of making something dear to them. Prime examples are Assassins Creed, COD, etc.

And if companies can get money even before the game releases then they will jump on it in a heartbeat.

Luckily said games dont interest me as I see no heart put into them.