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Is It True That 3rd Party Games Can't Sell on the Wii? Figures say No.

Forums - Gaming Discussion - Is It True That 3rd Party Games Can't Sell on the Wii? Figures say No.

Caveat:  Haven't read all the posts.  But my 2 cents in:

Granted that the lower dev costs for some games make them more profitable in the short term - However...

From an "investor" and "big business" stand point:

A big budget game (eg. Million Seller) - has more potential for even bigger revenues (and hopefully profit) down the road.  For example, games such as "Assassin's Creed" (as an example only, no actual numbers) - may not have made as much money or only broke even with regards to actual game sales BUT it has the potential for additional future revenue from (1) sequels and (2) other media - such as a possible movie, cartoons, etc.

 Therefore, while the 1st game may not have made more than another lower cost game.  But you can see that it possibly has more potential in the future.  And hence that IP is inherently more valuable than a lower cost game with less potential.

Also, though profit ultimately matters - a bigger revenue IP (eg. $50 million in sales) vs a lower revenue IP (eg. $10 million in sales) is more than likely more interesting to big business because it means that more people (or have more paying customers) like the bigger revenue IP and hence its potential is deemed greater.  EVEN though the lower revenue IP may make more dollar in profit.



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Also to add - businesses now also look at the actual IP as an asset that can be sold.  As a analogy, if you think about an IP as a sports team and "winning" as profits, it MAY make some sense to see why the big budget games get developed - even though the profit generated might not match (dollar for dollar) to a lower budget IP.

That is, they may be able to sell the actual IP for millions of dollars, even though they may not have generated a lot of actual cash flow profit of it.

Big Budget IP = New York Knicks (losing)

Small Budget IP = San Antonio Spurs (winning)

More likely than not, New York Knicks is worth much more than the San Antonio Spurs, even though they have won much more.



bardicverse said:
 -

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.



Tease.

Squilliam said:

bardicverse said:
 -

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.


Regardess, the return on investment for the Wii version would be 450% while it would only be 280% for the PS3+XBox 360 combined sales.



HappySqurriel said:
Squilliam said:

bardicverse said:
 -

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.


Regardess, the return on investment for the Wii version would be 450% while it would only be 280% for the PS3+XBox 360 combined sales.


Thanks, I was going to do ROI but I forgot the formula! .

Greater ROI vs Greater absolute profits... I didn't want to do any subjective judgements anyway so I won't.



Tease.

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Squilliam said:

bardicverse said:
-

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.

 

 

 

 



none of those were new IP's from 3rd partys