Because for far too many companies, this generation has seen a relative decline in profit, but revenues are generally increasing, so...

Revenue is garbage , any company that brags about it's revenue and fails to mention how much of it , it's retaining in profit defers to be discredited for it.

People don't understand that Microsoft could easily double or even quadruple the amount of revenue they are making but it's an entirely different situation doubling or quadrupling profits .

mike_intellivision said: Revenue works better for companies who are selling more expensive items. Think about who uses revenue. You'll get it. Mike from Morgantown

 

Don't know if you realise, but your name appears next to your post.

Oh and look up the word pretentious.

XOXO

Shameless. 

I just started a thread called Lazy Journalists – The News is What They’re Spoon Fed about this very problem. If you actually read a lot of what passes for technology "news" it is actually press releases which they then print without even trying to correct the spin.

Xbox 360 sales surpass Wii, PS3

News to you wasn't it. Well this was Reuters Headline for May 15 about that ridiculous press release from Microsoft that they had won the console war becasue they were the first to reach 10M NA sales.

When a company talks about revenue, or gross sales and don't mention the bottom line, you can bet your bippy that it's a pretty good sign that the bottom line is bad.

I'd say this is more a problem of companies not revealing their operating costs. If people actually told us how much profit they made on each item sold.

But eh, PR nonsense.

Revenue is much more interesting than profits, by far.

Profits. Usually I don't care if the owners of a company make money (as in profit) or not, as they are no-names to me. I don't know who they are, and btw they're not always physical persons but sometimes pension funds or some other abstract agents.

Also, there are many people getting rich even if a company doesn't show profit. The high salaries of CEOs and other bosses, and their bonuses, they're included in revenue but usually aren't tied to profit per se.

Profit is somewhat interesting as a driving force for future projects. Like if a certain game made huge profit, therefor the publisher will push dev to make sequels (although not always very innovative). But on the other hand, profit isnt always neccesary, because a certain developer might be perfectly happy to just get enuff amount of revenue so that they can keep on making games by their vision. As long as the revenue pays the salaries of the CEO, programmers, artists etc they're happy.

Profits don't reflect how BIG something (company, dev, publisher, market segment or whatever phenomenon we're talking about) is as well as revenue does.

You can have 0 profit but if your revenue is big, you are still big (affecting peoples lives, market penetration, investment, R&D... whatever parameter you examine). But even if you have 35% profits, that's still not a big deal if the revenue is also small.

Sony had losses (or tiny profits) for years. So what? That doesnt take away the fact that Sony are BIG. It's actually a HUGE company. So by revenue alone they are influencal.

Nintendo has almost always been pretty profitable. But they were always small company(until the DS/Wii). Because profits are only a % of revenue.

Same thing with publishers. Nowadays EA arent making much profit. So what? They have HUGE revenue, and that means they can keep on buying devs, making big budget games, having multiple game studios worldwide, doing huge advertising, being all-present on game-shows etc. And the market, analysts, magazines, gaming websites, the gamers, they all listen to EA and check out whats going on. So EA is like a BIG machine regardless if it makes profit or not. And the CEO, executives etc in the company sure make money (only the share holders suffer).

Its just a case of people hearing something that sounds intelligent and then spouting it everywhere...

REVENUE! BLAH! REVENUE!

Just having big revenues and lots of assets doesn't mean a whole lot in the business world. Just ask any airline or US auto company.

TheRealMafoo said: I am not a business guy, but I have a few friends own some companies, and they are very concerned about revenue (in some cases, more than profit). Selling 100,000 things that make you $10 each is far better than selling 10,000 things that make you $100 each. I am not sure why. Maybe a business guy could chime in and explain it.

I'm not a businessguy myself, but i do understand the reason. Your friends are concerned about revenue, because it shows the value of your market. Without market, no profit. If you have high revenue, but low profit, you can increase your profit by cutting down costs. High sales volume, compared to low volume, cuts costs per unit sold. Production usually gets cheaper as volume grows, as well as logistics. Also, in your example, the cheaper product has larger market, which means that demand doesn't jump up and down that much, as it does with expensive low volume products. Think it this way, that your truck/van can take 10 units of the item you're selling. Since you have to pay for the driver and you have to pay the diesel, one truckload increases costs by 100€. So, it would increase the price by 10€/unit, or eat away your profit by 10€/unit. Then you have another product, which you can fit 100 units to one truckload, costs are the same, so the price increases by 1€/unit. And the same goes for retail, low volume equals higher costs/slower returns for their investments etc. Although your question was purely hypothetical (the two products would have to be completely different, when the competition aspect would be different too), the whole process is a little too complicated to explain (atleast for me in english), but the generalisations i made should work as an example.

Slimebeast said: Revenue is much more interesting than profits, by far. Profits. Usually I don't care if the owners of a company make money (as in profit) or not, as they are no-names to me. I don't know who they are, and btw they're not always physical persons but sometimes pension funds or some other abstract agents. Also, there are many people getting rich even if a company doesn't show profit. The high salaries of CEOs and other bosses, and their bonuses, they're included in revenue but usually aren't tied to profit per se. Profit is somewhat interesting as a driving force for future projects. Like if a certain game made huge profit, therefor the publisher will push dev to make sequels (although not always very innovative). But on the other hand, profit isnt always neccesary, because a certain developer might be perfectly happy to just get enuff amount of revenue so that they can keep on making games by their vision. As long as the revenue pays the salaries of the CEO, programmers, artists etc they're happy. Profits don't reflect how BIG something (company, dev, publisher, market segment or whatever phenomenon we're talking about) is as well as revenue does. You can have 0 profit but if your revenue is big, you are still big (affecting peoples lives, market penetration, investment, R&D... whatever parameter you examine). But even if you have 35% profits, that's still not a big deal if the revenue is also small. Sony had losses (or tiny profits) for years. So what? That doesnt take away the fact that Sony are BIG. It's actually a HUGE company. So by revenue alone they are influencal. Nintendo has almost always been pretty profitable. But they were always small company(until the DS/Wii). Because profits are only a % of revenue. Same thing with publishers. Nowadays EA arent making much profit. So what? They have HUGE revenue, and that means they can keep on buying devs, making big budget games, having multiple game studios worldwide, doing huge advertising, being all-present on game-shows etc. And the market, analysts, magazines, gaming websites, the gamers, they all listen to EA and check out whats going on. So EA is like a BIG machine regardless if it makes profit or not. And the CEO, executives etc in the company sure make money (only the share holders suffer).

I really don't follow your logic at all....unless I'm just missing the sarcasm in my lack of sleep....it seems that your being serious so I will respond as such until someone tells me I fell for it....

First I wanted to point out that one of us is insane and I'm pretty sure its you. Specifically, salaries are NOT included in revenue, revenue is the money taken IN to the company only. It IS factored into profits, which is the NET CHANGE of revenue - costs.

As for a company making 0 profit and "big deal"...I don't see what you're getting at...at all. The CEOs and decision makers that have been fired or left since the PS3's launch of have done so primarily because of the situation there in regards to profits. If the key decision makers are removed and rewarded based on profits wouldn't it be the obvious indicator of performance? You said yourself that the losses haven't effected their revenue much, and in fact have increased revenue so clearly someone wouldn't be fired for increasing revenue..unless of course it was producing a negative profit....which is precisely why profit matters and revenue doesn't (at least in this regard).

The thing I think I'm missing the most is why the "bigness" of a company matters? Who does that matter to? Why does that make any difference? I'm honestly at a loss on that one. If revenue is in your view the measure of how big a company is and that status doesn't change much at all why is it the more interesting of the two in any way? It would seem to me that everyone knows without looking at a single revenue number that Nintendo is smaller than Sony & MS.

As for your EA example...this is really the point..what good does a company get from "buying devs, making big budget games, having multiple game studios worldwide, doing huge advertising, being all-present on game-shows etc." if they aren't able to actually make money from it?