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noname2200 on 30 August 2008
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Squilliam said:
noname2200 said:
Squilliam said:
Sky Render said:

I see what you're getting at, but there are some major and unwarranted assumptions you're making here. First, you're assuming that the publisher will get every dollar that the customer pays at retail: that is demonstrably untrue.

http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames.html

"For the companies that do put next-generation titles out early, making a profit is tough. Namco Bandai president Takeo Takasu said his company needs to sell at least 500,000 copies of each PlayStation 3 game it creates to make a profit. Analysts predict that some other publishers will need to clear 1 million units to get in the black--and start making about $1 per game sold."

If a publisher is really only making a profit of one dollar after they've broken even, your return on investment figures go straight out the window (Note: I'm uncertain just how long that holds for. You're widget example is a perfect example of the flaw in your thinking: you're not going to sell widget at $20 a pop (competition being what it is) but even if you magically do, retailers and shipping are going to be taking large bites out of your numbers.

No, if we're to continue this discussion, we'll be needing profitability numbers, rather than trying to exptrapolate them from revenue. That, obviously, is going to take a lot of work (slogging through financial records).

 

I wasn't assuming that every publisher got every dollar at retail. I was trying to prove that a vast majority of revenue is made by the top 20% of games. The margin of uncertainty supports my point because most games sell the majority at full retail and the best selling games maintain their prices/margins for longer than the games which are quickly discounted and withdrawn from market.

As games are essentially a fixed cost once developed, therefore its quite a safe assumption to believe that the higest selling games are vastly more profitable, or that the games that sell the least lose the greatest amount of money.

You missed the point I was trying to make with the widgets. Its not about competition its the fact that a company can lose money on other endeavers but still come out ahead overall. A profitable company is a prosperous one.

 

I getcha, but my point in return (which I admit I came to in a roundabout fashion) is that knowing the revenue divide doesn't tell us much that's useful. A company can bring in record revenue and still close down due to a lack of profit: sadly, something like that is happening to the gaming industry, which is seeing more and more developers get shuttered at the very same time that revenue is reaching record highs. Hell, EA achieved 25% higher revenue than it expected last year, yet still posted a loss for the fiscal quarter. If things are so bad that a billion and change ain't enough to guarantee profits...

But we begin to go off-topic. The origin of this sidebar was that we are experiencing more mergers and closures due to rising HD costs. The data I've seen supports this. True, a handful of developers are leaning the other way, but they are hardly representative of the majority.

To use a real world analogy, Walmart here in America made record profits last quarter. Am I then to assume that the American economy is doing hunky-dory, or shall I examine the field as a whole before passing judgment? And if Malstrom is right on this point (as I firmly believe he is), then one of the legs you're standing on to criticize Malstrom fades away. Now, don't take this as a personal attack; it's not meant as such. Nor should you take this as a message that Malstrom is infallible; it follows naturally that he is fallible. But the avenues you've chosen are fairly weak, all things considered.