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Louie on 25 January 2009
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RVDondaPC said:
Louie said:
RVDondaPC said:
Louie said:
RVDondaPC said:
You will never know the profit from a video game. Never ever. So no we shouldn't be looking at profit, because well. We'd be looking at nothing.

 

Yeah sure... why using our head, right? I never said we should look at the profits from a single game but revenue is just silly to measure the success of a developer on a platform. Again, DS games are 40 Euro so they make 20 Euro less revenue from a DS game. Does that mean the games made them less money than the ones on the PS3?

And if the Wii accounts for 15% of the revenue, the games are cheaper at retail than PS3 / 360 games and the production costs are less, then it is valid to argue that they made just as much profit from the Wii.

 

Of course you have to look at profit and while you can't get exact figures there surely are some indicators if a developer made money on a platform or not.

 

And what are those indicators that they made money? The only numbers they'll give you for a given platform is... *drum roll* REVENUE. Factoring in development costs for multiplatform games is pointless. Which platform "costs" the developer for when they were brainstorming for new games? Which platform "costs" the developer for when they are designing the characters? Does the lead platform incure all the costs? Which platform incures the cost of writing the script? Recording the music? Advertising for the game? Does one platform unfailry bare the burden of the development cost? Or is it split evenly? 

 

Of course you have to consider their revenue (I completely agree here) but just blatantly looking at the revenue and saying the Playstation 3 made Ubisoft the most money is wrong. Only if you look at the revenue and take all other costs into account you'll get the complete picture. Grand Theft Auto IV for example surely is a huge source of revenue for Rockstar but the estimated development cost (+ advertising) is more than 100 million dollars. Imagine: Babies on the other hand sold 2 million copies or so but was so damn cheap to develop that it probably made almost as much profit in the end.

Just to remember you: I'm not one of the "PS3 is doomed" people just because I have an Xbox360 avatar. I'm a bit too old for the fanboy wars. I never said anybody will abandon the PS3, I just said this is the wrong explanation. I also don't argue from the "PS3 vs 360" point of view but from a financial one.  I'm sure Haze was a dissapointment for Ubisoft but it still made millions of dollars for them - if you don't take development costs into account.

Development costs are a huge factor today and a huge risk for developers so they surely have to be taken into consideration by every developer. If a developer only looks at revenues he is in danger of going bankrupt. This is probably the reason why Ubisoft has expanded its casual game development by such a lot: Less revenue but also less development costs and just as much profit in the end with a much lower risk (if you only spend half a million dollars on a game you can only lose half a million dollars). This is the deciding factor for developers, not revenue alone.

 

Edit: As a general example look at it this way: You can either develop a game with a budget of 10 million $ that will give you 15 million $ in revenue ( =5 million in profit) or a game with a budget of 1 million dollar that will make you 8 million dollars in revenue ( = 7 million in profit). Which one would you chose?

You see this is more a Wii/DS vs 360/PS3 thing as those two platforms have much lower development costs. I don't even remotely care if a developer puts a game on PS3 as lead platform or on 360, it doesn't bother me at all.

 

I think you missed my point. I agree with almost everything you said because all you were trying to tell me is the difference between revenue and income. I know the difference. My point is that we don't know the development costs. AND with the 360 and the PS3 on multiplat games you'd have to assume the development cost is basically the same because of all the shared costs incured for developing a game. Therefore if the costs are even, then the revenue would determine the profit. Not the exact amount of profit, because you don't know the cost but it should indicate that the higher the revenue the more profitable. Then you'd have to compare the exclusives to eachother and what percent of the total games made were exclusives. If both platforms have a pretty even amount of exclusives and they are only a small portion of game sales/development cost compared to all the games released, then you'd assume revenue is still a pretty accurate indication of which was more profitable. 

I'm not aware of all the exclusives but if there was only 10 ubisoft games(hypothetically) and 9 were multiplat and 1 was a ps3 exclusive(haze) then you'd have to assume the PS3 total cost(development cost, marketing cost, etc.) was about 14% higher (give or take a percentage point depending on the quality of the other 9 games). 14% higher because we're assuming the average development cost of a game is represented by 1x and the cost to port a game is .5x thus making the two games for a miltiplat a total of 1.5 and then splitting the cost between the two platforms. That would give the PS3 development cost of 8.25x compared to 7.25x. 

Taking that indication of a 14% higher development cost you would look at the revenue and compare the two different consoles revenue. The PS3 would have to generate 14% more revenue to be a better investment. Though that method of anaylsis doesn't necessarily give you the Profit, it does give you an indication of Return On Investment. And that is actually a more important number to companies than raw profits. 

Ofcourse those are just hypothetical numbers and a theory of how best to determine which console is giving the company a better return. It would be much too difficult to determine anything comparing the Wii or the handheld games, because we are not exactly sure how much it costs to develop on those consoles compared to other consoles. We assume it's cheaper to develop for, but we really don't know how much cheaper. 

 

 

I know where you're coming from and apparently we both missed each others point   My point wasn't Xbox360 / PS3, though. My point was Wii/DS against 360/PS3. Believe me the VGChartz staff has some good idea of how much a game cost in development.

The discussion PS3 or Xbox360 is irrelevant as 95% of the game are multiplatform anyways. But people like to jump to conclusions: PS3 had highest revenue so Ubisoft will develop for the PS3. This is wrong. Ubisoft expanded its casual gaming division so heavily during the last years, there is absolutely no chance I'm wrong when I say those DS games make them just as much profit, probably even more.

My point wasn't arguing about how much money did a console make them exactly, it was about which console should they favour. And looking at revenue will show you a completely different picture than estimating profits. We have had rough figures of development cost on all consoles already (they are sometimes floating around on the internet) and DS games like Imagine: Babies are around 1/10 as expensive as PS3 / 360 games.

People always argue about PS3 vs 360 when it comes to developing games and say "Wii and DS are in completely different markets, they are no competition." This is wrong: Ubisoft for example is totally on the Casual wagon, each year we see more casual games from them and those games have to be highly profitable to make them expand on that. Now Ubisoft is also developing a Turtles game for Wii and Red Steel 2, a lot of their developers are working on casual games for Wii and DS... this automatically decreases their PS3 / 360 resources.

People are so much into this console war thing that they completely forget about the important things: There are two platforms on the market that are cheap to develop for, are less risky and have the highest install base. This is the reason why we'll see less PS3 / 360 games in the future, not an imaginary console war - the console war between the HD consoles has never really taken place: As long as both consoles sell they'll get mostly multiplatform games anyway.

I agree that revenue was a good indicator for years in the videogaming market as most platforms had roughly the same development costs (Snes and Genesis, PSX and N64, PS2, Xbox, GC...) but now we have a different story as two platforms have development costs so significantly lower than the others that revenue alone shows a different picture.