Are wii development costs really cheaper?

[Plaupius]

WereKitten said:

^I think that nobody disputes that Wii games can be cheaper to make because you'll be cutting man-hours in coding and assets.
I think that one reasonable point is that as soon as you engage into big projects on the Wii, there are several fixed costs that will greatly increqse the total, exactly as in big projects on the HD consoles. The end result is not even close to the one-third or one-fourth ratio that might very well hold for smaller games, and probably close to one-half.
If we really pit a $20M Wii game vs a $48M PS3/360 game (wondering about the reason for these numbers? read the entire thread, you lazy bum) we have:

Sales
x console Profit Wii Profit PS3+360 1M -10M -18M
1.5M -5M -3M
 2M 0M 12M
2.5M 5M 27M

As you can see developing multiplatform PS3/360 seems to be much more profitable unless your game really bombs, in which case upfront expenses will drag you down much more heavily.
So why do developers go into red on PS3/360?
- GTAIV did cost 100M dollars. If you let your budget grow to such incredible amounts it will be hard to pull into the black. If it was developed on the Wii for 60M dollars it would have needed 6M sales to break even. And I'm not counting the marketing. Does it look more viable?
- EA posted losses. This baffles me a bit, as they have several cash cows. But if you look at their sales, they are mostly around 0.8-1.5M per game. These medium-sized games could be the less profitable in HD, because you take all the extra costs, little of the extra revenue.
- Lair and Haze probably sunk the respective studios. If you try and bite a too big chunk on the HD consoles, you can be crushed pretty hard.

My idea? Going on Wii makes you more money for small and medium sized project, or for games that you know will sell heaps on the Wii demographics. Going on Wii is also safer for small and medium sized project, again especially if it's a casual/family game.

For big projects though, it seems that if you really want big profits you have to stay multiplatform PS3/360. You will also lose less if you come slightly short in sales.

Thus I can see EA going to differentiate, and same for Activision and other big publishers, but hardly taking the "big guns" games on the Wii as straight ports (note that a port to the Wii is almost the same as developing an exclusive as far as assets and code go. But you can still share Voice overs, CGI, marketing etc with the HD consoles).

Comments?

Out of curiosity I put your numbers up in a spreadsheet, and there is one thing which is not clear: you're assuming that the PS3 + X360 sales are per platform, so essentially you're comparing Wii sales to double HD sales figures. Given that the install base is roughly the same for Wii vs HD consoles, that seems fishy. So, here is a table using the same figures with the sales number meaning total sales:

Sales	Wii profits	HD profits
1 million	-10 million	-33 million
1.5 million	-5 million	-25.5 million
2 million	0	-18 million
2.5 million	5 million	-10.5 million
3 million	10 million	-3 million
3.5 million	15 million	4.5 million

That means that a Wii game that sells a total of 3 million is 13 million dollars more profitable than a HD game that sells the same across both platforms. IMO this is the way this comparison has to be made, you can't just assume that the HD consoles all of the sudden get double total sales.

Also, the publisher markup is really critical to these calculations and I don't think the 10$ and 15$ figures are exactly right. So, using shams figures (14$ for the Wii and 18.5$ for HD) the same calculations result in this:

Sales	Wii profits	HD profits
1 million	-6 million	-29.5 million
1.5 million	1 million	-20.25 million
2 million	8 million	-11 million
2.5 million	15 million	-1.75 million
3 million	22 million	7.5 million
3.5 million	29 million	16.75 million

Now the difference with a 3 million seller is 14.5 million in favor of the Wii.

shams figures point to the publisher getting aroun 35-40% of the recommended retail price, which IMO sounds right. If your high quality Wii title costs 10$ less in retail than the same title would cost in HD, that means the publisher is making 3.5 - 4 dollars less profit on the Wii title. That difference is what needs to pay for the difference in development cost. So, using the 20 million and 48 million figures, that means the HD game needs to sell 7-8 million copies more to be as profitable as the Wii version.