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Alot of companies will release a game, with the financials in place to expect to lose money on it. However, in this case they hope the subsequent sequels will be cheaper as dev costs will be less with the engines already setup and marketing not as important once the brand is established.

To me a flop has to be a game that completely sinks, like the publisher couldn't in their wildest dreams believe the game could tank so hard - I think Bionic Commando is a good example of this. Capcom were expecting millions for that game and it didnt launch above 100k.