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jammy2211 on 26 January 2010
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Procrastinato said:
Demotruk said:
kowenicki said:
Whilst I agree with what you are trying to say, which is that not all games that sell on Wii are Nintendo games... you cant really escape the fact that wii isnt the best home for 3rd party, actually its relatively (and absolutely? probably) the worst of the three isnt it?

Is it? The overall third party sales are higher, and the costs are (much) lower. Revenue is probably lower, but I doubt it's that much lower. Granted, there are more Wii games made, but the vast majority of them are very cheap attempts to cash in on the casual craze, a very large number of them with their budget's combined would be less than a handful of the very expensive HD games combined. CoD:MW2 cost $200mill including marketing, GTAIV cost around $100mill, the highest costing Wii game ever was SMG at $20mill, and most are far far cheaper.

The average PS3 game costs $8.9mill and needs half a million to make a profit. That barrier is much lower on Wii.

http://www.destructoid.com/500k-sales-of-each-ps3-game-needed-for-profit-28232.phtml

The issue is that you said "overall"... which is a boon for Nintendo, but not necessarily 3rd parties individually.  Every thing about a Wii game makes it less profitable per unit than a HD game -- the cost-of-goods is higher, as a % of total revenue (because its its the same as a X360 game, but the revenue is lower per unit), the raw revenue is just plain lower (as evidenced by the data Pachter provided in his post), and the average unit sales, per title (i.e. per investment) are much lower.  In the end, combined with the cost benefits of sharing marketing and dev dollars between X360 and PS3 games, the profit per investment on a 3rd party HD title outweighs that of a 3rd party Wii title, despite the lower development investment in the Wii game.

I find it ironic that Nintendo is always proud to point out that the Wii has the largest number of 3rd party titles -- meaning the number of investments, and invested dollars, is quite high.  Yet their 3rd parties are not receiving the extra revenue return necessary to pay for all those titles development costs -- outweighing the fact that the per-title cost is lower than the HD-combo cost.

Marketing, in particular, is a big issue.  I don't see any reason why the marketing expense on a "big" Wii game would be any less than a big HD game -- and the marketing investment on big titles often outweighs the dev cost.  CoD:MW2 had a supposed marketing budget of $200M -- outweighing the $50M dev cost by a 4:1 ratio (see link below).  It's cost was thus $250M, not $50M.  The Wii demographics aren't there to support such large game investments, which explains the Wii market pretty clearly, I think.

MW2 vs Avatar investment graphic link

 

Nail on the head for me.

 By my figures, after production, retailer cuts, publisher royalties, taxes, shipping etc, games see a good ~$30 taken out their profit margin. That means that a $60 game generates ~50% more per copy then a $50 game, and right there is a reason to invest more money into the title; when scaled into everything else you've posted.

 If Patcher is right and the average third party Wii game is selling for ~$37 per copy, I'd be seriously worried for those companies. There really is no profit margin there. Fair enough they've got a fair share of themselves to blame for that, but the market seems to already be turning into something thats very difficult to into a gold mine.