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Barozi on 07 January 2014
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Dgc1808 said:
superhippy420 said:

The thing is though is those are just pure development costs.    Sony also has to pay a hefty cut to retailers, shipping costs, marketing costs, and whatever other stuff Sony needs to pay for.   Theres just no way a game like Killzone 2's total costs were only 40m. while Saints Row were 123 m.          Its actually pretty crazy how much of the total costs actually go into devolopment.  I saw somewhere that GTAV's development costs alone were about 200+m. so they may have actually spent 400m. after all the marketing (which there was a TON of) and the cuts to the retailers.    Obviously is was worth it for them, but the total cost to these companies can be insane.   Nintendo has been avoiding marketing costs for years, but I think they need to invest some $$$ into the Wii U.   All the ad's they put out at holiday time obviously helped sales.


I think you're underestimating the amount of money SONY makes on a 1st party sale and overestimating the cost of getting a game out of a store and into the hands of a consumer. Look at Heavy Rain for example. that was a well marketted game with AAA production value. Development and marketting are the too biggest chunks of the budget and in total that was just over $52M for SONY. They only spent about $30.4M on the ads and that was a very well advertised game by SONY standards. The game hasn't even hit 3M yet it's put out $180M+ $130M+ in revenue for SONY.  Killzone did significanly better sales wise and Gran Turismo 5 sold at least 5-6M at full price. 

On top of the money the make on first party, you've got third party royalty fees that help them out. The bulk of Playstation's financial woes are really just tied to hardware sales. Selling a console and praying for a strong attach ratio in the early years to keep you financially healthy just isn't an awesome business model. SONY and Microsoft have proven that on a number of occassions now. 

A lot of these 3rd parties like Rockstar and THQ are operating really inefficiently or doing something else seriously wrong.  You would think they would be much more strict about this seeing as they make less than a first party publisher with each sale. I'm still trying to wrap my head around Modern Warfare2 costing Activision $40M+ in development alone. Then you have these summer blockbuster movie industry styled marketting strategies with costs in the 100s of millions to get their games featured in a commercial every 5-10mins and featured on cans for multiple brands of soda. It's not even optional. They've got to do this to make sure the game sells and actually makes up it's already crazy cost.

EDITED

Out of all users I didn't expect such an experienced one to make such a comment.

We know that he took the sales of the game, multiplied it by the full price of one unit and then told everyone that this is the amount Sony got in the end.
Proof:

At the time Heavy Rain didn't even ship 3m units (that happened in August), so maybe 2.9m shipped and 2.8m sold.
He said Sony made over 100m € with it. So $130m is the bare minimum he was talking about.
Sony gets according to him: $130m / 2.8m = $46.4 per game (minimum)
That's not even possible IF all 2.8m units were sold at full price. In realtity not even half of that were sold at full price.

Therefore he must have used $60 or the equivalent European recommended retail price without taxes.

I did the calculation two times before I think and I came to the conclusion that it made a profit of around $30m or so. Can't fully remember.