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Teeqoz on 23 July 2015
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Hynad said:
Teeqoz said:

-snip-

I said they get a %, because that's what you brought up, but I then added the important part which is that the game cost is a huge factor to take into consideration when you want to know how many units they need to sell to break even. Big games on consoles cost more than ever to produce. But they don't sell for more than they did during prior gens. So they need to sell a lot more to break even. 3DS games cost barely more than they did on the DS. They don't need to sell as many copies as their console counterpart to break even. 

That's just basic. You said "a home console game doesn't have to do as much in raw numbers to make as much money".

But that simply isn't true because of the increased cost to actually make such games. That's unless you mean indie games, then I'd agree. I think you're confused between games "moving money" and "devs making money". A console game will move a lot of money. But it also has to move quite a bit more money than 3DS games to start making profit. A big game right now costs on average between 20M and 50M to make. And quite a few games go even higher than that. They will need to "do much more in raw numbers" to start making money compared to handheld games, which I'll reiterate ony need to sell around 100k-200k units to break even and start profitting. The fact that the cut they get for a console games is barely different than for a handheld game should give you a better idea of the big picture.

With what I provided, let me give you an example:

- 3DS game development cost = 2M
- PS4 game development cost = 25M

Now, let's use the industry average of profit per unit sold, which is around 15$.
The 3DS game has to sell 133k units to cover its costs and start turning a profit, while the PS4 game has to sell roughly 1.7M

Now let's say both are good sellers and both sell the same amount of units. Let's say 3M. Let's see how much profit each of them will turn:

For the 3DS game: 3M x 15 - 2M = 43M 
For the PS4 game: 3M x 15 - 25M = 20M

So do you now understand the issue I had with what you said ("a home console game doesn't have to do as much in raw numbers to make as much money")... ?


And as for your source, I suggest you try looking into more sources to get a proper idea of what it costs and how much developers profit from sales...



As for the bias part, I've never agreed to that point.


Okay Hynad, first of all, how in the world can you assume that each unit sold makes the publisher 15 $ from both handheld and home console games? That's just silly. Each copy of a 40$ handheld game wouldn't net the publisher the exact same amount as a 60$ home console game. You're even contradicting your own statement of "publishers gets a certain % of the cut for each unit" because 15$ is 25% of 60$, but 37.5% of 40$. Why would the % cut be so much higher (50% higher in fact) for handheld games?

Second of all, source for your "15$ industry average"?

http://kotaku.com/5479698/what-your-60-really-buys

According to this, a publisher gets 27$ from a 60$ video game. And that is after platform royalties, shipping costs, etc. are paid, all of which would be present for a handheld game.

So that's about a 50% margin. Let's just assume that the margin is the same for handheld 40$ games (instead of your 15$ industry average, because that averages out handhelds and homeconsoles, which it shouldn't in this discussion.)

 

PS4: 3 M x 50% x 60$ - 25M= 65M profit

3DS: 3 M x 50% x 40$ - 2M = 58M profit

 

Obviously, the disrepancy increases the higher the amount of copies sold is.

PS4: 4 M x 50% x 60$ - 25M= 105M profit

3DS: 4 M x 50% x 40$ - 2M= 78M profit

 

But I should have noted that I was talking about big titles that are guaranteed to sell plenty of copies past the breakeven point. Obviously if a game only sells 100k, the 3DS will end up ahead.