Teeqoz said:
Development budget is fixed cost. The cost of developping games does not depend on how many copies the game sells. If the development budget is 20 million, it won't suddenly cost 25 million to develop if it sells more than expected. Since both versions are getting developped regardless, no, development costs don't matter after the games have bloody been developped. Those costs don't make SE get paid less per copy.
To simplify:
Hypothetical development cost for PS4: 35 million $ Hypothetical development cost for 3DS: 7 million $ Combined development cost: 42 million $ SE revenue per copy (PS4 version): 40$ (60$ selling price - 20$ or 33% retailer margin. Probably a bit on the high side, but whatever) SE revenue per copy (3DS version): 30$ (40$ selling price - 10$ or 25% retailer margin. Lower retailer margin for handheld games, just to show you that even if we skew in in the 3DS's favour, it's irrelevant. Now, if total sales are at 4 million: Scenario 1: 40/60 PS4 vs 3DS split SE revenue: 1.6 million PS4 copies * 40$ per copy + 2.4 million 3DS copies * 30$ per copy = 136 million $ SE profit (not including other fixed costs, like marketing, distribution, shipping) = 136 million $ - 42 million $ = 94 million $
Scenario 2: 30/70 PS4 vs 3DS split SE revenue: 1.2 million PS4 copies * 40$ per copy + 2.8 million 3DS copies * 30$ per copy = 132 million $ SE profit (again not including other fixed costs, like marketing, distribution, shipping) = 132 million $ - 42 million = 90 million $
Scenario 3: 50/50 PS4 vs 3DS split SE revenue: 2 million PS4 copies * 40$ per copy + 2 million 3DS copies * 30$ per copy = 140 million $ SE profit (not including, you guessed it, other fixed costs) = 140 million $ - 42 million $ = 98 million $
As you can see, because the development budget doesn't change regardless (unless you are talking about not developping the PS4 version at all), it is more profitable for SE if the PS4 gets a bigger platform split. That the PS4's dev budget is higher changes absolutely nothing with that fact. Zero, zilch, nada.
Now, as to how this pertains to my original point for why they shouldn't release the 3DS version long before the PS4 version: That will make people pick the 3DS version over the PS4 version, because they don't want to wait, and most people won't want to pay for both versions. This will lead to the PS4 getting a smaller portion of the sales, which in turn leads to less profit for SE.
Maybe you are thinking about which platform's version will be most profitable? Because that's an entirely different (and irrelevant to this discussion) question. As long as both versions are getting made, the bigger the portion of sales the PS4 gets, the higher the revenue for SE, and the higher the profit for SE. Dev budget is irrelevant to this, just like I said, because dev budget remains the same regardless of platform split. |
)''claps''
Nice detailed post.
