| Killergran said: I have an example for you, sqrl. It's somewhat generic, but I heard somewhere that GTAIV made $100m revenue the first day in US (I think...) I also heard that it cost of making the game was around $100m. Now, how would the statement "GTAIV made 0$ profit 1st day in the US" sound? How do you count AFTERWARDS? Do you NOT detract costs then, because they were already detracted in the first figure? .... it's all messed up. Profits can only be measured after everything is said and done. Revenue can be measured at once, and is exact. I DO agree that revenue is probably being overused by the spindoctors, but especially in measuring sales it's extremely relevant. |
Revenue for a specific game is definitely useful if we need to extrapolate unit sales should a company not provide that information in a press release for example. And I'm not debating that in terms of PR revenue plays a lot better for a company. Again I point out my issue isn't with the company's using revenue (this is like the 4th time I've said this now).
My contention is that if you really want to know where the games are going, which games are being remade, which games are being canned, and which studios are happy/disappointed with their results then profit is the number you want to look at.
I think just the fact that this thread has become a hot topic of debate sort of points to the idea that there is definitely some dissent about revenue's uses. I think if nothing else many people have shown that revenue is absolutely a useful number for a business to have when making strategic decisions and you are absolutely correct that it is probably much easier to work with for the PR teams as well.
I do not however think that by itself revenue can be used as an indicator of likely future projects. GTA IV provides a good example here in that if it were to only reach a total revenue of $300* million it would be considered a massive failure because $300 million revenue probably would barely allow them to recover the costs of the game and make a little bit of money.
On the other end of the spectrum a game like World of Goo probably cost those guys around $50-$80k* to make and if they sell only 10k* copies at $20 bucks a piece they would probably be happy..or if they sold 25k* copies at $20 they would be very happy. More likely they will sell 100k copies or possibly even more...it depends on how big WiiWare turns out to be.
The reason for this disparity is because WoG has no retail costs, no massive marketing budget, and in general there are a lot less people sticking their hand into the pie. With revenue by itself if you only know that Game #1 made $300m revenue and game #2 was only $200k-$500k* revenue you really have a horrible picture of how these games did.
Ultimately I think the real answer here is that you do need both numbers. And perhaps that should have been more obvious to all of us. With both numbers you could look at the above example and say game #1 had 5-10% return on investment and game #2 had 250-680% return on investment. And you also know that the 5-10% is larger than even the 680%. This is a very clear and accurate picture that the more I think about it the more you really do need both.
But that just brings me back to my original point again with a slight twist..."Whats up with revenue, and why does everyone ignore profit?. Perhaps that would have been a better title. I think maybe that is something we can all agree on?
* - The GTA & WoG example was exactly that....just an example, the numbers don't need to be even remotely close for them to be instructive. The point is that those scenarios are plausible and they illustrate problems that exist within those plausible scenarios. I'm sure someone will flip out on me anyways but I've stated explicitly its purpose so now I can mock them when they do 
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| To Each Man, Responsibility |
