| Sqrl said: 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. (...) 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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Now this I can agree with mostly.
But perhaps one type of scenario has escaped you, and I'm glad that your've focused on the topic of game sales/future titles (could have been console sales, or anything) because I have a good example where revenue is very important.
Scenario: How sales of a game affects the chance of a sequel being made. This is especially interesting in cases of new IPs.
We all know that devs seldom tell us exact budgets nor profits, but why is it that I get the feeling that a lot of games almost automatically gets sequels, regardless if the reception was bad or not? Often you ask yourself, "how did they make profit on that one.. another sequel??" Gothic, Two worlds, Medal of Honor, Empire Earth, Prey, Warlords, Blood Rayne, Just Cause, IL2-Sturmovik, Star Trek, Stronghold are examples of series when I ask that question.
Well, often games and especially if it's new IP is a risky investment and really a hit/miss project in terms of sales and profitability.
I can see many games even show a huge loss, but still get a sequel because you can tweak so many factors for the next installment.
Before the first game is released, the dev/publisher has just a vague idea of how much it will sell and how it will be reviewed. Will LPB get a gameranking of 83% or 93%? Will it sell 1 or 2.5 million? It's a shot in the dark. But target estimations becomes a lot easier for a sequel. Prey sold 800,000 copies, "ahh... if the sequel is similar we'll know it sells at least 600,000", they might think. "Let's budget it at 600,000". I bet the makers of The Settlers-series have a very good idea of how much the next game will sell.
The next game might be a lot cheaper to develop just because you already have the infrastructure set up from the first game (storyline, design features, game-engine, a dev team that is glued together etc). So even if they lost say $0.5 million on a new IP like Two-Worlds, they decide to make an expansion or a sequel anyway because they know it can be made a lot cheaper. Or Heavenly Swords, a high-budget game which in essence was a good game, but too short and didn't sell very well. Even if they lost money, I believe there is very good chance there will be a HS 2, only this time they'll be able to make it much longer even with a smaller budget (and aim for profit).
Often a new IP starts out on just one platform, because it's easier to be focused and thereby meet deadlines, but they know it's easier to expand to multiple platforms for the next game. So even if Condemned (X360) didn't make profit, Condemned 2 (X360 and PS3) might because of the larger total installed base.
