What would you say if Sony or MS decided that for next gen they will opt to not charge royalties from the devs. That would mean that the multiplatform would have to sell for 20 bucks less than the version on the competitor. And to keep the same profit they would raise the price of the console itself (so they make profit from HW and subscription, but not from royalties on the third party games)?
In this scenario let's use PS4 as analysis case.
Console launched for 399 and AAA (and most retail games anyway) launch for 60 bucks. We have about 10-12 attach ratio so in royalties each console sold would receive about 200 USD.
This way we would had PS4 launching for 599,99 USD (only 100 more expensive than X1 at the time) but assured that all games would release for 40 or under (including first party), let's keep the subs price untouched at the moment.
Would you support this Business Model? Do you think it would sell more consoles or less (it really is a comparison of upfront payment, fixed cost and "present value", but let's say for the sake of comparison the total cost would be similar to average customer)?
I myself prefer to have higher upfront with lower fixed costs, because I'll be sure I have the money for the upfront payment and then will use a lower fixed cost (which is easier to manage and also to increase the flexibility on finances). Also this could even diminish a little second hand market since entry price for the games will be lower. I know that higher tag for the console itself will be a barrier for many and I suspect it would have a bad effect overall even if I would prefer this model.
duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"
Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"