Analysis of sales (units) and profits (units) of next gen consoles-games using 10 common games and estimates of break even points. As you now development a game for the PS3 console is a very costly endeavor, also the PS3 have a much smaller installed base. The cost for a 360 game is also higher that of a Wii game but the installed base is similar. This analysis provides a rough estimate of the profits or losses of the game publishers in each console.

References:

Sales figures from vgchatz.com

http://kotaku.com/gaming/ps3/namco-ps3-games-must-sell-500k-for-profit-218215.php

http://www.joystiq.com/2006/11/30/big-sales-needed-for-ps3-game-profit/

http://www.n-sider.com/newsview.php?type=story&storyid=2005

I think you're under the impression that revenues are the same as profits ...

Many of these games will have drastically different development costs (Gutar Hero vs. Madden) and they may even have massive different development costs across platforms (Tiger Woods). You can only determine what the profits would be by determining the cost of development taking that away from the revenues.

No, that's is not the case.  The profit comes after all fixed and variable costs are covered.  Break even is the point when the publisher neither losses or gains money. 

Well, why is the break even point so different between the XBox 360 and PS3 when the only difference between both builds (typically) the cost of optimizing the engine (an expensive task, but nothing compared to the cost of the artistic assets).

The calculate the profit (in dollars) we need the actual net margin that the publisher make for each game. That's the reason I include the profit in units, I don't have a clue about that margin. If you want, multiply the units by the margin (if you have that info) and there you'll have the profit in dollars.

The break even points are only averages of estimates. Some sites mention other amounts and there are some variation.

It'll be really interesting to see what software sales are like in '08. After buying a console it's usually awhile before I can afford to buy games regularly. I imagine it's the same for most people. Next year PS3 and Wii sales should look quite different.

Most of the cross platform games are developed on one system, and then ported to the other. How are you counting development cost? The development cost would be much less for a port, and make the break even cost much less.

So, say game X costs $10million to develop for the Xbox 360, and $2M to port to the PS3. What is the basis for the break even point for the two systems? $10M/$2M = development cost on each platform. $6/$6 = split the cost. $5M/$7m = split development and extra for port.

The question for developer would be: Would porting this game from system X to system Y cover the extra development cost.? In almost all cases, this is true. Your numbers make is seem like developers would have made more money if the never made a PS3 version.

I applaud the original poster that was a wonderful analysis using decently rigorous methods, and it made a salient point about the profitability on the respective platforms. Don't let the detail police hold you down. You were incredibly fair in your analysis, and I believe most posters should accept your methodology.

The original poster in fairness used games that were released on all platforms. They are not stating that the developers that made the same game for multiple platforms lost money. They are highlighting the fact that on average which consoles are more profitable to develop games for. You guys were so bent on finding errors that you entirely missed the point.

The games being used were used, because they are on all the next gen consoles. Therefor they are reasonably impartial. The poster is comparing apples to apples as it were. Think of these games as stand alone on their respective platforms. These games were used as examples. Fair examples no less.

The Wii on average generates a hundred percent profit for developers. The 360 generates on average a sixty percent profit for developers. While the PS3 generates a thirty five percent loss. Had these games been stand alone rather then multiple platform. These numbers might hold true.

These games were they exclusive for instance to the PS3 would have cost the developer a pretty penny, and honestly exclusive titles might be losses for developers on the PS3. Note these are averages some exclusives might make money on the PS3. While some might be total money pits. What isn't in doubt is that your chances of profitability are greater on the other two consoles.

Simply not knowing the specific development budget for a particular game doesn't mean we cannot speculate about profitability using good rules of thumb.

I think your missing the point that he was giving a great analysis on which multi-port games, to what system, are the most profitable.

That's what matters, and that's what he showed: making a game on PS3 only covers the costs of the port, and little else. The Wii makes some money, and the X360 makes the most for the multi-port game.