@Lord: I did make the same point as WereKitten. Notice my earlier post where i mention (as an example) the difference in retail, where the 10M difference in dev costs is offset after the first million the game sells. Though, that is not what the publisher makes.

Games like MW2 and GTA4 are exceptional games with their success, but they are the kind of games everyone tries to make. I already said, that somewhere between the top 20-50 games is the line for the ones that in reality have been profitable. Majority of all the games turn only into loss and that's what Reggie is addressing.

For GTA, until GTA4, the series have been increasing in popularity and San Andreas might have been the peak in the series. The series have been pretty stagnant and every new game has only been a "better" iteration of the earlier game, meaning that basically the sequel have been made for the same people that bought the earlier game. Without getting new people to buy the game, their audience shrinks due to them growing out of the game or just getting bored in the same old kind of game.
So, no matter what platform the game is on, it doesn't sell any better than on another platform if it can't break out of the existing audience.

One obvious flaw in the publishers "blockbuster hunt" is, that if you're able to continously put out games that sell 10 million copies, you would be able to put out twice as many 10M sellers for the same cost (not counting in marketing costs).

First of all, I did not make up numbers to suit my argument and I'm not spinning things. I put in numbers that seemed in the right ballpark for what was being discussed: blockbusters like GTAIV and MW2. My estimates: a project as big as MW2 or GTAIV would nowadays aim for 25M copies among PS3, 360 and PC platforms. It would have a marketing budget on average of $100-150M. If you think these assumptions are extremely off, please explain why, and keep the discussion on the track of the sales and profits instead of accusing people of having hidden agendas. There's no need to get aggressive and really as a moderator you should learn to behave better on the forums.

Back to the gist of it: MW2 went all out on marketing, but you really want to use its numbers instead of "blockbuster average estimates"? You're served:

Call of Duty cost $40 million to $50 million to produce, people close to the project said, about as much as a mid-size film. Including marketing expenses and the cost of producing and distributing discs, the launch budget was $200 million, on par with a summer popcorn movie -- and extremely high for a video game.

is the quotation from the original LA Times article. The bold is mine and since it says "including" I read it as a $40-50M developing cost to a grandtotal of $200M budget at launch, meaning $150-$160M of distribution and marketing costs.

I might be wrong, since English is not my first language, so let's even say that it's $45M of developing costs and an extra $200M of distribution and marketing.

Vgchartz tracks the game at 10.31M+7.54M+PC sales. Even with only a couple million copies sold on PC that's in the range of 20M copies, and it sold 200K copies (+PC) last week. That would mean with the numbers you endorse, an estimated 20M*$22-$245M= $195M profit to date. A factor should be taken in account for the decrease of price at retail, but we're still early on in the game's life so I won't apply it neither here nor in the Wii case.

Now we have to make a few estimates for the Wii case: let's say that developing MW2 on the Wii instead would have cost around $15M (improving an existing engine, reduced costs for assets, same amount of netcode and dedicated servers development). Let's say that Activision had gone for half the distribution and marketing costs as LordTheNightKnight suggested, even if it still sounds extreme to me. That amounts to $115M total.

Same profit would need a gross of $310M, needing about 18M copies sold on Wii alone to date. As you can see the point stands that reduced developing costs for a blockbuster (and even cutting wildly the marketing part) still would require a huge sale success relative to the Wii total market.

Lastly, don't twist my words. DLC might be supported on the Wii, but all I said is that it's more likely that extensive DLC for a project like GTA or MW will rake more money on PS3+360+PC - three platforms versus one, each one with higher average network utilization than the Wii and a longer proved history of episodic content/expansion packs.

Again, the fact that blockbusters are an extreme case is not the point. That's the case that was being discussed and for which LordTheNightKnight asked for a modicum of math, that's what I brought to the plate.

To add to what WereKitten just wrote; the point i had, was that the platform depends on the games initial target. If a game starts turning more profit on HD systems after 5M of sales, and the targeted sales is 6 million, the game goes on HD systems. But if the game is targeted to sales of 4 million, then the game goes to Wii.

Think about Mario and Sonic at the Olympic Games. Sega had a target of 4 million in sales (across the two platforms) and the game was put to Wii and DS (on other platforms Mario hadn't been possible though). If Sega had known that they are making the best-selling game they have ever published, the game had been on other platforms (without Mario, that is).

I didn't say you had a hidden agenda at all, but rather taking extremes of numbers to suit your argument, if you feel that it also means you have a hidden agenda with that, then it's your own conscience talking not me.  

As for the 200M thing yeah that was my own goof, since I swear I saw 200M marketing budget being thrown around on the forums, likely a misquote or some such, went and googled the article and didn't check the quote.  

My other issue with the math you're using is where is the money that publishers and developers are making per title coming from?  And you also leave out factors such as Activision themselves released Guitar Hero at 60 dollars on Wii, if they were to make MW2 on Wii with the huge budget as well, then they could just as easily hike the price up to 60 dollars.  Also are you trying to impose the hypothetical if instead of MW2 on PS3, PC, and 360 that its Wii exclusive and trying to make the same amount of profits?  Cause if not then you have to figure the marketing budget is shared between all the platforms, like with World at War, the same channels that aired the HD version commercials also aired the Wii version, though it might have been stupidly done a month after the game released for the Wii version, it still stands that they had marketing contracts with these companies and channels and it's all shared.

But the killing point is this, which is the main idea, with no game are you guaranteed sales.  A budget so high with marketing even higher, if you don't hit outrageous sales, it's pretty much over for you.  No matter how you look at that strategy, its rather bad, I'd never invest my money into a company that would gamble its own livelyhood in one game.  Your original argument was talking about best financially, and there's a reason game companies are dying >_>

What WereKitten is saying is what's going on with the publishers. It's rather irrelevant how much the game ends up selling. What counts is their expectations.

MW2 and GTA4 work as an examples about why it didn't make sense to put them on Wii. However, any real-world example is bad, since the royalties depend on the deal the publisher manage to make with the platform holder. I don't think MW2 and GTA4 were games you needed to pay full royalties.

You can release  your game at a higher pricepoint, but that's a little harder to justify when you have 20$ cheaper games sitting next to them.

That point is rather moot since the same is true for all consoles, and if that mattered then no one would have bought Guitar Hero 5 on the Wii but the Wii version is still the highest selling sku.

As for royalties I haven't seen jack as proof for how much anyone pays or gets away with not paying, so I'd like to see some kind of facts around it before people go around claiming how much you can and cannot make off each game sold.

And if everyone expected their games to do so well, then no wonder everyone is screwing themselves, cause you simply can't expect people to buy that much so often.

 I really don't get this, no company runs seperate adds for Xbox 360 and PS3 versions of a game - seeing as well, they're the same game. Hence the same marketing budget, and thats why so many adverts have both logos at the end of the advert and never hone in on one version... To a third party the PS3 and 360 are the same console now pretty much, once the game hits marketing anyway.

 There is the exception where Microsoft or Sony buy exclusivity on advertising, like what happend with FFXIII and Assassin's Creed II, but that's generally a good thing for third parties and most consumers will still assume it's on both consoles anyway.

 I'd argue the Wii market needs more aggresive marketing then the HD console (Which is where Nintendo have had so much success) and that there's absolutely no justification in halfing the Wii marketing costs, for a hypothetical game on the scale of a GTA or MW2, just cause it's one system. That just doesn't make sense 0_o.

@Maxwell: You know, Guitar Hero was a very bad example. There's the lack of real competition in the market and the previous games were sold at the same price with PS2 version, so there were lots of GH guitars in homes already.

I can't remember any other official take on royalties, other than Iwata stating that their royalties are 10$ for a normal game and 5$ for a budget-price game (if i recall). Other than that, the talk is that the royalties across all platforms are between 3 and 15$. And, that is commonly known, even years ago, that the royalties get usually negotiated if the game is big enough. That's when the third party publisher can have its say on the matter.

And yes, that's why the publishers are putting themselves down the drain.

If most Wii games would profit more if sold at $60, I'd think that publishers would have moved to that value, though.

The rough numbers for the publishers' share on the retail price I took from older threads, an interesting post giving an estimate was this one from shams (who I happen to understand is somewhat in the business).

PS: According to those rough estimates I should have better used $18.5 instead of $17.5 for a $50 game and $23 instead of $22 for a $60 game, but it wouldn't have tilted the result of the estimation as the difference stays constant. And the $1 difference is probably irrelevant given the error margin... the point is there's about $4-5 more for the publisher out of the $10 retail price difference.

Where did you get your estimate that there's only $4-5 for a publisher for every $10? Doesn't the retailer generally take in roughly 15-20% of a game for a 59.99 product? That drops the game to 45-49 level. Then the publishers take their royalty fees on top of that. And then shipping/packaged material costs. I'd say the publisher is getting near $35-$42 per $59.99 product and that doesn't take into account the special editions that are major profit margin winners. Sure, the price drops over time, but I think you are on the low end for a major title like MW2 and GTA V in terms of the price point. And what you also forget is that Sony and Microsoft often lend millions to help advertise games like MW2 and GTA V. Those costs are not all taken by the publisher