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Forums - Sales Discussion - How much does a game need to sell to make a profit?

man-bear-pig on 14 December 2011
osamanobama said:
Slimebeast said:

War in the North looks fairly low budget for a HD game but the studio making it, Snowblind is relatively large at +80 members. So lets say 80 developers making it for 2-2.5 years. which gives roughly a $16-20 million dev cost. Add another $3-4 million for marketing and a few more millions for the LOTR license/royalties (these cost!) and on top of that a significant number of millions that the publisher Warner needs from each game to run its gaming division.

So all in all the game would need minimum $30 million from sales (yes a very rough estimate and I'm almost pulling these numbers from my ass) to cover all those costs, and since you get $25 per copy sold (low reviewed games like War in the North end up quite quickly in the bargain bin) it would need to sell at least 1.2 million copies to break even.

Now, how many copies has it actually sold so far? A million?

NO... just no.

that would be a bigger budget than Uncharted games have, and a much bigger budget than the Gears game (1st one especially).

having games in the $20 million budget range is well above average. thats a big budget game.

it is more that like LotR had a budget well below $10 million after marketing, etc.

okay, so 350,000 x $25 = $8,750,000... so it still is making a loss.



My prediction threads:

Wii U will sell under 40m units (made on 14th September 2012)

PS Vita will sell under 20m units (made on 30th September 2012)

Wii U will sell under 7m in 2013 - I was right

Halo 4 first 9 weeks sales prediction

PS4 to be down YOY in 2015

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Millenium on 14 December 2011
osamanobama said:
Slimebeast said:

War in the North looks fairly low budget for a HD game but the studio making it, Snowblind is relatively large at +80 members. So lets say 80 developers making it for 2-2.5 years. which gives roughly a $16-20 million dev cost. Add another $3-4 million for marketing and a few more millions for the LOTR license/royalties (these cost!) and on top of that a significant number of millions that the publisher Warner needs from each game to run its gaming division.

So all in all the game would need minimum $30 million from sales (yes a very rough estimate and I'm almost pulling these numbers from my ass) to cover all those costs, and since you get $25 per copy sold (low reviewed games like War in the North end up quite quickly in the bargain bin) it would need to sell at least 1.2 million copies to break even.

Now, how many copies has it actually sold so far? A million?

NO... just no.

that would be a bigger budget than Uncharted games have, and a much bigger budget than the Gears game (1st one especially).

having games in the $20 million budget range is well above average. thats a big budget game.

it is more that like LotR had a budget well below $10 million after marketing, etc.


His estimate for the developer salaries is too high, I'll make a quick formula that is not perfect, but more accurate:

80(developers) x 60k(more than the average salary actually is) x 2 (years)= 9.6M



osamanobama on 14 December 2011
man-bear-pig said:
osamanobama said:
Slimebeast said:

War in the North looks fairly low budget for a HD game but the studio making it, Snowblind is relatively large at +80 members. So lets say 80 developers making it for 2-2.5 years. which gives roughly a $16-20 million dev cost. Add another $3-4 million for marketing and a few more millions for the LOTR license/royalties (these cost!) and on top of that a significant number of millions that the publisher Warner needs from each game to run its gaming division.

So all in all the game would need minimum $30 million from sales (yes a very rough estimate and I'm almost pulling these numbers from my ass) to cover all those costs, and since you get $25 per copy sold (low reviewed games like War in the North end up quite quickly in the bargain bin) it would need to sell at least 1.2 million copies to break even.

Now, how many copies has it actually sold so far? A million?

NO... just no.

that would be a bigger budget than Uncharted games have, and a much bigger budget than the Gears game (1st one especially).

having games in the $20 million budget range is well above average. thats a big budget game.

it is more that like LotR had a budget well below $10 million after marketing, etc.

okay, so 350,000 x $25 = $8,750,000... so it still is making a loss.


perhaps, i dont know. i also dont know how much it has sold. im sure most of its sales favored PC, and most of them were downloaded. so VGC doesnt track it.

but my point was just to show it had a budget of no where near $20 million, its likely a quarter of that. 

though im just pulling a number out of my ass, i wouldnt be surprised if a game like this, with little to no advertising, with a small not very well know development team, cost as little as $5 million to make.

im mean just look at the uncharted's. Super high production values, tons and tons of mo-cap, a super advanced engine, a well know big studio, well known voice actors, big marketing, full time dev time of 2 years, and those cost less than $25 million to make.

than the first gears game cost something like less than 15 million to make (it might have been $10 million, cant rememeber, and cant be bothered to look up sources)

i just dont think a game like this cost much at all.



osamanobama on 14 December 2011
Millenium said:
osamanobama said:
Slimebeast said:

War in the North looks fairly low budget for a HD game but the studio making it, Snowblind is relatively large at +80 members. So lets say 80 developers making it for 2-2.5 years. which gives roughly a $16-20 million dev cost. Add another $3-4 million for marketing and a few more millions for the LOTR license/royalties (these cost!) and on top of that a significant number of millions that the publisher Warner needs from each game to run its gaming division.

So all in all the game would need minimum $30 million from sales (yes a very rough estimate and I'm almost pulling these numbers from my ass) to cover all those costs, and since you get $25 per copy sold (low reviewed games like War in the North end up quite quickly in the bargain bin) it would need to sell at least 1.2 million copies to break even.

Now, how many copies has it actually sold so far? A million?

NO... just no.

that would be a bigger budget than Uncharted games have, and a much bigger budget than the Gears game (1st one especially).

having games in the $20 million budget range is well above average. thats a big budget game.

it is more that like LotR had a budget well below $10 million after marketing, etc.


His estimate for the developer salaries is too high, I'll make a quick formula that is not perfect, but more accurate:

80(developers) x 60k(more than the average salary actually is) x 2 (years)= 9.6M

and its likey they were paid less than that.

also im guessing you found at the number of people on their team, and found it to be 80?

i wouldnt be suprised if a lot of them were only part time



Millenium on 14 December 2011
osamanobama said:
Millenium said:
osamanobama said:
Slimebeast said:

War in the North looks fairly low budget for a HD game but the studio making it, Snowblind is relatively large at +80 members. So lets say 80 developers making it for 2-2.5 years. which gives roughly a $16-20 million dev cost. Add another $3-4 million for marketing and a few more millions for the LOTR license/royalties (these cost!) and on top of that a significant number of millions that the publisher Warner needs from each game to run its gaming division.

So all in all the game would need minimum $30 million from sales (yes a very rough estimate and I'm almost pulling these numbers from my ass) to cover all those costs, and since you get $25 per copy sold (low reviewed games like War in the North end up quite quickly in the bargain bin) it would need to sell at least 1.2 million copies to break even.

Now, how many copies has it actually sold so far? A million?

NO... just no.

that would be a bigger budget than Uncharted games have, and a much bigger budget than the Gears game (1st one especially).

having games in the $20 million budget range is well above average. thats a big budget game.

it is more that like LotR had a budget well below $10 million after marketing, etc.


His estimate for the developer salaries is too high, I'll make a quick formula that is not perfect, but more accurate:

80(developers) x 60k(more than the average salary actually is) x 2 (years)= 9.6M

and its likey they were paid less than that.

also im guessing you found at the number of people on their team, and found it to be 80?

i wouldnt be suprised if a lot of them were only part time

Actually I was basing it on one of the earlier posts in this thread, if I found the actual number I'd do a more accurate calculation. :)

But yes, I agree, 60K is above the average for a "high quality" studio, so it's likely that only a handful of people earn more than ~55K at that studio.

And indeed, it looks like a studio that wouldn't have ~80 devs permanantely, except for the biggest studios around (343/bungie/epic/ubisoft) the average amount of permanent employees should be around 60.



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yo_john117 on 14 December 2011

It really depends on a multitude of things and there is no way to say what a game needs to sell to make a profit.

But anyways here's a chart with a average breakdown of where your money goes for a $60 game



Shinobi-san on 14 December 2011

I would say a game like LOTR: war in the north would probably be okay...Not saying it will make a profit but i dont think heads will roll. despite the bad sales.

The main problem occurs when publishers have a high expectancy for a certain game to do well, and because of this expectancy they give a fairly big budget. Then the game flops and doesnt meet the expected sales, thats when bad stuff happens. The budget doesnt get covered and the studio ends up in a financial mess.

But i cant imagine anybody involved in LOTR: war in the north having high expectations, which would result in a suitable budget, with lower sales expectations and much easier targets to meet to break even or make a profit.



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osamanobama on 14 December 2011
yo_john117 said:

It really depends on a multitude of things and there is no way to say what a game needs to sell to make a profit.

But anyways here's a chart with a average breakdown of where your money goes for a $60 game


i wonder what returns means.

so that means sony first party games get around $40 (yes they have to incure shipping costs, but they get that $4 still)



Acevil on 14 December 2011
osamanobama said:
yo_john117 said:

It really depends on a multitude of things and there is no way to say what a game needs to sell to make a profit.

But anyways here's a chart with a average breakdown of where your money goes for a $60 game


i wonder what returns means.

so that means sony first party games get around $40 (yes they have to incure shipping costs, but they get that $4 still)

Edit: Scratch what I said, it most likely the amount that goes to the developer.

Edit: Or it might be copies returned assuming developer returns might go under publisher. 

(I guess I am just as confused as you are). 



 

Pemalite on 14 December 2011

Don't forget that in some countries games only need to sell half as much due to price gauging.
Not unusual for a new game to sell for $100 - $120 here in Australia if it's a AAA block buster...
And despite our dollar pretty much on parity to the US dollar we still end up paying twice as much.

Also Namco Bandai stated they needed to sell 500,000 copies of a game to turn a profit, not representative of every company and things may have changed since then, but it's figures regardless.
http://au.gamespot.com/news/6162509.html



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