bardicverse said:
We've had this discussion a few weeks ago, regarding profit margins, but we'll throw it down again - Average HD game development for AAA title runs roughly about 20 mil. Wii AAA development runs about 5 mil. Lets say that both versions sell 1 mil copies. The Wii version sells for 50 per copy, and 60 on the HD version. On average, after retail fees, manufacturing and distribution, there is an expense of $25 per copy, bringing the income per unit to 25 and and 35 respectively. The Wii version made a total of 25 mil and the HD version 35 mil. Wii version cost 5 mil to make, making a margin of profit at 20 mil HD version cost 20 mil to make, making a margin of profit at 15 mil So with that, we now have numbers to play off of. As it stands, the developer has enough money to make another 4 Wii games free of development expense, and would have to invest 5 mil to make another HD game. Consideration has to be made for the fact that there are 2 HD systems, and these numbers would only imply 500k each or some variation leading to 1 mil. This is where the strength of multiplatform development comes into play. So the argument can be made that HD games made for both systems might be more profitable than Wii standalone development, but exclusive games on HD systems will not be as profitable as exclusive Wii games. What does this all solve or mean? It means that it depends on the developer's viewpoint. Development for the Wii means that the company can sustain future products on the back of successful published games, gaining larger profits in the long run. Development for HD systems in a multiplatform situation (Xb360 and PS3) have potential to reach a combined larger audience (though not dramatically so - 32 mil as opposed to 27 mil) and hope to sell twice as many units as a Wii exclusive. This would allow for a larger up front profit if 1 mil sells on each of the 2 hd platforms (10 mil more) but only allow for 1 more HD game to be made using those profits. If you want to crunch numbers off of those stats, if the subsequent games were 1 mil sellers per system, the Wii version could make 4 games off of its profit, making a total next wave profit of 80 mil. The HD version would allow for 1 more game to be made, keeping it at 15 mil profits. In conclusion, it all depends on what the developers plans are. Quick up front profit, multiplatform HD games are the way to go. Long term sustainance in the industry (important for newer and indie devs) Wii development is the way to go. I think this may have been my longest post ever. :D |
If so it was a good one. Well said.
The only thing you left out (because I don't know that we know it) is the effect of multiple game development, with different levels of success after release. It has been said that in the old days, a company would need one hit in order to cover the costs of 10 games that didn't do so well. Now with the PS3 and 360, that's down from 1 in 10 to 1 in 3 or 4. Obviously if we extend your example above to be 10 "average" Wii and 10 "average" PS360 games we probably wouldn't have an average of 1m games per console. The question then is, even short term, will making 10 HD games be more profitable than 10 Wii games. I suspect not.
