You make some good points, but we still don't quite see eye to eye.

I'll concede that creating a new engine should (mostly) be a one-time fee, but I think you're drawing too broad a conclusion. Remember, middle-ware is almost a requirement now, as I wrote earlier, and the majority of developers on the HD consoles seem to be liscensing engines from Epic et. al., rather than developing their own. So for most third parties, it is not a one-time expense, but rather a continuing cost that applies to all their games.

I also concede that the link I provided did continue as you posted. The thing is that advertisement is far from being unique to new IPs: the point of the article wasn't that advertising costs are higher for "casual" titles than traditional ones, it was a warning that you have to spend advertising dollars on such titles, just as you would with traditional ones, so people should not leap to the conclusion that development costs alone are the only thing that goes under a publisher's "spending" column. Which ties into my point perfectly, since the best-selling games almost always have the highest advertising budgets.

The solution you propose is elegant, but its simplicity is the same reason why it just won't work. We can not and should not assume that the remake of Okami had anywhere near the same advertising budget of GTA, for instance.

Less dramatic, but more commonly, I think it's more than safe to say that most million-sellers had far more advertisement that the average B-level game; businesses aren't always stupid, and they know that their expensive investment will go for naught if people don't know that the game exists. And the more they invested in making the game, the more determined they will be to get the word out.

The problem I have with your assumption about the Game A vs. Game B analysis is two-fold. First, it requires that we have at least a rough idea of each individual game's profits in order to be truly effective.

Second, while it may work for comparing two games that sell outstandingly well, most games don't sell all that well. THAT is Malstrom's point. The vast majority of game studios will never release a game that goes platinum: most are thrilled if their game even tickles 400k. And yet up until this generation that situation was fine, because development costs weren't so high that cracking 500k was required for the average title. Now, HD costs require that they do.

And that, simply put, is the same point that Malstrom was making.

The article you linked to is a prime example of that (and if you hadn't posted it, I would have). The tone, the thrust, of that article isn't that only three out of ten games are profitable: it's that only three out of ten games are profitable this generation, hence the need for developers and publishers to discover new sources of revenue in order to keep afloat.

True, I'm reading between the lines here, but I don't think I'm wrong, especially in light of how so many people are complaining that it's almost impossible to NOT make a profit off the DS, even if you barely sell any copies. Contrast that with the HD situation...

The final sentence in your last post in particular is one I find deeply flawed. That may apply to the big companies, who are able to shoulder successive flops just to have one mega-hit balance it all out (for now, anyways).

But as I wrote earlier, most companies simply do not have the resources to take such a gamble. One or two flops will eliminate most companies, and they know it. That is why small and mid-sized developers are increasingly developing only for the handhelds and/or the Wii. Heck, Hudson came right out and said that they won't do HD games because they can't afford a flop, and why Tecmo's openly admitting that it's shifting support to the Wii.

And I'll reiterate what I said in the last paragraph: most companies will never have a mega-hit. They must make most or all of their titles profitable if they're to survive. And unfortunately, too many of them have been sinking rather than swimming...

But I've been doing both of us a bit of a disservice by speaking hypothetically. We do have some sources for the big publishers' profits this past year.



Notice that for the most part the companies that focused on the DS were quite profitable, while those that preferred the HD consoles were not. The only major exception I see there is Activision, who had two mega-hits on their hands that fiscal year with Call of Duty 4 and Guitar Hero III. Unfortunately, no other company can even dream of meeting such success (with the singular exception of Nintendo).



I can see why you believed that Malstrom was wrong on this point, but from my reading the data don't support your thesis. The idea that companies can and will continue to toss out flops because they know a single mega-hit will erase those losses doesn't seem to apply to the vast majority, and even the small cluster of companies that could follow it are shifting resources to the cheaper systems because they'd rather make a profit off every game, not just one in three.

P.S. I'll be happy to continue this discussion tomorrow morning, since I always enjoy talking with you (you've never failed to bring some form of support to your side, even if I don't agree with the assumptions you made or the conclusions you draw). For now though, blessed unconsciousness calls...

Nope. You didn't answer why. You just showed how. How the book about the 2nd best flying ace of WWI didn't sell as well was a bunch of fine points about point-of-purchase marketing, shelf positioning, and percent of sales as a hardcover or softcover, etc., which some of you seem intent on debating.

No actually it comes down to a simple fact. People are more interested in the best flying ace of world war one. If 40% of people could name the Red Baron, how many could label the number 2 flying ace? So i'll take it even further, could you name the fourth fastest sprinter in the world? Could you label the 3rd best quarterback in the NFL or the 6th best paid soccer star in the world.

The best Shooter of the last generation was Halo 2 - it sold 8 million copies whilst the best selling shooter on the PS2 sold 3.44 million copies despite the huge difference in sales of the two consoles. This gap is due to the fact that the combination of Halo 2 + The Xbox was far superior than Socom + PS2. If the Wiimote was what broke Nintendo into vast untapped markets it was Halo 2 which broke the shooter into the console markets in a big way.

That's all good and well. But you didn't do anything to address why. At the core, the 2nd best flying ace book didn't sell as well because it was trying to capitalize on a trend, and HOW the best flying ace book became a hit, instead of WHY.

I was talking about the Ace, not the book.

Your whole 80/20 rule seems to be just to make a company like Nintendo and a company like EA look the same. They both earn the bulk of their money from a few of their releases. But it's an artificial similarity. Maybe, no matter the business strategy, the bulk of money in creative fields still comes from a few releases. But WHY is Nintendo the one, in particular, who is rolling in profits, while traditional powerhouses like EA are nosediving despite record revenues? 80/20 doesn't address that.

Because on their own platform they are the big fish, because there are hundreds of competing offerings and most of them are total crap it makes sense that people would gravitate to a name like "Mario" or "Wii" on the games as a mark of quality.  Once you remove Wii Sports/Wii Play you will find that 4 of the next 5 games have Mario in them and remaining one Wii Fit. 35.9 million out of 74.6 million of the million sellers were Mario or 48% of the total.

EA on the other hand is competing in a much tougher playing field. They are competing with every other developer to produce games which edge ahead of the competition. Take EA vs Activision on the Xbox 360 in the million seller list. Activision has 3 entries in the list and 2 in the top 10. Total sales: 11.06 million (3.68 avg) . EA has 1 entry in the top 10 and 8 games on the list. Total sales: 12.93 million (1.61 average). So you can see that activision has been much more successful than EA. Especially if you use estimates that indicate a game needs to sell 1 million copes to break even.

To figure out WHY, you need to study the business strategies. Certainly, some rhetoric comes from a lack of understanding, or is outright a lie, but that's why Malstrom is so useful. His articles examine all the rhetoric from every player in the industry. Go further and examine the rhetoric coming from Iwata and others at Nintendo, and compare it with rhetoric from other companies, to understand WHY Wii and DS own the industry, while other companies are consolidating and collapsing left and right.

Sure I will do that, but do you mind that I start with Microsoft?

80/20 rule, hell, from that chart, it looks to me like Nintendo has well over 100% of the profits coming from the industry.

The purpose of Maelstrom's blog is not to be pro- or anti-anything gaming-specific. His main goal is to observe a market trend in action, and to note the side-effects of that change. It's pointless, as a result, to take what he says personally; the goal for him is to learn what it means to successfully put out a disruptive product and make a blue ocean market. Who the teams involved are matters little in that analysis. He could have just as easily analyzed a different market in the midst of such a change, if there were any others so early in the process available for study.

The short of it: don't read it as pro-Nintendo, read it as pro-Blue Ocean and pro-disruption. Because that's what it is.