gnawkz on 18 December 2008
| Plaupius said: What I find really interesting is the distribution of costs between functions, and also the costs of goods sold. I am under the impression that game development falls under R&D costs, but if that is so then I'm really buffled. They are spending almost 3 times more on General and administrative costs than on R&D, and G&A is more than 10% of their revenue. Morever, R&D is about 4% of revenue, which is really, really low. Even for a manufacturing company that wouldn't be a lot, but for a software company it seems impossibly low. Am I missing something? Do some of the game creation costs fall under G&A? What is actually included in R&D? Costs of goods sold includes development costs and internal royalties and licensing costs, but are those costs only related to the sold goods, meaning that the costs of development of upcoming games is not included in that figure? |
Ok ... glad someone brought this up.
This is where the accounting gets a bit interesting.
If the product is not in a playable form, i.e. early stage development, the cost is placed in R&D. If the product is playable, a level has been built and a character can walk around, then the expense is recorded under product costs, as such that is why it is so huge and high and R&D is so low. Based on my understanding ... if Niko can walk down a street and wave ... any further development costs must be recorded under product costs and not R&D. As such R&D is super low.
In addition, Take 2 probably had to spend another $15 Million to fight off EA. Spend extra for marketing (hence the higher revenue)
