He's right tho. Also, Im not a pro-Wii owner and i didn't bother with math either... I figured others did so I went along with the thread...lol

^

The thing is that from a topic point of view he's not right, bigjon is. Bigjon mentioned return on investment, not net profit. I also mentioned that the thread is ridiculous as well, because clearly the HD versions are more successful and the probable high ROI on the Wii version is a direct concequence of it being a port, in which case the PS3 version should absolutely have the highest return.

You'd be surprised how many people actually seem to think that those faster little guys would destroy hw-division. Like RJJ owned Ruiz. ;P

so Call of Duty Wii is a success after all that, i guess the reason it sold that well is the lack of Nintendo core games

and it's going even higher

Wait a second.

Why are we arguing ROI when no one knows actual development costs? It's nice to say that the Wii version, since it was a port, cost 5-10% of the PS3/X360 version, but exactly what was the ROI, even with those numbers?

Let's use my $30m 40/40/20 example:

X360 Version:
$12m budget (40% of $30m), $192m gross profits. 1,600% return on investment.

PS3 Version:
$12m budget (40% of $30m), $114m gross profits. 950% return on investment.

Wii Version:
$6m budget (20% of $30m), $26.4m gross profits. 440% return on investment.

Now, I must ask...How did the Wii have better ROI? Unless the Wii version cost LESS than $1.6 million dollars (5.3%), it did not have a better ROI than the X360 version.

Furthermore, lets not forget that the ROI on the X360/PS3 accrued MUCH quicker than the Wii. So if you want to talk about how quick the ROI was, it favors the X360/PS3 even moreso: within 4 weeks of launch, the X360 version outsold the Wii version by just under 10:1, and the HD twins outsold the Wii version by 14.5:1. That's in comparison to the current LTD numbers of just under 6:1 for the X360, currently, and about 8.5:1 for the HD twins.

So lets summarize:

ROI was much higher on the X360 (1600%) and PS3 (960%) versions than the Wii (440%) versions using a $30m budget + 40/40/20% split for development costs. Unless the Wii version cost under $1.6 million USD to develop (5.3%), it did not have a higher ROI.

Furthermore, if you want to talk about ROI by month, it's even more skewed, as the X360/PS3 had much higher debuts in relation to current LTD numbers.

Finally, I apologize if I offended any people trying to make the point that the Wii made more money. The issue is that bigjon, and the others arguing that point have failed to put any revenue numbers into their argument. That's why I take issue with it: You cannot argue ROI without putting forth any sort of formula. I did. I tried to give hard numbers as best I could. I even gave the break-even point of ROI for the Wii to surpass the HD twins. If you want to argue the Wii version cost less than $1.6m to develop, then feel free to. But please note, no one bothered with actual ROI in this thread. Not even you, Benga. So I fail to see why my argument that the Wii owners are only supporting their stand because they haven't done thier math still stands, because even after taking that 'jab' at them, they have only complained that I said it: but have failed to refute my point.

I think people are severely underestimating Wii development costs. Do any of you really believe that the Wii is cheaper to develop for than the last generation consoles? The average development cost may be a lot lower than the HD consoles, but the key word is AVERAGE. For all we know they're including Big Beach Sports and Game Party along with Metroid Prime 3 and Super Mario Galaxy in the average development costs.

By the way, don't ask me who "they" are.

This thread really shows you that 99.9% of people really should stay away from any finance job.( and when they don't and get into banking and get people to listen to their weird ideas we get a recession like we have now....)


Stop trying to make up some new BS numbers every 5 minutes and then arguing on how your number is the key number company use to direct their business....

@Ail

The ps3-360 gap in your signature is much larger at this point :)

ROI is a function of net profit, not of revenue. If you invest $100 and make a net profit of $50 (net revenue of $150) your return on investment is 50%.

I think the 360 game is the #1 SKU, meaning it will likely be the project to which the original budget is allocated. Let's put it on $20 million.

we know that porting from 360 to PS3 will cost 10% of the original budget (Ubisoft said this), so the PS3 version (is a different project) will need an investment of $2 million.

Now let's assume Activision makes $25,- on each game sold. That would make:

360: 5 million * $25 = $125 million - $20 million = $ 105 million net profit.
PS3: 3 million * $25 = $ 75 million - $2 million = 73 million net profit

ROI 360 = 105/20 * 100% = 525%
ROI PS3 = 73/2 * 100% = 3,650%

Please note that I already said twice that I agree with you that this thread is nonsense and that it's obvious that the HD versions are more successful. For ports ROI's are not useful at all, it was basically a trick of bigjon to show of his business knowledge and combining it with positive Wii spin or something like that. That doesn't make it false though, just useless.

Just some thoughts

We don't know what the development costs are/were. We don't know how easy/costly it is to port. All we have are some blanket statements regarding development costs, often put forth by the developers themselves for reasons unknown as well as estimated development costs for a smattering of games (generally high-end experiences). We also do not have data for costs that may be more equal among different types of consoles: manufacturing, distribution, advertising, etc.

From this, the general consensus is that Wii development is less expensive than development for the PS3 or Xbox 360 -- based upon "cold room" scenarios (starting from scratch). Various estimates have put that at between 1/2 and 1/4 the cost.

We do not know the pre-existing costs/assets for this title. It did not create an engine from scratch. So the use of existing technology may have reduced the development costs. Similarly, the process of porting a game from System A to System B is thought to be cheaper because of the presence of some elements that can be reused in different versions. However, whether the degree this applied in both parallel ports (HD to HD) and down-ports (HD to SD) is not known. In other words, porting may not always be as easy as porting is thought to be.

Thus, any calculation of IRR or ROI is based upon a set of assumptions. And you do know what happens when you assume (you make an ass out of you and me).

But the take home point is that there is money to be made -- profit -- by releasing Wii versions of what have traditionally been considered core games for HD consoles/computers/unit. But the IPs have to be known and the games have to be good.

How much profit is unknown -- and may be tough to calculate since companies may choose methods to report their costs in ways that do not accurately reflect reality as we may perceive it. (I am thinking the company spreads the cost of game engine acquisition over all consoles equally, even though they are only using one console as the base for development activity and then creating ports).

So companies should do games for the Wii that they heretofore did not think of as "Wii--appropriate." Because if done right, it can help their bottom line.

Mike from Morgantown

Disclaimer -- I dropped public finance when in graduate school because I could not understand the material the way it was being presented. I later learned that I should not have taken the course from that prof because he was not very good. But by then, it was too late to take the course again and did some reading on my own -- particularly as things applied to the public sector. So while I get the concepts, I do not necessarily know how to do the calculations without looking it up in a book.