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'Less than 3 out of 10 games recover costs,' says EIF boss


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#1 Xbox-Scene

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Posted 12 August 2008 - 04:54 AM

'Less than 3 out of 10 games recover costs,' says EIF boss
Posted by XanTium | August 11 23:54 EST | News Category: GamingGeneral
 
From gamesindustry.biz:


Edinburgh Interactive Festival chairman Chris Deering has warned the games industry that it must look for new revenue sources as development costs rise and software sales fall.

"My guess and analysis shows that less than 3 out of 10 games recover their development and marketing costs with boxed goods sales," said Deering. "So what's going to have to happen? Creative use of hybrid online and offline advertising revenues, online offline transactions with consumers - these business models must be explored."

According to Deering, the big trends of the next decade will include the growth of internet-served video, the expansion of fanbases into new communities, increased remote data storage and the emergence of global virtual currencies. He also predicted the growth of mobile social networks, TV, GPS and advertising - all of which present the games industry with new opportunities to create games and seek out revenues.


Full Story: gamesindustry.biz






#2 PaddyPat

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Posted 12 August 2008 - 08:33 AM

Maybe they need to make fewer but better games?! Why make games that everyone knows will fail? For example: Beijing 2008. Worst button-mashing game ever made. They don't need to make a game just because the Olympics are this year. Of course it's going to flop because it's so repetitive and boring. Those games might have worked in the early 90's with SNES, but not anymore.

There are probably 50-75 games for the 360 that are worth playing and the others might as well not have been ever created. Also, how is it that companies like EA continually churn out top quality games? They have a virtual monopoly on sports games in North America and they still get great reviews. This is no accident, some companies like EA and Rockstar just want it more.

Ever remember in high school when you would hand in a totally crappy assignment you know you didn't put much effort into and knew you would get a bad mark? That's what 7 out of 10 games are. They can't possibly be happy with the final product but they release it anyway hoping it'll turn a profit.

My own conclusions about why 7 out of 10 games fail to turn a profit: they're friggin shitty! Don't complain about the lack of ad spots in your games! Just make better ones!

#3 Martinchris23

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Posted 12 August 2008 - 11:24 AM

The biggest problem is the RRP, especially over here in the UK.

£50 ($100) RRP is stupidly high for a vast majority of games. True, some games are definitely worth it and their longevity is a testament to this.

IMHO if you were to cut the RRP by 50% (£25), you would sell more than double the units on a comparitive quality game. Why? The best form of advertising is word of mouth. More copies of a game out in the public means more advertising. How many of you have had mates around and have played a game, then decided to all go out and buy it to play it online? Not only that, but tie it in with DLC and you've more prospective people buying the content. £25 RRP is a price point that most people could easily walk past a game shop (who would possibly sell it for £19.99) and pick it up without much thought.

We're about to hit a rough patch in the UK financially and people will not be able to afford the cost of games as they currently stand. If the game sales are low now, it's gonna get a whole lot worse.

#4 jimbobjim

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Posted 12 August 2008 - 11:46 AM

Most games aren't even worth £10, nevermind £50. I can barely think of 5 games i've played that are actually worth their rrp.

COD4
GTA4
Bioshock
errrrrrrrrmmmmmmmmmm.....

Most games released are just poor imitations of a far superior game that did well. Just look at all the poor cash in attempts that came off the back of COD4.

I admit, some games are worth something (say £30), but £50 is asking a little too much.

#5 Devryn

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Posted 12 August 2008 - 02:04 PM

I'm sorry...But how can you have a guess AND an analysis and call it fact. You either analyzed the data and made a determination OR you guessed. This guy is extremely out of touch. The "industry" has been playing with different revenue sources ever since online gaming became huge, hence all of the in game advertising.

#6 BoNg420

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Posted 12 August 2008 - 03:12 PM

1. Quit making video games based on movies. They are usually child aimed, so they will not sell well. Like every movie that comes out anymore, there is a game that follow.
2. Lower game prices.
3. Instead of just putting out any game, make sure its something people will actually like.
4. Do we really need a new madden, NCAA, NHL, NBA, MLB 20XX every year? Seriously. If you don't add a new feature to the game, why do we need a new game? Why not just give out or sell updated rosters? These games lose a lot of value too, since the next year they are prob only worth 1/5 or 1/4 what you originally paid..
5. I have played tons of games, sad thing is I would say most of them I would turn off within 20 minutes or less of playing because they are so horrible. It really seems like the companies don't even try. The only good games are big releases that are worked on over a year it seems...

#7 Devryn

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Posted 12 August 2008 - 03:33 PM

QUOTE(BoNg420 @ Aug 12 2008, 10:48 AM) View Post

1. Quit making video games based on movies. They are usually child aimed, so they will not sell well. Like every movie that comes out anymore, there is a game that follow.

This will never stop...Capitalism at its finest.
QUOTE(BoNg420 @ Aug 12 2008, 10:48 AM) View Post

4. Do we really need a new madden, NCAA, NHL, NBA, MLB 20XX every year? Seriously. If you don't add a new feature to the game, why do we need a new game? Why not just give out or sell updated rosters? These games lose a lot of value too, since the next year they are prob only worth 1/5 or 1/4 what you originally paid..

I have been saying this since the 360 and PS3 were released...Why aren't sports games just updated via DLC?

Also, I was reading on Gamespot that the new Madden game has glitches...Is it just me, or is that COMPLETELY unacceptable on a game that hasn't really changed in 3 years and is the same as the NCAA equivalent that's already been released?

#8 spinjunky

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Posted 12 August 2008 - 03:40 PM

This is reason why have been using the Blockbuster video game rental program. For $20 a month, I can try everything. I haven't bought a game since COD4 came out. Almost everything that I have rented has been pure crap. I also get bored with games pretty quickly (points and achievements dont add incentive for me).
So, I like the new Hulk game until you realize that hitting waves of things is it, I like GTA4 till you realise that they employ game lengthening mechanics a lot (start on right island, drive to far left and come all the way back without hitting another vehicle, type of stuff) that is not entertaining and it is not pushing the story along.
I enjoyed army of 2 but my brother and I beat it in 4 hours tada! so glad I didn't spend $60 on that.
Tiger woods is pretty fun but was it worth it to buy the new years release so I can customize grass length, cloud density and amount of razor bumps on my chin?

I assume it all comes down to the same problem with movies. The Story has usually been replaced with interesting fluff and large explosions, which is great until you realise it and then you become instantly jaded.



#9 abbylee26

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Posted 12 August 2008 - 04:20 PM

Less than 3 out of 10 games recover costs! laugh.gif laugh.gif laugh.gif

Then you must also believe that...
John Edwards is not Rielle Hunter's baby daddy.
Russa did not invade Georgia because they wanted to be in NATO.
Obama (who by the way calls for restraint on both sides during the slaughter of Georgians) is not dangerous.

Companies are in business to make money.
They pay people lots of money to tell you they are losing money…because they want you to believe it. Otherwise they know we would not pay $60 for a game. Do you blame them? We use the same argument on our bosses when asking for a raise every year. “Oh boss, I can’t live any longer on the little you pay me”. Fact is…if we didn't make a good living we would do something else…and so would they.

Edited by abbylee26, 12 August 2008 - 04:21 PM.


#10 wyldstallions

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Posted 12 August 2008 - 05:15 PM

From 8th May 2008:

Growing publisher Activision today reported that its year-to-date 2008 net income totaled some $344 million, a significant increase over its 2007 take of $85 million.
The record profits were pulled from a total revenue of nearly $2.9 billion, up from $1.5 billion the previous year. Activision's fiscal year ends on March 31.

Activision's strong lineup was lead by Guitar Hero III: Legends of Rock and Call of Duty 4, which continued to perform well into the company's fourth quarter. The company records over 9 million sales of Call of Duty 4 as of March 31.

According to the publisher, 82.8% / $2.39 billion of its total revenue came from console software. The sale of portable games brought in 10.8% / $314 million of the overall sum, while PC games only made up a paltry 6.4% / $185 million.

A further breakdown revealed that Xbox 360 sales were responsible for 31% of the company's $2.50 billion publishing revenue, with PlayStation 2 software following at 29%. PlayStation 3 publishing made up 13%, Wii games checked in at 12%, and PC represented 6%. Nintendo DS software publishing followed at 5%, and PSP was responsible for 3%.

or

Microsoft today announced Halo 3 has officially become a global phenomenon, garnering more than $300 million in sales in the first week alone. The critically-acclaimed Xbox 360 exclusive, which was released worldwide on Tuesday, September 25, is the fastest selling video game ever and one of the most successful entertainment properties in history.

They should be happy that they are making any money at all from most of the warmed over crap we are repeatedly served up. Most of the tripe isn't worth the plastic its written on. But it seems like they are making tidy sum to me??

#11 so_what

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Posted 12 August 2008 - 07:17 PM

QUOTE
We're about to hit a rough patch in the UK financially and people will not be able to afford the cost of games as they currently stand. If the game sales are low now, it's gonna get a whole lot worse.

This is the case in the US, as well. The economic system is looking a bit grim at the moment. On topic, I don't believe for a minute that less than half of the games are making money. The guys writing them would be dropping like crazy. There's only a few people I know of that will keep dumping their life into a losing game. They're addicts. Maybe these people are just addicted to making shitty games or maybe there is some bad information floating around (intentionally or not).

Edited by so_what, 12 August 2008 - 07:18 PM.


#12 synthetamine

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Posted 12 August 2008 - 07:50 PM

"Less than 3 out of 10 games recover costs"

modders, we're looking at you

#13 HotKnife420

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Posted 13 August 2008 - 04:33 AM

Anytime my local Best Buy has a new game (about 2 weeks after release) for $20 off, they sell very well. I think games should have a 'generic' retail value of around $30, and maybe higher profile games (such as Gears of War 2) could be more. When the production of a fully packaged game is less than $3 (manufacturing costs), I see no reason for insanely high prices. Your volume will increase significantly if you drop MSRP.

I recall when the Dreamcast came out, EA talked of the possibilities of selling a 'core' sports game and selling updates for the 'next year edition' until they came up with a significantly 'different' edition. Whatever happened to that idea? I'd say that's proof right there that a lot more than 3 out of 10 games are recovering costs. Alternatively, if they made better games, they wouldn't have as much a problem selling for the current MSRP.

The author also makes the assumption that *all* games have $10+ million in production costs (which is hardly the case). Then Mr. Deering says "people are saying the software business will be down 20 per cent by 2011 versus this year"... What people? By what means was this conclusion reached? Where's the trend in loss, when so many companies had a significant gain? Will the 20% down from this year be *just* in 2011, while 2012 could be 20%up? Too many unanswered questions...

Edited by HotKnife420, 13 August 2008 - 04:47 AM.


#14 BasicAir

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Posted 13 August 2008 - 08:25 PM

I've seen a show on tv a few years ago when Halo 2 was in development and very credible developers, NOT analysts, stated only 1 in 10 games turn a profit. So that goes along with this analyst saying less than 3 in every 10.

I've cited this statistic of only 1 in every 10 games turning a profit when defending game prices in threads online. Everyone wants to bitch and moan about game prices and claiming the companies make tons in profits but they really have no clue.

At any rate, it's a shame so few games are successful.

#15 HotKnife420

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Posted 14 August 2008 - 09:26 PM

If they'd stop trying to sell games that aren't the same caliber for the same price, they wouldn't be claiming a loss on as many units.

100,000 units sold at $60 each leaves about $5,900,000 to split between the retailer, distributor, publisher, & developer.
250,000 units sold at $30 each leaves about $7,250,000 to split between the retailer, distributor, publisher, & developer.

$7.25 million > $5.9 million

I'm sure that more than a 1.5x sales spike would result from this 'half price' concept. Major games, of course, could still be sold at the MSRP $60, as they have higher development costs.




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