Topic: SEGA profits down by nearly 80%! Is SEGA losing it?

[Ian Sane]

3DO was created by 3DO which was a then new company created by EA founder Trip Hawkins.  The idea was that the 3DO would be a console standard and that any manufacturer could make them.  Panasonic was the first one to manufacture them though later Goldstar made them too and I think there was one other model.  The big flaw in the design was that the hardware manufacturers didn't make anything from games sold so they had to sell the console at a ridiculously unaffordable price to make a profit which doomed the whole thing.  EA, due to their relationship with Hawkins, supported the 3DO but they weren't the console maker.

[NinGurl69 *huggles]

Creative Labs also made a 3DO board for turning your PC into a 3DO platform.

[nickmitch]

Here are the models:

Quote
Panasonic 3DO Interactive Multiplayer FZ-1 (Release in Japan, Asia, North America, and Europe) The first 3DO system.
Panasonic 3DO Interactive Multiplayer FZ-10 (Release in North America, and Japan) Less costly than the FZ-1, the FZ-10 is smaller compare to the FZ-1.
Goldstar 3DO Interactive Multiplayer (North America only) Early models of the Goldstar systems cause some games not to work.
Sanyo 3DO Interactive Multiplayer (Japan only) The rarest model of the 3DO systems.

You can find more info here or check your local library.

[KDR_11k]

Trip Hawkins... Man, that guy's a retard...

[vudu]

Quote
Originally posted by: Ian Sane
3DO was created by 3DO which was a then new company created by EA founder Trip Hawkins.  The idea was that the 3DO would be a console standard and that any manufacturer could make them.  Panasonic was the first one to manufacture them though later Goldstar made them too and I think there was one other model.  The big flaw in the design was that the hardware manufacturers didn't make anything from games sold so they had to sell the console at a ridiculously unaffordable price to make a profit which doomed the whole thing.  EA, due to their relationship with Hawkins, supported the 3DO but they weren't the console maker.

Any idea what games cost?  In theory, since there were no licensing fees, games could be sold at much cheaper than the competition, thus making up for the high initial cost of the console.  Somehow, I doubt consumers saw games for any cheaper than on other systems.

[KDR_11k]

Games are priced at whatever the suckers^H^H^H^H^H^H^Hcustomers are willing to pay. they just tell you "oh, it's piracy" or "oh, it's licensing fees" because they want you to apply pressure to whoever is reducing their profits in order to increase their profits. Passing savings on to the customer is very unlikely, especially in the IP market where all this price fixing is going on (DVDs, CDs or games aren't exactly competing on price).

[Spak-Spang]

KDR:  That is partially true.  Games are priced at what people will buy...however there are few exceptions.  

1)Games have to be priced above the cost of the product.
2)Since a cheaper game will sell more, if a company can sell the game for cheaper they will, because in the end it means more profit for them from larger sales.  

It is the above two reasons why budget games like Mega Man Collections and stuff are priced the way they are.

1)They were cheaper to produce.
2)Dropping the price ensures better sales.

[nickmitch]

Well EA could sell a sixty dollar madden and people will still buy it.

[KDR_11k]

The "cost of the product" is around 10 bucks for the box, disc, manual and licensing fees. The big problem is R&D but that's fixed cost, you cannot give a price that will gurantee the game will break even (as opposed to selling, say, forks where your cost is material and labour and only changes for large quantities), you can only say "at this price we need to sell this many units to break even", compile the price->demand curve and look where you might make the most money. Many forget the price->demand curve but some care so they price games they don't expect to sell well lower (e.g. Serious Sam, Viewtiful Joe, Alien Hominid). Some managers are completely delusional about the quality and therefore demand for their product.

This problem leads to the hit-driven business model we're seeing today, games carefully aimed at certain demographics with hopefully predictable sales and therefore calculable price->demand curves so they can predict how much money they can spend on the development to get returns. Of course too many ignore the primary factor here, quality. You can have the best idea but as the Heavenly Sword diary says, "you cannot copy good execution". Innovation adds another uncalculable factor and managers love to pretend a problem is predictable (even though quality and innovation are both pretty random and based on the skill of your devs, no innovation doesn't mean they'll make a good game).

(note: Usually it's called "supply/demand curve" but few items are really priced by supply at retail except if they overstock and don't sell. Competition works differently in the IP market as well so competitors dropping the price will not necessarily lead to less sales for you.)

[nickmitch]

Well Madden has high demand anyway so a price increase wouldn't drastically hurt sales.

[KDR_11k]

It could make more people wait for the bargain bin version which would both reduce their profits and shift the remaining ones into another fiscal quarter. Shareholders have a very narrow vision and will complain if the "Madden quarter" ends below expectations even if the next quarter is above expectations. And 60$ WILL impact the sales, probably enough to make up for the increased per-unit profit.

[vudu]

Remember, folks just had to pay a measly $30 for the 2005 version.  Are they really going to be willing to pay twice that for the 2006 version?

[stevey]

"Well EA could sell a sixty dollar madden and people will still buy it. "

Yeah so WE would pay $60 for the new zelda hell I pay $150 for zelda if the game is made of gold.

"Are they really going to be willing to pay twice that for the 2006 version? "

They have no chose they the only one make football game.

[nickmitch]

If you update the roster then you won't have to pay for crap, but Madden has such a strong fanbase that people are willing to compromise their wallets.