AFAIK the rule of thumb is that you must sell 100k units for every million dollars you invested into the development.
Last I heard an average Wii game cost $10M. It's tough to say what these games cost, but I think it's safe to say that nobody comes to market with a game (that's not Wiiware) and expects to sell only 100,000 especially with the Wii usesrbase at 50+ million and expanding at least 1+million a month. This is a problem. I know these are niche games, but unfortunately these are some of the better games to hit the Wii.
There's a reason Iwata told people not to do pricedrops. I preordered NSMBWii from Amazon while all 360 games I bought were significantly below MSRP (most expensive was Brütal Legend at 55€, MSRP 70€, second was Prototype at 40€ and it goes down from there). That's in part because Nintendo also starts out with a saner price (40-50€ instead of 70) but also because you can be sure the price won't drop much.
I think first it's a general problem in our economy right now. Look at other retail items. It's I won't buy this until Thanksgiving sales, or after Christmas sales, or until the government makes a program incentivizing me to purchase something. And I think in general consumers are still scared to purchase, job cuts are still coming in the areas I live. I think my job is secure but the more businesses our area loses even I wonder when my business won't make enough to support itself. So their is a problem in the environment right now.
However, having said that, I think your argument is more for digital distribution than companies not to decrease prices. Nintendo has clought in retail. While Excite Trucks is nary to be found at retail, most stores with have a few copies of Galaxy or Twilight Princess at $50, because they know when people buy a Wii these two titles have a good chance of being picked up as well. Most developers don't have that luxury. Retail in general wants to see turnover if they are holding your products. So if a developer like Marlvelous takes this stand they can expect fewer sales to retail because retail doesn't want to gamble on sales.
It also doesn't mean a sale won't occur. Retailers often hold unofficial sales to get gamers in. And it's sure with the games mentioned at some point the retailer is just going to decide to dump their product at whatever price they can get for the copies because they see 20+ new releases a week, they like the cycle of games sell for 6 months and then dump.
Digital games don't have this issue. It cost a fee to run a server, but to add one game to a server to hold available for download costs almost nothing. So if 5 years after release someone downloads LKS or whatever, it's almost all profit. A retail wouldn't hold a game for 5 years (without it continually turning I.E. Galaxy) because it takes up space for them to be selling something else to their customer that will turn.
Where'd you hear the "average" cost, and beyond that, and why would you think every developer expects over 100k in sales? There are so many low-budget Wii games out there, it's incredible.
AFAIK the rule of thumb is that you must sell 100k units for every million dollars you invested into the development.
I think part of the problem with video games sales generally, and this probably affects 3rd parties the most, is that the consumer base knows that if they don't buy the game right away, it will drop in price--often radically--within a few months.
There's a reason Iwata told people not to do pricedrops. I preordered NSMBWii from Amazon while all 360 games I bought were significantly below MSRP (most expensive was Brütal Legend at 55€, MSRP 70€, second was Prototype at 40€ and it goes down from there). That's in part because Nintendo also starts out with a saner price (40-50€ instead of 70) but also because you can be sure the price won't drop much.
That might be to earn a million dollars in profit, providing a standard cost of game production, but 100k in sales generates four million dollars of revenue for a $40 game, and five million for a fifty dollar game. While we don't know the actual production cost, we can expect that the game didn't cost as much as the typical game does, since they're lower budget niche games. The shipping charges and the retailer's cut can't be too high, since they ship in bulk and the margins from new video games tend to be very low, hence why used games are GS's bread winners. So, depending on the price sold, 100K would bring in somewhere around 3 million dollars of revenue, higher for a $50 tag, perhaps a little lower for a $40 one.
The issue becomes murky when there's multiple publishers in each region, like with many of Marvelous's game. It's not clear who developed the game, from my perspective. If Marvelous provided the development or payed for the cost of development, then I would believe that they'd have control of the license, and should have profited from selling said license to other publishers for other regions, too. If they didn't, then, as a publisher, they would have had to bought the rights for whichever regioin they chose to publish in. This is another place where bad business can enter into play, since buying over-valued rights would just be a mistake, and selling them under-valued would also be an issue. Chances are, this is where the money would have had to have been lost, if anywhere, I suppose, because these games have sold enough copies across all regions that you'd expect a profit to be turned.
Anyways, a game I've spoken with a few developers about appeared on the Xbox360 initially, Jason Hillhouse, over at PixlBit is someone who worked on it, and I went to high school with another guy who was lead programmer. The project was completely funded by their publisher, SouthPeak Games, and sold about 77k, according to VGChartz. Last I had heard, sales of the game earned SouthPeak a few million dollars in profits, but that was from the last time I spoke with the guy I knew, and before SouthPeak even decided to port the game to the PS3. While the game was no masterpiece, it still had a full story campaign and various online modes. It featured a full voice cast, albeit of nobodies from a college town. I suppose you could say I'm comparing what I know about that game to what we're being told about these from Marvelous, and I still don't believe things add up, given that knowledge.
Topic: Marvelous Loses Money on Wii Projects (Read 19249 times)
