The ship's still floating, but the first three compartments are flooded.
Believe it or not games consoles need games to make money. Game developers are not charitable institutions. Can you name a single PS3 game that's made a profit?
Heavenly Sword, Rachet and Clank, RFoM, Motorstorm, Uncharted off the top of my head.
All of these titles moved more than the pessimistic Namco 500K estimate to turn a profit.
Probably Warhawk too since that probably didn't cost $15M to make but only moved a quartermillion units or so.
Lair probably lost money. I won't comment what I thought of that game though.
But what? Even with MGS4's budget you don't think they will do 1M sales on week one and break even?
Quote:
Put another way, if you had $10M in lose change would you invest in...
One PS3 game (with 5M units out there)
Two 360 games (with 18M units out there)
Three Wii games (with 19M units out there)
There's no way in hell its two to one cost differential between a PS3 exclusive and a 360 exclusive even given that I think the MS tool chain is superior.
Marketing costs are the same. Content development costs are close to the same. For any AAA title on any platform, except maybe the Wii, $10M is on the light side.
If I had $10M to invest I'm make a cross-platform niche MMO but that's just me.
Quote:
These numbers have been exaggerated to make the point clearer.
C.
No, these numbers have been exaggerated to make a point that's just plain wrong. Game developers are certainly not charities. If there were no money to be made in 360 and PS3game development none would be occuring.
Frankly, very little of what you posted in this thread is based on anything but a dislike of Sony.
While I don't think Apple and Sony will partner anytime soon I don't think an Apple and Nintendo partnership is any better. Apple, if they do games at all, will be aiming right at the same demographic that Nintendo is aiming at. Apple and Sony might compete in many other areas but for games their focuses would be on different market segments.
I've got my wiimote working on my MBP and I'm guessing there's gonna be a Wiimote based game written for the PC and the Mac in short order.
Wii sports, when all is said and done, looks like an indie title and easily replicated.
Heavenly Sword, Rachet and Clank, RFoM, Motorstorm, Uncharted off the top of my head.
Don't forget Call of Duty 4
Quote:
Originally Posted by vinea
While I don't think Apple and Sony will partner anytime soon I don't think an Apple and Nintendo partnership is any better. Apple, if they do games at all, will be aiming right at the same demographic that Nintendo is aiming at. Apple and Sony might compete in many other areas but for games their focuses would be on different market segments.
I agree 100% Tell me that Sony and Nintendo don't view the iPhone and iPod Touch as direct competitors to the PSP and Nintendo DS.
Heavenly Sword, Rachet and Clank, RFoM, Motorstorm, Uncharted off the top of my head.
Do you even know what a first-party title is?
These titles were paid for by SONY. These are loss-leaders, intended to hook people into the console. Their development costs are astronomically high. I suspect that some of these titles would need sales of 2 million units to break even. On the PS3 that is going to be tough.
No third-party, even EA could afford this level of risk. It would be like expecting Delta Airlines to run a Space Shuttle.
First-party games, are what your Dad would call bait-and-switch. They are a financial trick to kick-start the platform. Sony stump-up cash on lavish loss-making games. The lavish games sell consoles. And with a sufficient quantity of consoles out there, independent developers are attracted to the audience connected to the platform. These independent developers all pay Sony-tax on each game sold, and at the end of the day, Sony gets their money back. Microsoft does the same, with Halo and Bungie.
So that's is the theory. But it's not working. PS3 third-party developers face a double whammy. A smaller market share combined with markedly higher development costs.
As an aside....first-party games can actually damage the market. They create an expectation in consumers that *every* $45 game should buy $40M of development. That expectation isn't achievable.
C.
(Quote From TVG Indicating first-month US sales)
Drake (Uncharted) hauled in only 117,000 unit sales after its November 19th release. Although, when this is compared with previous first-party PS3 releases, this figure doesn't look quite so bad. In their first month after release, Ratchet & Clank Future: Tools of Destruction (74,500 unit sales), Warhawk (58,600) and Lair (46,500) all fared badly. More worryingly, the most unit-sales for a first-party PS3 title have come from Heavenly Sword (139,000) in September.
These titles were paid for by SONY. These are loss-leaders, intended to hook people into the console. Their development costs are astronomically high. I suspect that some of these titles would need sales of 2 million units to break even. On the PS3 that is going to be tough.
No third-party, even EA could afford this level of risk. It would be like expecting Delta Airlines to run a Space Shuttle.
First-party games, are what your Dad would call bait-and-switch. They are a financial trick to kick-start the platform. Sony stump-up cash on lavish loss-making games. The lavish games sell consoles. And with a sufficient quantity of consoles out there, independent developers are attracted to the audience connected to the platform. These independent developers all pay Sony-tax on each game sold, and at the end of the day, Sony gets their money back. Microsoft does the same, with Halo and Bungie.
So that's is the theory. But it's not working. PS3 third-party developers face a double whammy. A smaller market share combined with markedly higher development costs.
As an aside....first-party games can actually damage the market. They create an expectation in consumers that *every* $45 game should buy $40M of development. That expectation isn't achievable.
These titles were paid for by SONY. These are loss-leaders, intended to hook people into the console. Their development costs are astronomically high. I suspect that some of these titles would need sales of 2 million units to break even. On the PS3 that is going to be tough.
No third-party, even EA could afford this level of risk. It would be like expecting Delta Airlines to run a Space Shuttle.
First-party games, are what your Dad would call bait-and-switch. They are a financial trick to kick-start the platform. Sony stump-up cash on lavish loss-making games. The lavish games sell consoles. And with a sufficient quantity of consoles out there, independent developers are attracted to the audience connected to the platform. These independent developers all pay Sony-tax on each game sold, and at the end of the day, Sony gets their money back. Microsoft does the same, with Halo and Bungie.
So that's is the theory. But it's not working. PS3 third-party developers face a double whammy. A smaller market share combined with markedly higher development costs.
As an aside....first-party games can actually damage the market. They create an expectation in consumers that *every* $45 game should buy $40M of development. That expectation isn't achievable.
C.
(Quote From TVG Indicating first-month US sales)
Drake (Uncharted) hauled in only 117,000 unit sales after its November 19th release. Although, when this is compared with previous first-party PS3 releases, this figure doesn't look quite so bad. In their first month after release, Ratchet & Clank Future: Tools of Destruction (74,500 unit sales), Warhawk (58,600) and Lair (46,500) all fared badly. More worryingly, the most unit-sales for a first-party PS3 title have come from Heavenly Sword (139,000) in September.
1st party titles are what separates one system from all the rest; the problem with Sony is that they really don't have any must haves, besides Metal Gear Solid or GT5. 3rd parties can recoup their costs by porting their games, and companies like EA are well versed in that (and usually do a terrible job at it, see Madden and the NHL between the 360 and PS3).
Nintendo hasn't had any great 3rd party titles, besides perhaps, Resident Evil 4 - "It's been done on the Gamecube, but we got this Remote, see" Wii Edition.
And Nintendo can't keep they silly things on the selves. The problem with the Wii, is that once you get past games like Mario/Zelda/Metroid, the system has nothing.
MS laughed all the way to the bank with the Halo series, and numerous tie-ins.
I'd get a PS3 just for the next Wipeout, but I'm still pissed on how Sony handled the PSP, so I don't know for sure. And the PS3 just doesn't have any games, but like the PSP, it's a decent multimedia machine (sans the emulators and ISOs).
I agree! COD4 is ace. And the PS3 version totally pwns the 360-version because of the Cell processor.
On the PS3 we can conclusively agree there is probably one title that actually made money.
Whooopee Motherflippin Doo! The crowd goes wild!
Thanks for that. Do we have a viable business model with one profitable game?
C.
-------------
While I am here - I have a new business proposal for you all.
It is called. "One-Ferrari-Per-Teen".
Car-deprived seventeen year-old-males will be able to purchase a brand-new proper Ferrari for just $5000. I expect the demand to be huge. It's gonna be ultra popular. It took us FIVE YEARS to develop the engine alone.
This market-led phenomena will drive the auto industry forwards. Every kid is ultra enthusiastic. Of course there is some loss with each unit sold. But we fully expect that we will make that money back somehow.
Nice movement of the goalposts. You asked for one game that made money you got several. Now you presumably want only 3rd party exclusive AAA titles on the PS3...mkay...
Insomniac and Naughty Dog are 2nd party by the way. They may be under contract but they aren't around to just break even any more than BioWare was.
So you think MGS4, Haze, UT3 (sorta exclusive) and FF are not going to make money?
Quote:
These titles were paid for by SONY. These are loss-leaders, intended to hook people into the console. Their development costs are astronomically high. I suspect that some of these titles would need sales of 2 million units to break even. On the PS3 that is going to be tough.
Loss leader? Lets take Heavenly Sword as an example. $20M development budget. It's sold 720K units or so.
Sony wholesales it for around $40-$45. Take the standard industry rate of 35% off the wholesale price for distribution, marketing and console royalties (which SCEA gets anyway since they are all of the above) and Sony has put $26-$29/game toward offseting development costs.
So they've offset anywhere from $18M to $20M on development to date. Heavenly Sword is in the black or very nearly so not even counting the cut Sony gets for being the console maker.
Quote:
No third-party, even EA could afford this level of risk. It would be like expecting Delta Airlines to run a Space Shuttle.
No, its like Hollywood. Studios spend mega $$$ to get blockbusters. Sometimes they win. Sometimes they don't but they sure as hell have the money to spend on a AAA title. They can sell 1M+ units on the consoles with hits moving 10M units.
So yes, games like Halo 3 cost $30M to make. So what? MS/bungie made it all back and more.
And oh yeah...tell that analogy to Virgin Galactic and Branson. Virgin is going to have their very own shuttle.
Quote:
First-party games, are what your Dad would call bait-and-switch. They are a financial trick to kick-start the platform. Sony stump-up cash on lavish loss-making games. The lavish games sell consoles. And with a sufficient quantity of consoles out there, independent developers are attracted to the audience connected to the platform. These independent developers all pay Sony-tax on each game sold, and at the end of the day, Sony gets their money back. Microsoft does the same, with Halo and Bungie.
You think Halo 3 lost money?
Quote:
So that's is the theory. But it's not working. PS3 third-party developers face a double whammy. A smaller market share combined with markedly higher development costs.
Moderately higher because of MS' nice tool chain. And smaller market share for now doesn't mean small numbers forever. Unit sales is on par with the 360 at the same point in its lifecycle and that's with the relative lack of games until recently.
With BluRay winning and the RRoD still being an issue I expect the PS3 to catch up to the 360.
I think there are ways Sony and Apple could co-operate which would make sense for both companies.
Sony make nice TVs - Good picture quality etc etc - They should incorporate appleTV right into their tv's.
OSX should NOT be put onto the PS3 - front row/appleTV however should be. OSX is design for a computer not a console.
Sony should release an emulator to allow PS3 games to be played on a mac, they still make money from the licensing and Macs get games (are macs powerful enough to play PS3 games?)
All sony movie content goes on iTunes.
Sony start selling iPods (similar to how HP did) or start making decent players compatible with iTunes.
Sony stereos could stream music from itunes.
Sony should start selling macs! - ok maybe this one won't happen, but at least start selling computers with itunes, safari and quicktime as default.
Sony used to be a great empire once, but is now a shadow of its former glory!
People might not think Sony and the PS series is a good marriage for Apple but the question remains - what is Apple to do about gaming?
I think getting Autodesk and Maya would be sweet. I could see Apple redoing the interface and dropping the price greatly.
There is not a snowball's chance it hell of Autodesk selling any of its core products (AutoCAD, 3Ds Max, Revit, Inventor) and just as unlikely a chance of offering a buyout to Apple at a cost-effective price. They're doing quite well, despite ruing the loss of SketchUp to Google, and have plenty of market potential. Autodesk is largely switching over the Macs in corporate, but there is no market for its products (yet) on Macs.
Loss leader? Lets take Heavenly Sword as an example. $20M development budget. It's sold 720K units or so.
Sony wholesales it for around $40-$45. Take the standard industry rate of 35% off the wholesale price for distribution, marketing and console royalties (which SCEA gets anyway since they are all of the above) and Sony has put $26-$29/game toward offseting development costs.
So they've offset anywhere from $18M to $20M on development to date. Heavenly Sword is in the black or very nearly so not even counting the cut Sony gets for being the console maker.
Good example.
The Heavenly Sword team (which had the game started well before 2002) grew from 20 to around 60 following their acquisition by Sony.
I'd put their dev costs over the 5 years at somewhere around the $22M mark, but I'd expect a bit more was spent on outsourced production, mocap and that sort of thing.
You have conveniently forgotten the marketing spend. On a title like this is is often the same as development. Let's go cheap and spend only 16M.
Your figures for revenues are pretty good, although I'd be surprised if all the sales were full-price. Usually there's some discounting towards the back end.
So we have a total spend by SCEE of $38.4M and a revenue of $18.7M leaving a nice balance of $19.6M in the red.
Almost broke even? Or loss-leader?
Please notice that for third parties to make the same money they would have to sell twice the volumes.
C.
* And yes, with 7m unit sales, of course Halo3 made money.
** Ratchet *was* first-party. Naughty Dog are not owned by Sony, but Sony was the publisher.
Your figures for revenues are pretty good, although I'd be surprised if all the sales were full-price. Usually there's some discounting towards the back end.
So we have a total spend by SCEE of $38.4M and a revenue of $18.7M leaving a nice balance of $19.6M in the red.
Almost broke even? Or loss-leader?
You're forgetting that Sony gets all of the wholesale price of $40-$45 since they did everything. That's $22.8M to $32.4M of total revenue.
Quote:
Please notice that for third parties to make the same money they would have to sell twice the volumes.
Except that marketing, distribution, etc are covered in the 35% slice carved out. What the 3rd party food chain doesn't get is Sony's royalty cut for being the console maker.
Quote:
* And yes, with 7m unit sales, of course Halo3 made money.
** Ratchet *was* first-party. Naughty Dog are not owned by Sony, but Sony was the publisher.
Meh...the lines are pretty blurred when you come to 2nd party titles...most of them are published by the associated company. Their financial risks are higher than first party developers and any payout from the Sony or MS offsets the revenue reduction from going cross platform.
The point is, most 3rd party devs are cross platform. Most exclusive companies are first or second party. There's only a handful of 3rd party exclusives out for the PS3 and those are mostly (if not all...are there any 3rd pary exclusives for the PS3 out?) still in the future.
Again...do you believe that games like Haze are going to be money losers? Why doesn't Ubisoft/Free Radical simply pull the plug on Haze now then eh?
You're forgetting that Sony gets all of the wholesale price of $40-$45 since they did everything. That's $22.8M to $32.4M of total revenue.
That seems on the high side. The stores take a fairly huge slice of the retail price. And there's a lot of discounting happening.
Quote:
Originally Posted by vinea
Except that marketing, distribution, etc are covered in the 35% slice carved out. What the 3rd party food chain doesn't get is Sony's royalty cut for being the console maker.
Exactly. Which I guess is about $12 per unit.
Quote:
Originally Posted by vinea
The point is, most 3rd party devs are cross platform. Most exclusive companies are first or second party. There's only a handful of 3rd party exclusives out for the PS3 and those are mostly (if not all...are there any 3rd pary exclusives for the PS3 out?) still in the future.
Quite.A third-party PS3 exclusive now looks suicidally risky. Which I guess is my main point.
Cross-platform games strengthen the 360 because it is cheaper.
If a developer has bought an engine which already runs on the PS3, then it's reasonable to go cross-platform. But if they have to adapt the tech to the PS3, it might not be worth it. UT is still being held-up by the PS3 version despite the fact that the engine supposedly supports the platform.
Quote:
Originally Posted by vinea
Again...do you believe that games like Haze are going to be money losers? Why doesn't Ubisoft/Free Radical simply pull the plug on Haze now then eh?
Yes, I do doubt it will make money. But if you are three years into a project, the money's spent already. The only way to get some of it back is to publish and keep your fingers crossed.
UbiSoft might get lucky and get Sony to pay them a exclusivity sweetner. Sony must now be fearful of the supply of games drying-up, so they are buying studios and cutting deals to prevent this.
OS X will never ever run on a PS3 for many many reasons.
I am a manager for GameStop, and Sony's #1 priority right now is "Home" which is the central point of the online community. I got this info from my Sony rep. They are trying hard to catch up to Microsoft's XBOX LIVE. The current OS on the PS3 is a central part of "Home", so there is no way they are going to change it.
Also, Apple will never put their OS on anyone's hardware but their own, and if they do ever decide to license OS X, the last place you will find it is on a game console. Just like Carniphage said, it would be too slow to be effective.
Comments
The ship's still floating, but the first three compartments are flooded.
Believe it or not games consoles need games to make money. Game developers are not charitable institutions. Can you name a single PS3 game that's made a profit?
Heavenly Sword, Rachet and Clank, RFoM, Motorstorm, Uncharted off the top of my head.
All of these titles moved more than the pessimistic Namco 500K estimate to turn a profit.
Probably Warhawk too since that probably didn't cost $15M to make but only moved a quartermillion units or so.
Lair probably lost money. I won't comment what I thought of that game though.
But what? Even with MGS4's budget you don't think they will do 1M sales on week one and break even?
Put another way, if you had $10M in lose change would you invest in...
One PS3 game (with 5M units out there)
Two 360 games (with 18M units out there)
Three Wii games (with 19M units out there)
There's no way in hell its two to one cost differential between a PS3 exclusive and a 360 exclusive even given that I think the MS tool chain is superior.
Marketing costs are the same. Content development costs are close to the same. For any AAA title on any platform, except maybe the Wii, $10M is on the light side.
If I had $10M to invest I'm make a cross-platform niche MMO but that's just me.
These numbers have been exaggerated to make the point clearer.
C.
No, these numbers have been exaggerated to make a point that's just plain wrong. Game developers are certainly not charities. If there were no money to be made in 360 and PS3game development none would be occuring.
Frankly, very little of what you posted in this thread is based on anything but a dislike of Sony.
While I don't think Apple and Sony will partner anytime soon I don't think an Apple and Nintendo partnership is any better. Apple, if they do games at all, will be aiming right at the same demographic that Nintendo is aiming at. Apple and Sony might compete in many other areas but for games their focuses would be on different market segments.
I've got my wiimote working on my MBP and I'm guessing there's gonna be a Wiimote based game written for the PC and the Mac in short order.
Wii sports, when all is said and done, looks like an indie title and easily replicated.
Heavenly Sword, Rachet and Clank, RFoM, Motorstorm, Uncharted off the top of my head.
Don't forget Call of Duty 4
While I don't think Apple and Sony will partner anytime soon I don't think an Apple and Nintendo partnership is any better. Apple, if they do games at all, will be aiming right at the same demographic that Nintendo is aiming at. Apple and Sony might compete in many other areas but for games their focuses would be on different market segments.
I agree 100% Tell me that Sony and Nintendo don't view the iPhone and iPod Touch as direct competitors to the PSP and Nintendo DS.
Dave
Heavenly Sword, Rachet and Clank, RFoM, Motorstorm, Uncharted off the top of my head.
Do you even know what a first-party title is?
These titles were paid for by SONY. These are loss-leaders, intended to hook people into the console. Their development costs are astronomically high. I suspect that some of these titles would need sales of 2 million units to break even. On the PS3 that is going to be tough.
No third-party, even EA could afford this level of risk. It would be like expecting Delta Airlines to run a Space Shuttle.
First-party games, are what your Dad would call bait-and-switch. They are a financial trick to kick-start the platform. Sony stump-up cash on lavish loss-making games. The lavish games sell consoles. And with a sufficient quantity of consoles out there, independent developers are attracted to the audience connected to the platform. These independent developers all pay Sony-tax on each game sold, and at the end of the day, Sony gets their money back. Microsoft does the same, with Halo and Bungie.
So that's is the theory. But it's not working. PS3 third-party developers face a double whammy. A smaller market share combined with markedly higher development costs.
As an aside....first-party games can actually damage the market. They create an expectation in consumers that *every* $45 game should buy $40M of development. That expectation isn't achievable.
C.
(Quote From TVG Indicating first-month US sales)
Drake (Uncharted) hauled in only 117,000 unit sales after its November 19th release. Although, when this is compared with previous first-party PS3 releases, this figure doesn't look quite so bad. In their first month after release, Ratchet & Clank Future: Tools of Destruction (74,500 unit sales), Warhawk (58,600) and Lair (46,500) all fared badly. More worryingly, the most unit-sales for a first-party PS3 title have come from Heavenly Sword (139,000) in September.
Do you even know what a first-party title is?
These titles were paid for by SONY. These are loss-leaders, intended to hook people into the console. Their development costs are astronomically high. I suspect that some of these titles would need sales of 2 million units to break even. On the PS3 that is going to be tough.
No third-party, even EA could afford this level of risk. It would be like expecting Delta Airlines to run a Space Shuttle.
First-party games, are what your Dad would call bait-and-switch. They are a financial trick to kick-start the platform. Sony stump-up cash on lavish loss-making games. The lavish games sell consoles. And with a sufficient quantity of consoles out there, independent developers are attracted to the audience connected to the platform. These independent developers all pay Sony-tax on each game sold, and at the end of the day, Sony gets their money back. Microsoft does the same, with Halo and Bungie.
So that's is the theory. But it's not working. PS3 third-party developers face a double whammy. A smaller market share combined with markedly higher development costs.
As an aside....first-party games can actually damage the market. They create an expectation in consumers that *every* $45 game should buy $40M of development. That expectation isn't achievable.
C.
Call of Duty 4 made money. So will UT.
Do you even know what a first-party title is?
These titles were paid for by SONY. These are loss-leaders, intended to hook people into the console. Their development costs are astronomically high. I suspect that some of these titles would need sales of 2 million units to break even. On the PS3 that is going to be tough.
No third-party, even EA could afford this level of risk. It would be like expecting Delta Airlines to run a Space Shuttle.
First-party games, are what your Dad would call bait-and-switch. They are a financial trick to kick-start the platform. Sony stump-up cash on lavish loss-making games. The lavish games sell consoles. And with a sufficient quantity of consoles out there, independent developers are attracted to the audience connected to the platform. These independent developers all pay Sony-tax on each game sold, and at the end of the day, Sony gets their money back. Microsoft does the same, with Halo and Bungie.
So that's is the theory. But it's not working. PS3 third-party developers face a double whammy. A smaller market share combined with markedly higher development costs.
As an aside....first-party games can actually damage the market. They create an expectation in consumers that *every* $45 game should buy $40M of development. That expectation isn't achievable.
C.
(Quote From TVG Indicating first-month US sales)
Drake (Uncharted) hauled in only 117,000 unit sales after its November 19th release. Although, when this is compared with previous first-party PS3 releases, this figure doesn't look quite so bad. In their first month after release, Ratchet & Clank Future: Tools of Destruction (74,500 unit sales), Warhawk (58,600) and Lair (46,500) all fared badly. More worryingly, the most unit-sales for a first-party PS3 title have come from Heavenly Sword (139,000) in September.
1st party titles are what separates one system from all the rest; the problem with Sony is that they really don't have any must haves, besides Metal Gear Solid or GT5. 3rd parties can recoup their costs by porting their games, and companies like EA are well versed in that (and usually do a terrible job at it, see Madden and the NHL between the 360 and PS3).
Nintendo hasn't had any great 3rd party titles, besides perhaps, Resident Evil 4 - "It's been done on the Gamecube, but we got this Remote, see" Wii Edition.
And Nintendo can't keep they silly things on the selves. The problem with the Wii, is that once you get past games like Mario/Zelda/Metroid, the system has nothing.
MS laughed all the way to the bank with the Halo series, and numerous tie-ins.
I'd get a PS3 just for the next Wipeout, but I'm still pissed on how Sony handled the PSP, so I don't know for sure. And the PS3 just doesn't have any games, but like the PSP, it's a decent multimedia machine (sans the emulators and ISOs).
Call of Duty 4 made money. So will UT.
I agree! COD4 is ace. And the PS3 version totally pwns the 360-version because of the Cell processor.
On the PS3 we can conclusively agree there is probably one title that actually made money.
Whooopee Motherflippin Doo! The crowd goes wild!
Thanks for that. Do we have a viable business model with one profitable game?
C.
-------------
While I am here - I have a new business proposal for you all.
It is called. "One-Ferrari-Per-Teen".
Car-deprived seventeen year-old-males will be able to purchase a brand-new proper Ferrari for just $5000. I expect the demand to be huge. It's gonna be ultra popular. It took us FIVE YEARS to develop the engine alone.
This market-led phenomena will drive the auto industry forwards. Every kid is ultra enthusiastic. Of course there is some loss with each unit sold. But we fully expect that we will make that money back somehow.
C.
Do you even know what a first-party title is?
Nice movement of the goalposts. You asked for one game that made money you got several. Now you presumably want only 3rd party exclusive AAA titles on the PS3...mkay...
Insomniac and Naughty Dog are 2nd party by the way. They may be under contract but they aren't around to just break even any more than BioWare was.
So you think MGS4, Haze, UT3 (sorta exclusive) and FF are not going to make money?
These titles were paid for by SONY. These are loss-leaders, intended to hook people into the console. Their development costs are astronomically high. I suspect that some of these titles would need sales of 2 million units to break even. On the PS3 that is going to be tough.
Loss leader? Lets take Heavenly Sword as an example. $20M development budget. It's sold 720K units or so.
Sony wholesales it for around $40-$45. Take the standard industry rate of 35% off the wholesale price for distribution, marketing and console royalties (which SCEA gets anyway since they are all of the above) and Sony has put $26-$29/game toward offseting development costs.
So they've offset anywhere from $18M to $20M on development to date. Heavenly Sword is in the black or very nearly so not even counting the cut Sony gets for being the console maker.
No third-party, even EA could afford this level of risk. It would be like expecting Delta Airlines to run a Space Shuttle.
No, its like Hollywood. Studios spend mega $$$ to get blockbusters. Sometimes they win. Sometimes they don't but they sure as hell have the money to spend on a AAA title. They can sell 1M+ units on the consoles with hits moving 10M units.
So yes, games like Halo 3 cost $30M to make. So what? MS/bungie made it all back and more.
And oh yeah...tell that analogy to Virgin Galactic and Branson. Virgin is going to have their very own shuttle.
First-party games, are what your Dad would call bait-and-switch. They are a financial trick to kick-start the platform. Sony stump-up cash on lavish loss-making games. The lavish games sell consoles. And with a sufficient quantity of consoles out there, independent developers are attracted to the audience connected to the platform. These independent developers all pay Sony-tax on each game sold, and at the end of the day, Sony gets their money back. Microsoft does the same, with Halo and Bungie.
You think Halo 3 lost money?
So that's is the theory. But it's not working. PS3 third-party developers face a double whammy. A smaller market share combined with markedly higher development costs.
Moderately higher because of MS' nice tool chain. And smaller market share for now doesn't mean small numbers forever. Unit sales is on par with the 360 at the same point in its lifecycle and that's with the relative lack of games until recently.
With BluRay winning and the RRoD still being an issue I expect the PS3 to catch up to the 360.
Sony make nice TVs - Good picture quality etc etc - They should incorporate appleTV right into their tv's.
OSX should NOT be put onto the PS3 - front row/appleTV however should be. OSX is design for a computer not a console.
Sony should release an emulator to allow PS3 games to be played on a mac, they still make money from the licensing and Macs get games (are macs powerful enough to play PS3 games?)
All sony movie content goes on iTunes.
Sony start selling iPods (similar to how HP did) or start making decent players compatible with iTunes.
Sony stereos could stream music from itunes.
Sony should start selling macs! - ok maybe this one won't happen, but at least start selling computers with itunes, safari and quicktime as default.
Sony used to be a great empire once, but is now a shadow of its former glory!
People might not think Sony and the PS series is a good marriage for Apple but the question remains - what is Apple to do about gaming?
I think getting Autodesk and Maya would be sweet. I could see Apple redoing the interface and dropping the price greatly.
There is not a snowball's chance it hell of Autodesk selling any of its core products (AutoCAD, 3Ds Max, Revit, Inventor) and just as unlikely a chance of offering a buyout to Apple at a cost-effective price. They're doing quite well, despite ruing the loss of SketchUp to Google, and have plenty of market potential. Autodesk is largely switching over the Macs in corporate, but there is no market for its products (yet) on Macs.
Loss leader? Lets take Heavenly Sword as an example. $20M development budget. It's sold 720K units or so.
Sony wholesales it for around $40-$45. Take the standard industry rate of 35% off the wholesale price for distribution, marketing and console royalties (which SCEA gets anyway since they are all of the above) and Sony has put $26-$29/game toward offseting development costs.
So they've offset anywhere from $18M to $20M on development to date. Heavenly Sword is in the black or very nearly so not even counting the cut Sony gets for being the console maker.
Good example.
The Heavenly Sword team (which had the game started well before 2002) grew from 20 to around 60 following their acquisition by Sony.
I'd put their dev costs over the 5 years at somewhere around the $22M mark, but I'd expect a bit more was spent on outsourced production, mocap and that sort of thing.
You have conveniently forgotten the marketing spend. On a title like this is is often the same as development. Let's go cheap and spend only 16M.
Your figures for revenues are pretty good, although I'd be surprised if all the sales were full-price. Usually there's some discounting towards the back end.
So we have a total spend by SCEE of $38.4M and a revenue of $18.7M leaving a nice balance of $19.6M in the red.
Almost broke even? Or loss-leader?
Please notice that for third parties to make the same money they would have to sell twice the volumes.
C.
* And yes, with 7m unit sales, of course Halo3 made money.
** Ratchet *was* first-party. Naughty Dog are not owned by Sony, but Sony was the publisher.
Your figures for revenues are pretty good, although I'd be surprised if all the sales were full-price. Usually there's some discounting towards the back end.
So we have a total spend by SCEE of $38.4M and a revenue of $18.7M leaving a nice balance of $19.6M in the red.
Almost broke even? Or loss-leader?
You're forgetting that Sony gets all of the wholesale price of $40-$45 since they did everything. That's $22.8M to $32.4M of total revenue.
Please notice that for third parties to make the same money they would have to sell twice the volumes.
Except that marketing, distribution, etc are covered in the 35% slice carved out. What the 3rd party food chain doesn't get is Sony's royalty cut for being the console maker.
* And yes, with 7m unit sales, of course Halo3 made money.
** Ratchet *was* first-party. Naughty Dog are not owned by Sony, but Sony was the publisher.
Meh...the lines are pretty blurred when you come to 2nd party titles...most of them are published by the associated company. Their financial risks are higher than first party developers and any payout from the Sony or MS offsets the revenue reduction from going cross platform.
The point is, most 3rd party devs are cross platform. Most exclusive companies are first or second party. There's only a handful of 3rd party exclusives out for the PS3 and those are mostly (if not all...are there any 3rd pary exclusives for the PS3 out?) still in the future.
Again...do you believe that games like Haze are going to be money losers? Why doesn't Ubisoft/Free Radical simply pull the plug on Haze now then eh?
You're forgetting that Sony gets all of the wholesale price of $40-$45 since they did everything. That's $22.8M to $32.4M of total revenue.
That seems on the high side. The stores take a fairly huge slice of the retail price. And there's a lot of discounting happening.
Except that marketing, distribution, etc are covered in the 35% slice carved out. What the 3rd party food chain doesn't get is Sony's royalty cut for being the console maker.
Exactly. Which I guess is about $12 per unit.
The point is, most 3rd party devs are cross platform. Most exclusive companies are first or second party. There's only a handful of 3rd party exclusives out for the PS3 and those are mostly (if not all...are there any 3rd pary exclusives for the PS3 out?) still in the future.
Quite.A third-party PS3 exclusive now looks suicidally risky. Which I guess is my main point.
Cross-platform games strengthen the 360 because it is cheaper.
If a developer has bought an engine which already runs on the PS3, then it's reasonable to go cross-platform. But if they have to adapt the tech to the PS3, it might not be worth it. UT is still being held-up by the PS3 version despite the fact that the engine supposedly supports the platform.
Again...do you believe that games like Haze are going to be money losers? Why doesn't Ubisoft/Free Radical simply pull the plug on Haze now then eh?
Yes, I do doubt it will make money. But if you are three years into a project, the money's spent already. The only way to get some of it back is to publish and keep your fingers crossed.
UbiSoft might get lucky and get Sony to pay them a exclusivity sweetner. Sony must now be fearful of the supply of games drying-up, so they are buying studios and cutting deals to prevent this.
C.
I am a manager for GameStop, and Sony's #1 priority right now is "Home" which is the central point of the online community. I got this info from my Sony rep. They are trying hard to catch up to Microsoft's XBOX LIVE. The current OS on the PS3 is a central part of "Home", so there is no way they are going to change it.
Also, Apple will never put their OS on anyone's hardware but their own, and if they do ever decide to license OS X, the last place you will find it is on a game console. Just like Carniphage said, it would be too slow to be effective.