5 ms·

in response to the video's message - I get that $60 in 2006 inflated to $80 today. And that development costs have gone up rapidly (so have sales IIRC but I kno

in response to the video's message - I get that $60 in 2006 inflated to $80 today. And that development costs have gone up rapidly (so have sales IIRC but I know that's not evenly-distributed). Might the move to digital distribution, even if not complete yet, already be giving publishers substantially increased profits per unit sold? A decade ago, an article suggested publishers made $27 on a $60 physical game, and the platform holder a $7 royalty[1]. With digital, retailers lose out and no longer get a cut, cost of goods is reduced, and returns go away. With a $60 digital game, don't Sony/Microsoft/Nintendo/Steam all charge a 30% platform fee for infrastructure/store costs and their profit? They'd take $18 (+157%) and leave $42 for the publisher (+55%) (edit:math). Is that the extent of the pie or is it divided more? Multiplayer still requires a $60/year fee on console systems too, correct? And all the extra and ongoing costs mentioned in the parent post are unlikely to go away with increased base price, right? I don't mean to be skeptical but feel we're going to see some price increases (beyond gaming too) just because businesses can. [1] https://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/02/anatomy-of-a-60-dollar-video-game.html https://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/...

muststopmyths 5y ago
Most of what used to go to the retailer apparently goes to the console maker now ($7/60 vs $18/60), so the studio hasn't really gotten much of a benefit from digital. Multiplayer fee does not go to the game maker either. And costs are astronomically higher. A mid-market AA game with a studio of 80-100 people will cost in the order of 15-20 million USD a year to produce. Art is enormously expensive in 3D, even outsourced. My numbers are a few years old, so it's probably worse now. It's ludicrous to assume that in the cut-throat gaming market (unless it's the 1000th iteration of a franchise) game developers are looking to increase the price "just because they can". They actually can't because gamers have shown themselves to be incredibly hostile to price increases. The main reason there are no more mid-market games (i.e. between AAA franchises and indie small-scales) is that it is absolutely not profitable or sustainable. You can put all your money and energy into a game, but unless it's a huge hit, you will never recover the cost. It is just not worth it to most of us these days to even try.
- lupire 5y ago
  Meanwhile, $20M is peanuts for movie that only charges $10/ticket
  - sprafa 5y ago
    I think the economics of this are radically different. The movies that get released in theatres have already gone through A Great Filter - they’ve either been selected or made from the get go to movie theaters. When you have a film going to theatres you already have a lot of spend behind it, a marketing campaign etc. Sadly the most reliable correlation for whether a movie makes profit is how much you spent on marketing (and no I am not kidding). Lots of movies, in fact the vast majority of them don’t get to go to theaters. It used to be that this meant VHS or dvd release, now it means streaming, sometimes even just YouTube or Vimeo release. If you go to any film festival circuit I no your life you will see upwards of 1000+ films in a year. But not that many of them will go to theaters anywhere in the world. Basically the 20$M films you talk about have some reasonable chance of sucess. Gaming is a bit more of a free for all, having steam, early access, GOG. You have a Wild West capitalism type of ultra competitive env. When you launch a film in theatres, that is not what’s happening at all - you’ve already gotten a booking at the natural moated monopoly of Very Large Screens, a limited amount of which you have in the world. Basically I would estimate that the chance to launch a game and have VERY slim returns is far higher than a film.
    - muststopmyths 5y ago
      In fact, you see the same problem in movies where you either have big tentpole blockbusters or smaller low-budget movies ( like Blumhouse or A24 releases) or indies. There aren't many mid-budget (I guess that's around 50-75 million USD ??) movies made any more. Yes, you do have breakout hits in that space once in a while, but not enough for studios to risk them without big name stars. Or more commonly actors who fund their own productions. In both industries the case can be made that the market has made the choice and whiners should STFU. But then we should also make peace with what's lost in return.
ornornor 5y ago
> Might the move to digital distribution, even if not complete yet, already be giving publishers substantially increased profits per unit sold? There is also no more used market with digital only. I can’t sell a game when I’m done with it, and I can’t buy it for 1/2 or 1/6th of the price if I’m waiting long enough after release.

muststopmyths 5y ago

Most of what used to go to the retailer apparently goes to the console maker now ($7/60 vs $18/60), so the studio hasn't really gotten much of a benefit from digital. Multiplayer fee does not go to the game maker either. And costs are astronomically higher. A mid-market AA game with a studio of 80-100 people will cost in the order of 15-20 million USD a year to produce. Art is enormously expensive in 3D, even outsourced. My numbers are a few years old, so it's probably worse now. It's ludicrous to assume that in the cut-throat gaming market (unless it's the 1000th iteration of a franchise) game developers are looking to increase the price "just because they can". They actually can't because gamers have shown themselves to be incredibly hostile to price increases. The main reason there are no more mid-market games (i.e. between AAA franchises and indie small-scales) is that it is absolutely not profitable or sustainable. You can put all your money and energy into a game, but unless it's a huge hit, you will never recover the cost. It is just not worth it to most of us these days to even try.

lupire 5y ago
Meanwhile, $20M is peanuts for movie that only charges $10/ticket
- sprafa 5y ago
  I think the economics of this are radically different. The movies that get released in theatres have already gone through A Great Filter - they’ve either been selected or made from the get go to movie theaters. When you have a film going to theatres you already have a lot of spend behind it, a marketing campaign etc. Sadly the most reliable correlation for whether a movie makes profit is how much you spent on marketing (and no I am not kidding). Lots of movies, in fact the vast majority of them don’t get to go to theaters. It used to be that this meant VHS or dvd release, now it means streaming, sometimes even just YouTube or Vimeo release. If you go to any film festival circuit I no your life you will see upwards of 1000+ films in a year. But not that many of them will go to theaters anywhere in the world. Basically the 20$M films you talk about have some reasonable chance of sucess. Gaming is a bit more of a free for all, having steam, early access, GOG. You have a Wild West capitalism type of ultra competitive env. When you launch a film in theatres, that is not what’s happening at all - you’ve already gotten a booking at the natural moated monopoly of Very Large Screens, a limited amount of which you have in the world. Basically I would estimate that the chance to launch a game and have VERY slim returns is far higher than a film.
  - muststopmyths 5y ago
    In fact, you see the same problem in movies where you either have big tentpole blockbusters or smaller low-budget movies ( like Blumhouse or A24 releases) or indies. There aren't many mid-budget (I guess that's around 50-75 million USD ??) movies made any more. Yes, you do have breakout hits in that space once in a while, but not enough for studios to risk them without big name stars. Or more commonly actors who fund their own productions. In both industries the case can be made that the market has made the choice and whiners should STFU. But then we should also make peace with what's lost in return.

ornornor 5y ago

> Might the move to digital distribution, even if not complete yet, already be giving publishers substantially increased profits per unit sold? There is also no more used market with digital only. I can’t sell a game when I’m done with it, and I can’t buy it for 1/2 or 1/6th of the price if I’m waiting long enough after release.