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pete_thomas asked me for my thoughts on the pricing of retail games ($60 or more.)
Okay, full disclosure here: I make good money and I have few claims on my income other than, you know, basic living, so I've got a lot of disposable cash. I also come from a comfortably-off family and my mother says I am "muchly loved" (translation: I'm kind of spoiled, in that there were rarely material things I genuinely wanted that I couldn't have, though sometimes with strings - i.e. clean the house fully three times and you can have that game, which is hardly an unfair request for an able-bodied teenager.) So buying a new game at retail price doesn't mean that's my entertainment budget for three months, although given some of my past foolishness maybe it ought to, but that's beside the point.
As a gamer, naturally I sort of wish that games could be cheaper because then I could have more money for other things, like fancy steak dinners at fabulous restaurants. I'm helped out on this by a lot of things, one of which is that I'm mostly a one-genre woman with occasional flirtations with strangers at the pub, and another of which is that my backlog is so huge that I've started being pickier about what I'll pick up at release. However...
Frankly, knowing what it costs to run a business and how long it takes to get your ROI, I'm astonished retail games don't cost more. I realize that devs make up on volume what they lose in dev costs (i.e. once you break even it's all gravy because the production costs for more units are trivial), but getting there is a bastard.
Let's do some extremely hasty back-of-the-envelope math here on the development cycle for a game like...oh, let's say a Final Fantasy title; something AAA. We're going to assume a staff of 100 people for three years from concept to release, which frankly is not a realistic assumption, but we're being highly conservative here. We'll also assume that our staff of 100 are all freshly graduated kids desperate to make it in the industry and thus willing to work for peanuts. I'm using US dollars because that's what I know.
We're also going to assume that our hypothetical Rina Studios Incorporated has some assets to start with - I'm only going to calculate costs for half the computers such a venture would actually need, since I'm assuming we aren't a shoestring startup in the basement. And I'm going to leave out tons and tons and tons of details.
Staff costs - 25K per person per annum (salary + benefits + admin costs like employer share of Social Security) - let me just say that I am undercutting so desperately here. Programmers with 5-ish years of experience can go for 50K or more. But we're assuming everyone wants to make this game so badly they'll take bad pay. So for 100 people over 3 years that's 300x25,000 = 7,500,000.
Technology - Let's say that half of our people need fancy new rigs made of powerful graphic design antics. I'll even be nice and say we're using PCs, not Macs, and half our people got upgraded during the last dev cycle so we just need to upgrade the other half. We don't even need to buy them monitors. A gander at the cost of your average gaming tower on a retail site tells me I can expect to shell out $800 per person just for the equipment; at 50 people that's $40,000. Oh, but we'll need software; I don't know what the "in" thing is for this level of graphics design, so I'll just assume (remember, we're lowballing hard) that we're buying a Creative Cloud subscription for the office at $50 per person per year; 50 x 300 is $15,000. So we're at $55K for technology, bringing us to $7,555,000.
Office Space and Utilities - Let's say we want to have office space in the Loop, which is super-desirable real estate. For an office that will seat 100 and isn't particularly posh, we're looking at $70K a month just in rent, plus $2k/month in utilities. That's $2,592,000 just in real estate. OK, ok, we'll assume we don't need the desirable location, we're willing to be off stuck in a corner somewhere. I'll chop that in half, from $2.6m to $1.3m, which still puts me at close to $10M for space, people, and tech.
I haven't even touched licensing fees, manufacturing and distribution costs, or marketing costs, nor the chunk out of it that the actual retailers are taking. We'll say that all of that eats up, oh, 25% of the retail cost of the game. Dividing 10 million by 45 (what's left after I take out the 25% of costs), we're left with about 225,000 copies that we've got to sell just to break even. Not to fund our next game; just to break even. Keep in mind that I'm using super conservative numbers here and I'm ignoring massive chunks of the basic costs of running a business. If I made my staff costs and real estate a little more realistic (say, paying my people $35K each instead of $25K, which still isn't realistic, and using the true cost of downtown office space) my costs have hit $13M and my break-even point is approaching 300,000 copies.
The video game sales wikia (yeah yeah check my sources I just want a thumbnail) tells me that FF13 sold 13 million copies nationwide. That's rad! I guarantee you it cost more than my estimates up there to make, and not all of those copies sold at full retail price, which complicates the math further.
DS games must sell about 100,000 units to be successful. The number goes up hugely when you start talking about HD graphics or multiple platforms. Oh, and I haven't even touched on voice acting or localization. Polygon points out that AAA devs are making about a 3% profit margin. Which is surely better than a poke in the eye with a sharp stick, but isn't a wide margin between success and failure.
So yeah, I'm rather surprised that games "only" cost $60.
I've posted this at http://lassarina.dreamwidth.org/1087851.html and you may comment there or here. On Dreamwidth, this entry has
comments.
pete_thomas asked me for my thoughts on the pricing of retail games ($60 or more.)
Okay, full disclosure here: I make good money and I have few claims on my income other than, you know, basic living, so I've got a lot of disposable cash. I also come from a comfortably-off family and my mother says I am "muchly loved" (translation: I'm kind of spoiled, in that there were rarely material things I genuinely wanted that I couldn't have, though sometimes with strings - i.e. clean the house fully three times and you can have that game, which is hardly an unfair request for an able-bodied teenager.) So buying a new game at retail price doesn't mean that's my entertainment budget for three months, although given some of my past foolishness maybe it ought to, but that's beside the point.
As a gamer, naturally I sort of wish that games could be cheaper because then I could have more money for other things, like fancy steak dinners at fabulous restaurants. I'm helped out on this by a lot of things, one of which is that I'm mostly a one-genre woman with occasional flirtations with strangers at the pub, and another of which is that my backlog is so huge that I've started being pickier about what I'll pick up at release. However...
Frankly, knowing what it costs to run a business and how long it takes to get your ROI, I'm astonished retail games don't cost more. I realize that devs make up on volume what they lose in dev costs (i.e. once you break even it's all gravy because the production costs for more units are trivial), but getting there is a bastard.
Let's do some extremely hasty back-of-the-envelope math here on the development cycle for a game like...oh, let's say a Final Fantasy title; something AAA. We're going to assume a staff of 100 people for three years from concept to release, which frankly is not a realistic assumption, but we're being highly conservative here. We'll also assume that our staff of 100 are all freshly graduated kids desperate to make it in the industry and thus willing to work for peanuts. I'm using US dollars because that's what I know.
We're also going to assume that our hypothetical Rina Studios Incorporated has some assets to start with - I'm only going to calculate costs for half the computers such a venture would actually need, since I'm assuming we aren't a shoestring startup in the basement. And I'm going to leave out tons and tons and tons of details.
Staff costs - 25K per person per annum (salary + benefits + admin costs like employer share of Social Security) - let me just say that I am undercutting so desperately here. Programmers with 5-ish years of experience can go for 50K or more. But we're assuming everyone wants to make this game so badly they'll take bad pay. So for 100 people over 3 years that's 300x25,000 = 7,500,000.
Technology - Let's say that half of our people need fancy new rigs made of powerful graphic design antics. I'll even be nice and say we're using PCs, not Macs, and half our people got upgraded during the last dev cycle so we just need to upgrade the other half. We don't even need to buy them monitors. A gander at the cost of your average gaming tower on a retail site tells me I can expect to shell out $800 per person just for the equipment; at 50 people that's $40,000. Oh, but we'll need software; I don't know what the "in" thing is for this level of graphics design, so I'll just assume (remember, we're lowballing hard) that we're buying a Creative Cloud subscription for the office at $50 per person per year; 50 x 300 is $15,000. So we're at $55K for technology, bringing us to $7,555,000.
Office Space and Utilities - Let's say we want to have office space in the Loop, which is super-desirable real estate. For an office that will seat 100 and isn't particularly posh, we're looking at $70K a month just in rent, plus $2k/month in utilities. That's $2,592,000 just in real estate. OK, ok, we'll assume we don't need the desirable location, we're willing to be off stuck in a corner somewhere. I'll chop that in half, from $2.6m to $1.3m, which still puts me at close to $10M for space, people, and tech.
I haven't even touched licensing fees, manufacturing and distribution costs, or marketing costs, nor the chunk out of it that the actual retailers are taking. We'll say that all of that eats up, oh, 25% of the retail cost of the game. Dividing 10 million by 45 (what's left after I take out the 25% of costs), we're left with about 225,000 copies that we've got to sell just to break even. Not to fund our next game; just to break even. Keep in mind that I'm using super conservative numbers here and I'm ignoring massive chunks of the basic costs of running a business. If I made my staff costs and real estate a little more realistic (say, paying my people $35K each instead of $25K, which still isn't realistic, and using the true cost of downtown office space) my costs have hit $13M and my break-even point is approaching 300,000 copies.
The video game sales wikia (yeah yeah check my sources I just want a thumbnail) tells me that FF13 sold 13 million copies nationwide. That's rad! I guarantee you it cost more than my estimates up there to make, and not all of those copies sold at full retail price, which complicates the math further.
DS games must sell about 100,000 units to be successful. The number goes up hugely when you start talking about HD graphics or multiple platforms. Oh, and I haven't even touched on voice acting or localization. Polygon points out that AAA devs are making about a 3% profit margin. Which is surely better than a poke in the eye with a sharp stick, but isn't a wide margin between success and failure.
So yeah, I'm rather surprised that games "only" cost $60.
I've posted this at http://lassarina.dreamwidth.org/1087851.html and you may comment there or here. On Dreamwidth, this entry has
comments.