no, i don't assume the publisher gets all the $60.
i admit i didn't go into it too much in my long post, but in short, it goes a little something like this:
1) Game Publisher spends $5-$10 million dollars for the production of a video game. this budget covers everything from producers, to designers, to programmers, to qa teams, to marketing to manufacturing.
2) The money has already been allocated. they don't sell the game, and then pay off all of the various people that had something to do with the creation/marketing of the game. they've already spent the $5-$10 million.
3) The sales of the game are simply the publisher's attempt to recoup the money they've already spent on the game. the film industry is the same way.
if the publisher doesn't make back, at the LEAST, the $5-$10 million they spent on the production of the game, then that's not a good thing.
BUT, if they make MORE than what they spent, then they've netted a profit.
again, they don't hold off paying everybody until the project ships. people do the work and they get paid.
the point of my earlier post was to illustrate that not all games are costing $40 million to make like a GTAIV or MGS4, and that selling 1 million units isn't vital to the success of a game. it simply increases the margin of profit that a publisher makes.
a $10 million game that sells 250,000 units still netted the publisher a profit of $5 million dollars (250,000 times $60 a pop equals $15,000,000 minus the $10 million they spent on the project).
lets go back to that 250,000 unit sold number. so the dev has made a profit of $5,000,000. maybe the next game costs $5,000,000 to make instead of $10,000,000 because they have an engine in place that makes development more cost effective, that'd net them a profit of $10,000,000 if it sells 250,000. that'll let them make an additional 2 games.
what if they release 5 $5 million games a year (that'd be $25,000,000 budget total for all 5 games) that sell 250,000 units each.
total profit for those 5 games is $50,000,000.
most publishers out there try to release multiple games a year for that very reason.
like i said before, Activision and EA post profits of over $900,000,000 a year because they release a large number of games a year, and many of them are tied to franchises known to sell in the millions, so that any "risky" endeavors like Brutal Legend don't hurt their bottom line.
i doubt Brutal Legend cost $40 million to make, but due to the success of licensed games like Harry Potter, and yearly games like Madden, EA could absorb any potential profit loss from Brutal Legend, and i guarantee they still post a hefty profit for 2009 at the end of their fiscal year in March.
the same with Activision with Modern Warfare 2 and Guitar Hero franchises. even if you don't factor in the fact that WoW brings in an insane amount of profit for Activision, they'd still post huge earnings next March anyway.
the point isn't that these companies pocket the full $60 from a games sell, but that they carefully allocate their budgets so they can maximize profit despite not selling 1, 2, or 3 million units.
most games fall into the "under 500,000 units sold" category.
mostly franchise series and licensed titles reach the 1 million or more mark. new IPs have a rougher time, although, depending on the timing of their release, they can do surprisingly well (see Assassin's Creed, Dead Space, inFAMOUS, and even Uncharted 1).
once those new IPs become franchises, the next title, which will cost significantly less than the original (again, see Assassin's Creed 2 and Uncharted 2), will more than likely have an easier time reaching the 1 million unit mark than it's predecessor, IF the first title even reaches 1 million units at all.
it's all about how you position your new IP that will guarantee exposure and therefore, a better chance at netting a large enough audience to help make a profit.
Uncharted is a great example, because the first title, despite releasing during the year of PS3 hate that was 2007, garnered decent day one sales. enough to make a profit for Naughty Dog, and warrant a sequel. it took Uncharted 1 a few months to reach 1 million units as word of mouth was slow. Uncharted 2 releases, and sells 1 million units within the first MONTH of release, because the series made a name for itself.
considering that we are 4+ years into this generation, and publishers/developers have been making games on the Xbox 360 and PS3 for 4 years now, it's silly to think that producing games has gotten MORE expensive than at the START of the generation, when the history of game development have shown us that development costs get CHEAPER, no matter how advanced the technology at the time is.
this article is taking one company KNOWN for producing high profile games (ie, the GTA series and it's generally star studded; read COSTLY; cast), and using it as a means to illustrate how 1 million units sold isn't enough for the industry at large.
it's poorly conducted "journalism."
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