Game Companies Face Hard Economic Choices

Hugh Pickens writes "The NY Times reports that the proliferation of free or low-cost games on the Web and for phones limits how high the major game publishers can set prices, so makers are sometimes unable to charge enough to cover the cost of producing titles. The cost of making a game for the previous generation of machines was about $10 million, not including marketing. The cost of a game for the latest consoles is over twice that — $25 million is typical, and it can be much more. Reggie Fils-Aime, chief marketing officer for Nintendo of America, says publishers of games for its Wii console need to sell one million units of a game to turn a profit, but the majority of games, analysts said, sell no more than 150,000 copies. Developers would like to raise prices to cover development costs, but Mike McGarvey, former chief executive of Eidos and now an executive with OnLive, says that consumers have been looking at console games and saying, 'This is too expensive and there are too many choices.' Since makers cannot charge enough or sell enough games to cover the cost of producing most titles, video game makers have to hope for a blockbuster. 'The model as it exists is dying,' says McGarvey." As we discussed recently, OnLive is trying to change that by moving a big portion of the hardware requirements to the cloud. Of course, many doubt that such a task can be accomplished in a way that doesn't severely degrade gameplay, but it now appears that Sony is working on something similar as well.

This is easy to fix:

[B1oodAnge1]

Only make good games.

I could easily predict what titles will only sell a few hundred thousand copies just by reading design proposals.
Where can I sign up to be paid for this cost cutting service?

Re:am i missing something?

[fractoid]

I thought it was more along the lines of:
1) Woo venture capitalists for funding for a huge, AAA game. Talk lots about the AAA games that make money.
2) Pay yourself and your friends sh*tloads of money because you're awesomesauce producers working on producing a AAA game.
3a) Spend all your venture capital on (2), and on flying yourself and friends around the world to industry expos.
3b) Set crazy deadlines because only 1/3 of your capital is going towards the actual development of the game.
4) Step back, let the company fold, and leave with your 3 years' worth of executive salary. Blame everyone else for the game's failure.

I'm still trying to figure out whether 3a or 4 is the '???'.

Re:I am a non gamer, and I own a Wii

[commodore64_love]

>>>If I wasn't sure you were a fanboy before, now it is obvious. What in the world are you replying to?

(1) As I stated before, I'm not a fanboy. Since the 1970s I have owned Ataris, Commodores, Nintendos, Amigas, Segas, Sonys, Colecos, and so on. I have no particular love for any one console, and I don't understand these fanboys that inhabit the net. They strike me as weird - who cares which console is best or whatever? I simply enjoy gaming, and could care less what piece of hardware I'm using. ----- (2) Since you're apparently slow on comprehension, I will repost my message and clarify "what I'm replying to".

>>>The day after we got the Wii I started looking out for something like second life. Say what you will, I know it doesn't have a good reputation with gamers. .....I find it hard to believe Nintendo has 20 years of producing outstanding games (1985-2005), and now has suddenly "lost" the ability to appeal to gamers. i.e. I don't agree with the poor reputation a lot of gamers feel towards Nintendo. Not at all.

>>>The gamecube worldwide was third. Just deal with it.

No. YOU need to grow up and learn to look at the math, instead of jumping to false conclusions. The Cube sold approximately 22 million and the Xbox sold about 23 million. The statistics have an error rate of +/- 2 million, which means the Cube might have sold as many as 24 while the Box might only be 21, due to miscounts on the sales. QED as I stated, "the Cube and Xbox are in a statistical tie for second place". ----- When you get into college and take Stat/Probability 101, you'll better understand. It's equivalent to an election year poll showing McCain is leading Obama 47% to 46% but with an error of +/-2%, and therefore a statistical dead heat.

>>>And like the GP was saying, non-gamers, almost by definition, don't buy a lot of games.

The statistics show otherwise. The statistics shows the Wii has an attach rate equal to the PS3 and Xbox 360, and therefore the supposed "Wii nongamers" are buying just as many games as the "gamers" on the other consoles. QED your statement is false.

Now if you want to start-over, and this time refrain from insults like "fanboy" or "stupid" or whatever, we can have a mature conversation about sales/stats. ----- Or I could just flame you. I've been on the internet for almost 22 years now - I can flame trolls with one arm and code in C with the other arm, and barely break a sweat. ;-)