EA Spends 3x More On Marketing Than Development 442
G3ckoG33k writes "According to Electronic Arts officer Rich Hilleman, 'the price of producing console games has rocketed, with marketing costing up to three times more than the development of a title.'" Sounds pretty insane, but does anyone know how this compares to the film industry?
Re:Well, that explains a lot (Score:4, Informative)
Umm, no decent games. Their sports titles are often the best. They get the best reviews and most sales. You can't say that games like NHL, Madden, MLB The Show aren't quality games. Also EA develops and sells the top selling video game series of all time, the SIMS.
Re:Why is this a surprise? (Score:5, Informative)
Fred Brooks put it best in 'The Mythical Man Month:'
"...when schedule slippage is recognized, the natural (and traditional) response is to add manpower. Like dousing a fire with gasoline, this makes matters worse, much worse. More fire requires more gasoline, and thus begins a regenerative cycle which ends in disaster."
Re:Why is this a surprise? (Score:5, Informative)
If I remember correctly, this is also the source of the pregnancy analogy. Good book.
Re:Who's Wrong? (Score:4, Informative)
Noting the success of the DS, PSP and iPhone, Hilleman slammed the price of producing console games has rocketed, with marketing costing up to three times more than the development of a title.
While the article is about handheld sales now being double that of consoles, it most certainly talks about the marketing costs. Read the whole article Sparky.
Re:The same for drug industry (Score:5, Informative)
That number for drug R&D costs is described by some commentators as "9-digit fairy tale" (source article http://www.cmaj.ca/cgi/content/full/180/3/279 [www.cmaj.ca]). It is true that you cannot market directly to consumers in many countries, the industry can and do market to doctors. Although the doctors are relatively few in numbers, the pandering they receive is far more expensive.
Doesn't compare to the film industry at all (Score:2, Informative)
In 2006, the average studio movie cost $65.8M to produce:
http://www.cinematical.com/2007/03/08/mpaa-in-2006-an-average-movie-cost-65-8m-to-produce/
In 2007, the average studio movie spent $36M on marketing:
http://articles.latimes.com/2009/apr/20/business/fi-ct-movies20?pg=1
Re:The same for drug industry (Score:4, Informative)
Source please?
http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0050001 [plosmedicine.org]
Re:Excessive Marketing (Score:5, Informative)
EA has been closing up shops left and right, just like most other large publishers (though really there aren't many large publishers these days, it's basically EA and Blizzard/Activision for PC games).
I think the main issue is that EA specifically, and the industry in general, has spent a lot of time in the last decade complaining about the rising costs of producing games, especially in the console and PC realms, yet EA is willing to spend 3x their development budget on marketing, the cost of which is pretty well within their control.
Of course, EA is also one of the companies that does pretty well controlling their development costs for their biggest selling games. They have a very limited time frame for development of their sports titles, and they do a fair job of deciding what improvements they can make year-to-year to still meet the time constraints and still keep most of their user base happy. They also figured out that it was worth more money to them to buy exclusive contracts with the leagues and player unions than to attempt to continue competing with other publishers and developers to make a better game in those time constraints.
Re:Well, that explains a lot (Score:5, Informative)
There is no longer any company named Maxis. EA published their games for many years but has completely absorbed the company now. Will Wright, the founder of Maxis, doesn't even work there anymore. The Sims 3 is now a first-party EA game by all definitions and, for the record, it is a really fantastic game.
Re:The same for drug industry (Score:5, Informative)
3x does seem a bit high.
Since I just cleaned out about 300 viagra spams, let's look at Pfizer's most recent 10-Q? [edgar-online.com]
In the last 3 months, they spent $3.35 billion on marketing(which doesn't include things like writing fake articles for medical journals and letting people know about off-label uses, but I'll let that slide if you'll give me "administration expenses"), and spent $1.695 billion on R&D.
That's about 1.97 times the $$ on convincing people to buy their drugs than they do finding new drugs.
Re:TJ (Score:5, Informative)
Disgustingly, this is also true of big pharmaceuticals. They spend close to 2:1 marketing to research. Given that marketing cures is not something that you need to do, a sick person will come looking for it, one has to wonder why they need to spend such massive (we're talking billions here) amounts of money on, and why.
Well, after having spent hours with many pharma reps, the answer seems to be that they promote their brands over generics. Despite the fact that a geneic is chemically identical to a branded drug (once it has come out of its 6 year patent period anyone can copy it), they spend money convincing doctors to keep prescribing their several multiples more expensive drug anyway. Here in Australia, that price is neither paid for by the doctor as the patient gets the script, and the government subsidizes a huge amount of drugs costs under the PBS scheme. So the ridiculous markup ends up coming out of the taxpayers' pockets. Big pharma is marketing their right to collect from general taxes.
They also spend enormous amounts of their marketing funds on lobbying. Getting your drug listed on the PBS is essentially a free ride on taxpayers, so pharma pays huge amounts of money inviting prominent doctors and other members of the medico-political fraternity to lavish "conferences" in exotic locations, showering them with luxury after luxury. I've been to a few of these events, and the thinly veiled palm greasing in such a socially crucial industry is sickening.
Marketing is an industry that needs regulation. I don't know how, but there needs to be some way to prevent marketing from deliberately destroying the ability of people to make informed decisions. Yes, yes, caveat emptor and all that. In the real world, not everyone can spend a year researching every decision exhaustively; we need to make decisions with incomplete information, and the marketing industry is designed to ensure that the first information that comes to hand is as misleading as they can get away with.
And holy cow, what a rant. I originally intended to whine about EA's marketing spending as being the reason we don't get any groundbreaking new games like Syndicate or XCom any more.
Dosnt surprise me. (Score:4, Informative)
With my experience with the quality and stability of their games, this does not surprise me in the least. I used to work for a cyber cafe. EA games made up about 30% of our titles and 25% of the playtime, but 95% of crashes occurred while an EA game was being played. also many times patches for EA games broke them, A problem we rarely had with non EA titles.
Re:2K football? (Score:4, Informative)
Re:Why is this a surprise? (Score:4, Informative)
I've normally seen that quote attributed to Werner von Braun [quotesdaddy.com].
Re:Excessive Marketing (Score:3, Informative)
Here is an example; Heinz Ketchup. I have lived throughout Europe, and North America, and there is no way I will buy anything but Heinz Ketchup. Yes they have a marketing campaign, but Heinz does do a pretty good job making ketchup
Please. Ketchup is ketchup. Anyone can make ketchup. You can even make ketchup in your own kitchen. The only reason you perceive Heinz as being better than other ketchup is marketing. Much the same way a plastic bottle with a nice label can make you perceive tap water as gourmet.