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?
The same for drug industry (Score:4, Interesting)
Often one heards that research costs drive the price of drugs high, but in fact a similar ratio between marketting and research costs exists in the drug industry.
Re:Why is this a surprise? (Score:5, Interesting)
Re:Why is this a surprise? (Score:5, Interesting)
While I agree with your point on "suit monkeys" ruining games by adding in-game marketing to skim off the top, you seem to have entirely missed the point of the post. "Marketing" in it's basic form is simply building awareness for a product so that, if people like it, they can go buy it. Believe it or not, people who are unaware of products may not buy them, and while a few people may follow the likes of /. or IGN and already know everything, that small handful of people isn't going to support a game release. For this reason, marketing activity is very important to let people know that mass-appeal games are out.
One example where this worked well is the new Batman game. Batman has huge appeal, cost a fortune to make. If you just put it on shelves, only a few people will walk by and pick it up. Millions more non-hardcore-gamer people would love to play a Batman game, but don't always walk by game shelves. With $x million in marketing to drive awareness, they can make $2x-10x million selling that game.
Game developing is cheap compared to what it costs to buy enough TV airtime to make everyone aware of your product.
Re:Why is this a surprise? (Score:3, Interesting)
This is true, and works for quarterly gains.
Just don't expect long term (5+ year) success out of it.
Re:Excessive Marketing (Score:2, Interesting)
Re:Hmm... (Score:5, Interesting)
I've been working in games for 10 years, and I really, *really* wish I could agree with you.
Did you know that it's only been in the last few years that review scores and sales started to correlate? Until recently, there was virtually no connection between the review scores of your game and how well it sold, and it's still somewhat tenuous.
(see http://games.venturebeat.com/2009/05/29/does-game-quality-translate-into-better-financial-performance/ [venturebeat.com] and http://www.dreamdawn.com/sh/features/sales_vs_score.php [dreamdawn.com] for some backup on that.)
If I could show you a graph of marketing budget vs sales, you'd see that the correlation is much stronger. Making a great game doesn't immediately make people aware of it, and the public isn't the most sophisticated video game consumer.
Remember Daikatana? (http://en.wikipedia.org/wiki/Daikatana (I can't believe I'm posting a wp link in case people on Slashdot don't know what Daikatana is. No one click that.)) It was famous for being over-hyped and a total mess. It looked good once, but by launch anyone who knew about games knew that it would not be good. And it was still a top-10 seller for 3 months on the back of name recognition. Because the majority of game buyers don't know much about games (just like most industries). People had heard of the game, and they forgot that what they heard was a joke, so they bought it. Oh yeah, it had a big marketing budget too...
The reality is, sales (and therefore income) are better correlated to investment in advertising than the game itself. That pains me (as a game designer) deeply, but it's true. Things like this article used to peg my rage meter, but there's no point in getting upset at EA for realizing the way the market works.
Luckily, that's changing. The market is becoming more savvy, and quality is finally becoming important to publishers. I'm not spilling inside secrets when I say that WB is very excited about the high quality of Arkham Asylum. They knew it would be good, but you can never be sure that a game will be great, and their faces light up whenever they talk about it. It's very encouraging to me to see executives this excited about quality; that's new.
It's now common to hear people say things like "They're an 80+ developer" or "We're targetting 85+", which is also really encouraging. People used to talk about making good games, but now it's important that you be able to clearly establish that. It used to be only sales that mattered, but now people are more willing to accept that if you make quality games, the sales will come. That's huge, and you can expect to see it shift more resources from marketing to production, where they belong.
Re:Excessive Marketing (Score:3, Interesting)
The issue is that the amount of money you spend on marketing vs the effectiveness is likely to take the vague shape of a bell curve. I think part of what the GP is saying is that some brands have moved to that peak in marketing vs effectiveness, and realize that spending the 50% extra on marketing is pointless.
Continuing to throw money at marketing just because your sales are low doesn't mean you'll make more sales. If you're already at that peak, due to the economy, market saturation, the quality of your game, etc., more marketing doesn't translate into more sales.
In the case of EA, I've seen a fair bit of questionable marketing from them. Commercials on channels that seem to be far outside their target audience, commercials that failed to make a game look good or worth buying, horribly obnoxious commercials that made me change the channel, etc. That said, I've been screwed by the DRM in EA games more than once, and I've played enough shitty games from them that they're off my list entirely now.
Re:Why is this a surprise? (Score:3, Interesting)
Re:TJ (Score:4, Interesting)
I agree, EA has to be one of the game companies i dislike the most. Their games have little to no replay value, if any value in the first place. Its obvious they're in it for the money and not the games themselves.
If you have to spend 3 times the money of development for marketing alone, its a pretty strong sign that you're selling crap and not giving a shit about your customers, all you want is their money.
The state of our entire entertainments industry today is very sad, everything is more about money than it is about quality.
Re:Well, that explains a lot (Score:3, Interesting)
Re:Excessive Marketing (Score:1, Interesting)
Of course when every Bud tastes exactly like piss, albeit the same piss, the point is moot.
Re:TJ (Score:3, Interesting)
Disgustingly, this is also true of big pharmaceuticals.
It's a natural result of monopoly rights.
Why would a company need to market their products if they had a monopoly? Marketing budgets typically go up when competition increases.