XBOX one: the last nail to the coffin

What's this - sky is falling again already?

I'll start building my shelter right now!
 
Nameless one said:
I disagree, there has been many quality adventures and strategies that are PC exclusive in recent years, and that market is growing(paradox strategies for instance have incised sale each year,same thing goes Relic,Ironcald games and lot other strategy developers),and now new wave of PC exclusive RPGs coming, some of those game are innovative.Are they pushing hardware limits,no(well maybe Company of heroes 2 and Sui generis and star citizen but it's hard to tell before they actually come out ),but they don't really need to except for good graphic which is always nice but not really essential.
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There are a few strongholds left for the moment as mentioned earlier.
Paradox by the way dabs into the console and tablet (or similar) markets.

At the moment, RPG and innovative seem exclusive.
 
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JemyM said:
What concerns me is that PC today live on four constellations, the loss of any of these have severe impact on the platform:
* Intel CPU's (under threat)
* Windows OS (under threat)
* Nvidia / ATI (no great need to upgrade anymore)
* Steam (depends on the hardware)

In particular the first two are my most major concerns and one of the great reasons for the windows mess is the change of focus into restricting the user and reducing user-choices and instead control the platform and it's content. From it's DRM-schemes to XBox they are basically going apple, attempting to control a market which openness, adaptability and diversity was it's greatest survivability. By becoming an AAA-product rather than a platform it lost it's appeal and vision.

It may therefore be ironic, that the XB1 is a nail to the coffin, not for PC, not for XB1 but for Microsoft.

Without the platform, most things discussed in here is moot. They all rely on PC as an open tool. But it's continued centralization into Microsoft and Intel and an increasingly top-down attitude, is basically the computer edition of the Soviet Union.
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XBOX one is integrated AMD hardware.
 
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txa1265 said:
You really have no clue, just a mindless "PC gaming R dead" straw man, eh? I am sorry, but you are clearly a troll and not worth the time if I have to explain basic game economics.
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Too bad. It would have been enlightening to know how a billion dollar gross is against basic game economics.

Do you charge for the revelation of that deep knowledge?
 
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ChienAboyeur said:
There are a few strongholds left for the moment as mentioned earlier.
Paradox by the way dabs into the console and tablet (or similar) markets.

At the moment, RPG and innovative seem exclusive.
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Publishers dont get the billion dollar gross. They get 80% of that because retailers get a cut too. But basically yeah they need the billion dollar gross to break even.
 
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Moriendor said:
Way too early to proclaim PC gaming dead but AAA PC gaming is going to take a huge hit. We will be bombarded with a slew of console exclusives and I believe we can only hope that some of those will merely be timed exclusives instead of all-out exclusive.
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It is a false dilemna. Timed exclusive has the same consequence as all out exclusive.

It means games developped exclusively for consoles. And possibly recycled to PCs or even to tablets in order to increase the profitability for console games.

PC gaming does not mean the possibility of playing games on PCs. A very weird version of it.

Reading comments, it looks like even in a situation new games on PC are ports from tablets, PC gaming would not be reported as dead because games are still released and played on PCs.
 
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Damian said:
Publishers dont get the billion dollar gross. They get 80% of that because retailers get a cut too. But basically yeah they need the billion dollar gross to break even.
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So 800 million gross is not enough to break even?
 
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ChienAboyeur said:
So 800 million gross is not enough to break even?
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Yes, sorta because only 15% or so actually pays off the dev expenses.

Say a game costs 50 million(one of the CoD games for example) to make. You need to sell 50x(~7.5) million, 375 million to break even. But what about all those failed games? For a publisher to continue to do what they need to leech off the more popular titles to make up for the newer titles. Hence why we dont see much originality. And that is last gen.


For the companies that do put next-generation titles out early, making a profit is tough. Namco Bandai president Takeo Takasu said his company needs to sell at least 500,000 copies of each PlayStation 3 game it creates to make a profit. Analysts predict that some other publishers will need to clear 1 million units to get in the black—and start making about $1 per game sold.
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game-pie.jpg
 
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Meaning : Those who actually DO the game get the LEAST amount of money from it ?

It's like with farmers : The food they produce feed millions - buit they get only pennies from it. Everything else gets stuck … well, somewhere else.

I bet that this will lead - one day in the future - into a more "localized" form of business : Farmers no longer selling to those who give them only so little amounts of money - but to the consumer directly. By passing the distribution channels and marketing completely.

For Indie developers, this is already going on - through Steam et. al. ... Whereas Steam is just another form of indirect monopoly to get rid of.
 
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Alrik Fassbauer said:
Meaning : Those who actually DO the game get the LEAST amount of money from it ?
Click to expand...

Exactly - in fact they often don't get any "money" out of it. That 15% up there they get payed for the expenses to develop the title, salaries, office rent, soft-and hardware. But they often do not get a share of profit in excess of that, or a very meagre one. They have very little liquidity, which is why you see dev studios go belly up if they fail to secure a new project for more than a month or two.

Why do you think even mid tier developers like Obsidian and in Xile are excited about doing Kickstarter projects on a measly 1-3 million $ budget? Because they still have the development payed (if they control their costs properly), but any profit goes to them (deducting the digital distributors cut of 10-15%, I think). For as long as the game sells. If they are lucky and PE or Wasteland 2 become a success (and here that does not require nearly as many sales, because they have already broken even, see above), they stand to win a considerable amount of independence and financial security, possibly far in excess of the actual KS funds they received.

(Edit @ Alrik: such models for farmers already exist, farmers offering you a subscription for a year, and you get fresh produce, eggs, meat etc. Of course only what the farm can deliver, at that time, and in that quality). Take a look you may find something in your area, if you are interested.)
 
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Alrik Fassbauer said:
I bet that this will lead - one day in the future - into a more "localized" form of business : Farmers no longer selling to those who give them only so little amounts of money - but to the consumer directly. By passing the distribution channels and marketing completely.
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They tried that in my hometown last year and everything they sold was bought. Lines of people waiting to buy were hundreds of meters long. Prices were 5-10 times cheaper than normally here. Some of the prices

0,5 kg pork 0,8€
1 kg beef 3€
six eggs 0,35€
1 kg potatoes 0,10e

http://www.maaseuduntulevaisuus.fi/maatalous/viljelijät-myyvät-ruokaa-alehintaan-1.27818
 
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We here are used to farmers selling their stuff at so-called "Week Markets". They're an long established form of selling products. Others sell their stuff there, too. I do even remember similar markets from an small village in the 80s, where someone actually sold clothes there, too. I don't remember much of it anymore, however, because I was too young, then.

Especially older folks and people who prefer fresh food (not only vegetables, but also fish and cheese) go there.
 
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We have markets here as well in Edmonton, you can even buy into co-op farms and get weekly deliveries, which my wife did for us about 3 months ago. So far the quality and prices beat any supermarket we've shopped at for the past 5 yrs hands down. The weekend market is packed every time they do it. I spent time on a farm in my youth so it pleases me to no end to watch these clever farmers actually make money and avoid "the man".


-Carn
 
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ChienAboyeur said:
And they will not be covered by a billion dollar gross?
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Depending on what their definition of minimum acceptable return on investment is, then from a cashflow analysis view - not necessarily. When considering spending on a project against other ways in which those resources could have been invested, a minimum acceptable return on investment is considered as a way of comparing the project's profitability against what might substitute effectively for the alternative of "doing nothing" instead. While effectively arbitrary, using the lipper large-cap core mutual fund average as the minimum acceptable return is a decent benchmark. That is to say, if it would have been more profitable to simply dump all that money into a broad selection of mutual funds instead of engaging in an enterprise then the enterprise looks to be a worse way of investing those resources.

At a developer cut of $25 per full priced game and, extending that ratio through to games sold at a discount, a $1 billion grossing game would net the publish about $362 million. Considering COD:MW2 had a launch budget estimated to be about $200 million including marketing and other costs (development only made up $40-50 million of that), a gross of about $1 billion would likely correspond to an extremely profitable game and well exceeding the company's minimum acceptable return on investment.

Now this is where things get interesting and the choice of a reasonable minimum acceptable return on investment really matters. Over the past two years through this month, the lipper large-cap core mutual fund average (effectively representing what a broadly diversified and relatively conservative investment across many large-cap mutual funds would look like) would be about 17.5% while some more specific averages over that period are closer to 25%.

A game with a total launch budget of 200 million grossing 1 billion is pretty safely worthwhile under most considerations with an mROI within that range. If, however, a game with a budget closer to $300 million spent over the last two years were to be released today then whether or not a large AAA firm like EA would see it as having been a worthwhile investment depends strongly on what the consider the minimum acceptable return for that period and on which side of $300 million it ended up costing them. If a company had looked at the sales history of a franchise like Call of Duty, they might have been convinced going in that $350 million was not a risky investment. In the present environment and in comparison to the performance of other markets in the past two years, these large AAA budgets (the vast majority of which consists of marketing and non-development costs) seem far riskier.

These sorts of cashflow analysis considerations would be done by large privately held companies whose owners hold them as investments as well as publicly traded companies. Publicly traded companies would also have to consider profit projections and so a big budget title would also need to at least come very close to come close to meeting expectations to not be seen as a misstep in a certain light. In the cases where a title was the latest entry in a long series of highly profitable successes, that franchise history would inform expectations and could well produce projected profits well above what a broader mROI might look like.
 
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Alrik Fassbauer said:
Meaning : Those who actually DO the game get the LEAST amount of money from it ?
Click to expand...
Yeah, but it isn't like they are enslaved. If they wanted to do a game all by themselves for PC and sell it on their own website, they could. They don't because $9 x 2,000,000 copies is way more than $30 x 15,000 copies.
 
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Well, you forgot the super hero of video games,,,, the super swede,,, the one and only minecraft creator.... he earned more money than a lot of AAA game studios all alone in one year, without using anything except his own website... give it up for Notch.... so it is definetly possible... if you have a good enough product.. and a good enough mind, giving money to him feels like giving it to charity your happy to buy something from him.....
 
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jhwisner said:
Depending on what their definition of minimum acceptable return on investment is, then from a cashflow analysis view - not necessarily. When considering spending on a project against other ways in which those resources could have been invested, a minimum acceptable return on investment is considered as a way of comparing the project's profitability against what might substitute effectively for the alternative of "doing nothing" instead. While effectively arbitrary, using the lipper large-cap core mutual fund average as the minimum acceptable return is a decent benchmark. That is to say, if it would have been more profitable to simply dump all that money into a broad selection of mutual funds instead of engaging in an enterprise then the enterprise looks to be a worse way of investing those resources.

At a developer cut of $25 per full priced game and, extending that ratio through to games sold at a discount, a $1 billion grossing game would net the publish about $362 million. Considering COD:MW2 had a launch budget estimated to be about $200 million including marketing and other costs (development only made up $40-50 million of that), a gross of about $1 billion would likely correspond to an extremely profitable game and well exceeding the company's minimum acceptable return on investment.

Now this is where things get interesting and the choice of a reasonable minimum acceptable return on investment really matters. Over the past two years through this month, the lipper large-cap core mutual fund average (effectively representing what a broadly diversified and relatively conservative investment across many large-cap mutual funds would look like) would be about 17.5% while some more specific averages over that period are closer to 25%.

A game with a total launch budget of 200 million grossing 1 billion is pretty safely worthwhile under most considerations with an mROI within that range. If, however, a game with a budget closer to $300 million spent over the last two years were to be released today then whether or not a large AAA firm like EA would see it as having been a worthwhile investment depends strongly on what the consider the minimum acceptable return for that period and on which side of $300 million it ended up costing them. If a company had looked at the sales history of a franchise like Call of Duty, they might have been convinced going in that $350 million was not a risky investment. In the present environment and in comparison to the performance of other markets in the past two years, these large AAA budgets (the vast majority of which consists of marketing and non-development costs) seem far riskier.

These sorts of cashflow analysis considerations would be done by large privately held companies whose owners hold them as investments as well as publicly traded companies. Publicly traded companies would also have to consider profit projections and so a big budget title would also need to at least come very close to come close to meeting expectations to not be seen as a misstep in a certain light. In the cases where a title was the latest entry in a long series of highly profitable successes, that franchise history would inform expectations and could well produce projected profits well above what a broader mROI might look like.
Click to expand...

So that is about the expectations of profits as pointed earlier in the thread, not about breaking even.

It makes a huge difference.
 
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Zloth said:
Yeah, but it isn't like they are enslaved. If they wanted to do a game all by themselves for PC and sell it on their own website, they could. They don't because $9 x 2,000,000 copies is way more than $30 x 15,000 copies.
Click to expand...

Nowadays, yes.
But a decade before, that wasn't much feasible.
Plus, there are still some weird people (like me) who prefer discs.
 
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To be fair, I want a steam pie-chart similar to the image above. Steam cuts out several of those steps.
 
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