Game development 101: Only 4% of games will ever make a profit |
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Well no wonder you've got layoffs in the industry recently - not to mention the shutting down of certain studios and whatnot. According to research conducted by EEDAR, only 4% of the total games out in the market ever make a profit - all other 96% just either break even or lose money. Yeouch.
The question is, what can you do as a publisher or developer to make your game into that 4% profitability rate? Try as you might, there isn't one singular equation that will ever give you a "perfect" game. Throw in all the tried-and-tested winning elements into the equation (high-end graphics, multiplayer, replayability, etc.) and that still doesn't mean you game's an instant hit.
EEDAR co-founder, and also previously a game developer for eleven years, Geoffrey Zatkin confides to Forbes that:
Every game I have ever worked on, we've gone in blind as to which features would sell the game better.
One example he gave was that you never know if your investment of say, US$ 500,000 to include multiplayer functionality in the game will actually be worth it. Not knowing if that kind of investment will return profit, he says, "scares the crap out of me."
They also reveal that 60% of a game's budget is usually allocated to redesigning and reworking a game to this so-called level of "perfection".
Using these figures (4% profitability rate, 60% of budget on reworking), it doesn't take a lot to assume that publishers, producers, and developers have to make very tough calls when it comes to game design and development. They have to make sure that every single thing counts!
So, when you pick up that next game of yours - think. Imagine all the risk that these higher ups had to burden themselves with! Uuugh, there's some serious food for thought for you.
When you think about, even if you did have the fool-proof equation to throw into your game, other factors that will make or break your investment: marketing, publicity stunts, failed PR campaigns, and that number one enemy - piracy.
Related articles:
- PC Magazine ceasing print, going online-only; EGM may follow
- Flagship Studios experience mass lay-offs
- Study suggests that publishers should avoid releasing demos
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Comments [refresh]
No surprise if you count all those totally bad games in. Like almost every "[insert something here] Tycoon" games.
development cost + ad campaign budget + misc expense (office rent, business license, legal fee etc) - sales = profit
So bad sales will affect it
oversize dev cost will affect it
oversize ad campaign will affect it
unexpected expense will affect it (like you got sue for something)
Except sales, everything else is kinda controllable but it is always hard to hit it at the right amount.
Thats why I rent from Gamefly. Even most of the games I do like arent worth buying unless they have good replay value. Most games are only worth beating once and there arent a lot of games with great multiplayer.
who has stated the obvious. wrongly at that!
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there's no way to control how good a game is, or how many sales you get. The statement that you cannot control sales but you can control everything else is like saying I can make lemonade but some people might not buy it. DUH.
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and how can you subtract sales? You have to negate both sides of the equation.
\
So it would be:
sales - dev cost - ad campaign - misc expense+ profit
it should be:
sales - dev cost - ad campaign - misc expense+ profit
this site mixes up plus and equals signs?
whatevs...the equation should equal profit
i want the total number of unique games for that figure...
thinking of either gaming console, it gives the impression that only so-called AAA titles make a profit.
if i expand it to include the insanely high number of wii and DS exclusive titles, then it would make sense to me that even the titles that don't plaster the airwaves make a profit, but not in break the bank amounts...
Don't forget Neverland Card Battles. They should go bankrupt, not just turn a loss, so that they can never make a bloody game again!
Yeah if you count loss to rental games as well,
or borrowing, or the game sucks that I bought for 60 so I sell to a friend for 55. (All of those are as bad as piracy to me, but hey, I still buy used games.)
In the end, I think these statistics are crap.
Folks!!!
This is a HUGE misconception on the public's behalf!!! This is a huge MISINFORMATION routine that the entertainment industry pulls in order to NOT payout residuals to unsuspecting programmers and performers.
I have spoken audnaseum about how the Music, Movie and Software industry has been screwing the brightest minds of the planet.
Despite what you may think, Hollywood "HAS NEVER" turned a profit on a movie since it's inception back in the Teens. NEVER TURNED A PROFIT!!! They hide the money and use inflation rates to hide the actual money made by the finished, packaged and multi-time sold product. If they didn't make anything how do they keep selling Elvis?
Folks, the most common game these ****Balls play works like this; You are a rising star (pick your medium of choice), you sign a contract stipulating that you are to get 20% of the net profits of (whatever you are the best at).
Now for those who didn't catch it... You just got BUTT****ED with a 18 pound sausage punctuated with a barbed wire c0ckring by the 'game' that the entertainment industry plays and you didn't even know it.
The trick was "NET PROFIT"!!! They (the entertainment conglomerate) will do everything in their power to mandate that your product NEVER - EVER makes a "NET PROFIT". This means that they got the best of the best for little or nothing $$$'s.
For those who don't know, NET is the money that is left over from a completed production (all taxes, electric, tags, title, license and delivery) have been paid off. What you want is to get a peace of the "GROSS PROFIT". That's a cut of what is being made as the (whatever commodity being sold) is bringing in at the real time moment.
And unless you have an army of attorneys all with the first name Prick and your ass chocked full of steel wool, the likelihood of you seeing even 1% of the GROSS is going to be an act of god.
That's why they came up with a "POINTS" system. Basically, the POINTS system works with belligerently small fractions of a percent. So dependent on what the game of the week is, 100 points could be equivalent to 1 cent to the first $100 and then a penny for every $1000 after that. So the screwing can just keep on coming even though you 'thought' you were in on the game.
Taking it back to basics, don't you think these talentless ****s would get out of the entertainment industry all together if there were little or no money involved? Nobody looses in the entertainment industry except the starving artists. Even if a title completely flops, those that invested on the project will have written that sucker off on one of the fattest tax write-offs you will ever see, thus making back their investment anyway.
I've worked around them folks. I have a good working knowledge of how to look out for the meat plug hovering over my ass, but I still won't try to tell you I know ALL about the game. That book will never be written because the rules always change...
So sayeth...
FTAFTFH...
the only thing you have working knowledge of (judging from your language) is how to take someone anally...