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eelke_folmer

How many copies does one have to sell

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to be profitable? In a 1999 article http://www.gamedev.net/reference/articles/article866.asp on this site its claimed that to make money: -between 15,000 and 40,000 games must be sold on the PC - 150,000 units for the console market The storage formats have increased by a huge factor the last 10 years E.g. The super Nintendo cartridge could hold 32 Megabits, compare this to a modern game storage format such as a DVD which can store 4.7 Gigabytes, we can see that storage capabilities have increased with a factor 1200. The next generation consoles are going to use the blu-ray format which can store 25 gigabyte. Suppose we can compress art such as graphics, animation and audio a factor 10 to 1 and assuming the game engine itself takes up 1 gigabyte, on a 3rd generation console we can potentially ship 240 gigabytes of art! that is a lot Can anyone tell me (or provide a rough estimate) how many copies must be sold to make a profit on a game? I'm interested in: - how many copies are profitable for 2nd generation consoles - how many copies are profitable for PC market - how many copies are profitable for 3rd generation consoles

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All depends on your methods of development, publishing, and distribution. You need to know what kind of startup money the venture will cost, and how much profit per unit you will make.

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Rule of Thumb:

Cost to develop and market / (Sale price per unit - Physical cost per unit) = Number of units required to break even



Your attempt to equate physical storage capacity with cost, while not entirely false (you have realized that more art requires more money), has led you to a false assumption that games have some general sales quantity required to make them profitable.

Your biggest mistake, as mentioned, is believing that available storage space is a measure of cost. Just because storage space exists, doesn't mean developers are forced to use it up. A really easy example would be Lumines for the PSP. It is distributed on the PSPs UMD disk, which can store up to 1.8GB of data. Yet the game itself uses a fraction of that space (try less than 180MB).

The cost of content per megabyte of data is also highly variable - is that 1 megabyte of voice acting, 1 megabyte of textures, 1 megabyte of FMV, 1 megabyte of code (no, game engines are not 1GB - code doesn't magically grow larger on next generation consoles or on large capacity storage mediums. A 1GB game engine wouldn't be remotely practical, even on a PC).

You then have the very design of the game. The title "Peter Jackson's King Kong" only uses 16 bytes more than just plain old "King Kong", yet it likely added a quarter of million dollars or more to the cost of the game.

The conclusion:
-Attempting to gauge cost (required to determine required sales volume) based on data size is ludicrous.
-Attempting to gauge cost based on general platform or worse, "generation" is a losing proposition.


Simply put, I could likely pop up a Gameboy Advance game that required more units sold to be profitable than a Playstation 2 or XBox game. To determine the cost you need to look at what went into making the game: Licences, artists, animators, motion capture, testing, audio and a host of other line items that make up the production.

While you'd have a hard time finding a publisher to back it at this point in time, you could make an XBox 360 game that was Tetris with lots of background music and low cost FMV (i.e. say HD video capture of natural scenes). It would take up an entire dual layer DVD (>9GB), yet would likely turn a profit at 20,000 copies. At the same time, you could make a titanic/Titanic Gameboy Advance game based off an expensive movie licence with voice recordings from the original A-list actors using sprites created through motion capture (it worked great for the original Prince of Persia) and with several hundred finely detailed levels throughly playtested (remember that 2D tile level data can be easily compressed). Such a game could easily require a million units sold to start becoming profitable.

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Original post by eelke_folmer
I know it depends on a lot of factors but isnt there some rule of thumb? or a gross estimate?

The only rule of thumb is that you have to sell enough to recoup your costs. What that number is depends on what your costs are. How much it cost to develop as well as what you spend on marketing, sales and manufacture. A big budget AAA PC title like Half Life 2 will cost millions to make and will need to sell a lot before it makes a profit. At the other end of the scale some indie PC games cost a few tens of thousands to make. Only you know what your costs are so only you can calculate when it will make a profit.

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If you make a game in your spare time for ~$0 and sell it by download from your website, you can keep 90% of the sale price as profit. If your game is $20 then that's $18 per sale. So 1000 sales = $18,000 which I guess is about the minimum liveable wage in the US?

To be a millionaire you must sell (only) 55,555 copies. Which is incredibly low compared to big AA titles, but a lot if you don't pay any marketing costs!

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Original post by d000hg
If you make a game in your spare time for ~$0
Your game won't actually cost $0 of course, due to opportunity costs. Your time has a value because that time could be used to earn money at some other job. Even if you assume that all you could do would be to flip burgers at minimum wage then the cost of making the game is hours invested * minimum wage.

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Original post by d000hg
To be a millionaire you must sell (only) 55,555 copies. Which is incredibly low compared to big AA titles, but a lot if you don't pay any marketing costs!
If you don't have any marketing costs, it's highly unlikely you're going to sell anything remotely close to 55,555 copies... probably more like 5 (I'm considering doing your own marketing a cost, since that's time you could spend improving your product). Conversion rates (# of sales/# of downloads) for downloadable games are usually measured in the low single digits. At a, say, 2% conversion rate, you'd need almost 3 million downloads.

That's not to say you can't make a day job out of it, or that you can't become a millionaire, but it's just not as simple as:
1. Make Game
2. ???
3. PROFIT!!!

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Original post by Michalson
Rule of Thumb:
Cost to develop and market / (Sale price per unit - Physical cost per unit) = Number of units required to break even


allright I did some research on this; according to this book (Austin Grossman, Postmortems from Game Developer) the average cost for developing a game lies between 5 and 10 million dollar.

according to this article: http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/1/hi/technology/4442346.stm these costs are expected to rise to between 10 and 20 million dollar for the 3rd generation gaming consoles

So lets say I will develop a game for the xbox 360 which costs me 7.5 million on average. (don't know whether marketing costs are included in this figure (can't really imagine that). The xbox 360 Game price is $60 lets say $10 goes to distribution / packaging / costs of the dvd. So I need to sell 150.000 copies to break even. That sounds pretty fair and is the same number as claimed in the article. (I mailed the author to ask if he knew any updates on these figures)

I am just interested in this "average" figure. If we look at the big picture there are 90 million playstations 2 in worldwide so selling 150.000 is not that hard I imagine. Although there are 5000 titles for the ps2. I always thought that developing a game that actually made money was the same as winning a lotery but these figures show that the odds are not that bad indeed.

GTA san andreas sold more than 1 million copies in the first 9 days so thats a huge profit

On the other hand I would have expected the number of units that must be sold to increase over the next years because of this increase in graphics & costs for creating graphics. Maybe 50 dollar is not the right estimate and is $40 dollar more accurate. maybe marketing costs are even bigger then development costs?

I'm not interested in these figures because I want to start a game company as I am interested in game engineering from a research point of view. I think costs are going to become a huge problem for game developers in the near future and few games will be able to make a profit (according to this http://www.dti.gov.uk/industries/computer_games/computergames_appendices.pdf article 3% of the games account for 55% of the sales. Academia should find new ways to decrease the costs of developing games.

Quote:

Your attempt to equate physical storage capacity with cost, while not entirely false (you have realized that more art requires more money), has led you to a false assumption that games have some general sales quantity required to make them profitable.


I'm only claiming that advances in technology (such as storage space, graphic cards) drive requirements for games (E.g. improved graphics etc)

Quote:
Your biggest mistake, as mentioned, is believing that available storage space is a measure of cost. Just because storage space exists, doesn't mean developers are forced to use it up.


That is true but if you just look over the past 10 years, developers have used up all space that was available to them (I still can remember buying phantasmagoria discovering it consisted of 7 (!) cd roms ;)

I don't know for sure but I think most games nowadays are shipped on one or more dvd's. If the dvd storage format was more then enough why are 3rd generation consoles shipped with blu-ray drives? (Ok hd tv but I can imagine in a few years there will be games that ship more than 100GB on art)

Quote:

The cost of content per megabyte of data is also highly variable - is that 1 megabyte of voice acting, 1 megabyte of textures, 1 megabyte of FMV, 1 megabyte of code (no, game engines are not 1GB - code doesn't magically grow larger on next generation consoles or on large capacity storage mediums. A 1GB game engine wouldn't be remotely practical, even on a PC).


Hmmm I was just assuming it would be something like 1GB, it will all depend on the game ofcourse. Do you have any figures on how big game engines are?

Quote:

You then have the very design of the game. The title "Peter Jackson's King Kong" only uses 16 bytes more than just plain old "King Kong", yet it likely added a quarter of million dollars or more to the cost of the game.


true.

Quote:
Simply put, I could likely pop up a Gameboy Advance game that required more units sold to be profitable than a Playstation 2 or XBox game. To determine the cost you need to look at what went into making the game: Licences, artists, animators, motion capture, testing, audio and a host of other line items that make up the production.


ow I am not argueing about that. The costs of developing games depends on many factors but another fact is that these costs have increased over the years and are still increasing just because technological advancements allow for this. If the Xbox 360 was still shipped with a normal cd rom drive we would have these expensive games with fancy graphics.

Quote:

While you'd have a hard time finding a publisher to back it at this point in time, you could make an XBox 360 game that was Tetris with lots of background music and low cost FMV (i.e. say HD video capture of natural scenes). It would take up an entire dual layer DVD (>9GB), yet would likely turn a profit at 20,000 copies. At the same time, you could make a titanic/Titanic Gameboy Advance game based off an expensive movie licence with voice recordings from the original A-list actors using sprites created through motion capture (it worked great for the original Prince of Persia) and with several hundred finely detailed levels throughly playtested (remember that 2D tile level data can be easily compressed). Such a game could easily require a million units sold to start becoming profitable.


That is a good point. and i'm interested to see if developers/publishers actually consider this when making the decision to start implementing the game. Especially with high risk games (e.g. new types of gameplay; you could opt for the first option rather than a more expensive option).

Thanks for the feedback anyway!

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Original post by Obscure
Quote:
Original post by d000hg
If you make a game in your spare time for ~$0
Your game won't actually cost $0 of course, due to opportunity costs. Your time has a value because that time could be used to earn money at some other job. Even if you assume that all you could do would be to flip burgers at minimum wage then the cost of making the game is hours invested * minimum wage.


Assume you work on a game full time (40 hours a week) for two years that's 4160 hours of production time. Multiply those hours by whatever wage you are giving up to spend on your own project and you get the total cost of production. Let's assume 4160 * $15 = $62,400

Now to find how much you break even:

TotalCost / NetValueOfEachCopy = NumOfCopiesRequiredToBreakEven

let's say you sell each copy and get to keep $15 from each and you're back to 4160 copies needed to break even. There are a lot of assumptions here, but I think it may help visualize (though no new info, just an example).

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