Forum-goers may know that I recently picked up a Dreamcast for the first time, and when thinking about finally getting to play Shenmue, I remembered back a decade ago when Sega boasted that at a development cost of $70 million it was the most expensive game of all time.
We all know how well that worked out for them. Barely selling more than a million copies, Shenmue’s budget was almost certainly one of the contributing factors that led to Sega dropping out of the hardware race. Since then however, publishers and developers have been reluctant to reveal how much they’re spending on creating the titles that we love.
This is a strange contrast to the film industry, where the exact budget and worldwide gross of almost every film from indie to blockbuster is publicly known. It got me thinking about why there should be secrecy around these figures. Do the game companies think that if the public discovers that a game has been a financial failure that it will impact their opinions of that title?
Games are obviously primarily judged on their critical success to define what makes a title a ‘good’ or ‘bad’ one. But we also make judgements based on the sales that a game achieves, saying ‘that game didn’t do very well’ or ‘that game was a great success’. But how can we make these distinctions without knowing how much was spent on creating that said game?
Brain Training, which was developed by nine people in less than three months, wouldn’t have needed to sell anywhere near a million copies to make a profit, and yet if it had only sold a few hundred thousand it would no doubt have been perceived as a failure. Now that it’s sold over 17 million copies it will probably be considered a success by any standards…
Killzone 2 has now sold around 1.7 million copies, which for many games would be great result, but considering it’s the most expensive Dutch media project ever made, with a rumoured budget of at least $40 million, Sony are unlikely to be celebrating anytime soon.
That pales into insignificance when compared to Too Human however, which over the almost ten years of its development cost a rumoured $80 million. Although current total sales figures are unknown it sold only around 560,000 copies worldwide in 2008. Although it was originally announced as the first game of a trilogy, the prospects of a sequel emerging are uncertain to say the least.
Not all expensive games fail to recover their budgets of course, with the best example possibly being the most expensive game of all time, Grand Theft Auto IV. Although it reportedly cost over $100 million to make, it generated $500 million in revenue in the first week of its release, and has gone on to sell over 13 million copies.
In comparison, the average game development budget of the companies that attended this year’s Game Development Conference was $8.8 million, and according to an analysis by Ubisoft last year – “a DS title costs between $785,000-$1.57m, PS3/Xbox 360/PC titles average $18.8m-$28.2m to create for all 3 platforms, and a Wii game is expected to cost $7.8-$9m to develop.”
It has also been calculated that for every $60 game that a consumer buys at retail, only $16 of that will make its way back to the publisher. That makes you realise that the hefty charges levied by Apple and Microsoft on digitally distributed titles might not be that bad after all.
With these figures we can work out that the average game nowadays needs to sell around 550,000 copies to break even. The average DS game only needs 100,000 copies, and the average current-gen multi-platform title needs around 1.2 – 1.75 million copies.
If there’s a point I’m trying to make with these facts and figures it’s that a game shouldn’t be judged by how well it sells or how much it cost to make, and that even if a game doesn’t break that hallowed million mark, it shouldn’t be considered a failure.
8 comments ↓
Ian S.
May 30th, 2009
Your completely right seth!
Psychonauts was one of the best videogames of the decade, and failed to reach a million units sold
Kash-if
May 30th, 2009
How the heck can Sega think that crud like ‘mario and sonic at the olympics’ is worth more effort than finishing off something so epic as Shenmue 3? I was a huge sega fan back in the day, i even bought sonic the comic! lol. That ruled, but even sonic blows these days. The last half decent game was sonic adventure 2 but i prefered the old school when he was back on mobious, lol.
Seth
May 30th, 2009
Money, money, money. Kash-if. It all comes down to money
If they can make a game with 10% of the budget that sells 10 times as much, they’d be foolish not to.. And their shareholders wouldn’t be very happy if they start losing money again.
Paul W
May 30th, 2009
They think that presumably because they know that Sonic will sell. When they experimented with brilliantly innovative concepts on the classic Dreamcast, they ended up with what turned out to be their last console and Jet Set Radio Future on the Xbox was ignored by most. I had no idea until recently that the Dreamcast sometimes had a more lukewarm response in Japan than Europe. If the Japanese, who are supposed to like funky, far out, concepts on the whole more than any other country didn’t embrace the Dreamcast enough then Sega could do no more.
Grilled Seabass
June 1st, 2009
On a side note, it is a shame what happened with the Shenmue series. It was a wonderful & unique, though slightly flawed, game. Its not for everyone – the pace is very slow. But have you ever played anything like it? The story was progressing nicely in a beautifully realised world, from your house in Japan to Hong Kong and China. Ahh how I wish they had finished it.
Vael Victus
June 20th, 2009
Excellently written, nice job.
C0un7z3r0
June 26th, 2009
On a similar subject, from a business point of view what is the best console? Huge development budgets for PS3 and XBOX360 meant that these consoles were being sold at a loss initially until hardware prices dropped. What was nintendo’s means of competing with these monster companies (M$ & Sony)? Repackage 4 year old hardware (Wii is essentially a pretty version of gamecube) add a new controller (wiimote) sell for 1/3rd of the price of your competetors hardware and outsell them with your better profit margins. Most people would say that PS3 and XBOX360 are the better consoles (i would anyway) of the three theres no doubt nintendo made the most sense business-wise but the best games are still much more common on the big two consoles. I dont think you can bare any correlation between success critically and success financially. Shenmue is the perfect example. I still have my dreamcast and original xbox because they are the only formats I have shemue 1 & 2 on.
Seth
June 27th, 2009
From a purely profit-based standpoint, the Wii is by far the best of the current consoles in terms of making money for the hardware manufacturers.
But the Xbox 360 is winning in terms of software revenue, especially for third-parties. Despite what Nintendo say, the vast majority of game sales on the Wii are Nintendo titles.
The poor PS3 seems to sell a lower share of multiplatform titles the majority of the time, and even Sony exclusives don’t perform to the blockbuster standards that you’d expect.
Microsoft is now making a profit on their hardware, and they sell a ton of overpriced accessories too, whereas Sony is STILL losing money on each PS3 they sell.
Basically, whatever happens in the future of this generation Nintendo will be laughing, Microsoft will be doing OK (but of course they’ve poured a bucketload of money into setting up the Xbox business and making it profitable), and Sony will be lucky to break even on the money they’ve spent developing the PS3 and ‘underpricing’ it to grow their consumer base.
Does that mean that the Wii is the best console and PS3 is the worst? Of course not. Why should we give a crap how much money these corporations are making or losing, as long as they bring us world-class gaming.