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Morning Consolidation

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50 Replies. 3 pages. Viewing page 2.
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30. Re: Morning Consolidation Oct 30, 2013, 13:46 Beamer
 
Creston wrote on Oct 30, 2013, 13:40:
Beamer wrote on Oct 30, 2013, 13:37:
I guess it's worded wrong. I meant, if you trust these numbers, Microsoft will give them $16 in addition to the $15 they get from the consumer.

Ah, okay.


But those numbers are high, anyway. A game may be $15 wholesale, but when you take out the COGS, freight, and incremental costs of PS4 dev/QA/marketing, the number will be a good amount below that.

Right, it's just an example. I think publishers make like ~ 12 bucks per game sold or so?

I used to have better estimates, but my guesses would be:
Wholesale price of new title: $15
Wholesale price of old title: $6
Cost of pressing CD and packaging, per unit: $3
Cost of freight, per unit: $0.50
% of sales at full price: 50%
% of sales at discounted price: 50%

These numbers are basically SWAG. In addition, though, by neglecting the PS4, you save on porting costs as well as some marketing costs and some additional costs for pressing and packaging, since media and packaging will be slightly different for the PS4. But then you lose on some marketing, because Sony would absolutely have pushed this title (then again, the additional push Microsoft will make with it being exclusive is likely greater than anything Sony would have done with it being cross-console.) You miss out on word-of-mouth from PS4 players, which would result in higher sales on all platforms. And, if you do a sequel, you miss out on PS4 players for the sequel that missed the original because they didn't own an Xbone. And then, of course, all of that is discounted for being possible future revenues, which is worth significantly less than guaranteed present revenues.

It's complicated math, but man, do I love this part.
 
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29. Re: Morning Consolidation Oct 30, 2013, 13:41 Drazula
 
Wouldn't it make sense to tie exclusivity to the number of consoles sold? If XBone fails, why should it be allowed to drag down games with it?  
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28. Re: Morning Consolidation Oct 30, 2013, 13:40 Creston
 
Beamer wrote on Oct 30, 2013, 13:37:
I guess it's worded wrong. I meant, if you trust these numbers, Microsoft will give them $16 in addition to the $15 they get from the consumer.

Ah, okay.


But those numbers are high, anyway. A game may be $15 wholesale, but when you take out the COGS, freight, and incremental costs of PS4 dev/QA/marketing, the number will be a good amount below that.

Right, it's just an example. I think publishers make like ~ 12 bucks per game sold or so?
 
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27. Re: Morning Consolidation Oct 30, 2013, 13:37 Beamer
 
Creston wrote on Oct 30, 2013, 13:33:
Beamer wrote on Oct 30, 2013, 12:32:
HorrorScope wrote on Oct 30, 2013, 12:29:
pupsikaso wrote on Oct 30, 2013, 12:28:
I don't understand deals like this. What could Microsoft have possibly offered them that would make up for the lost sales of the game on PS4?

A: A lot of money.

Yup.
"You think you'll have 45% of sales on the PS4? And you'll make $15 per sale, on average, for the life of the title? We'll give you $16 per copy sold on the Xbox One, so you'll end up better off without the PS4."

Did you just word that wrong, or do you think that's how it works? Because what you're saying is that by shunning the PS4, they'll make just one dollar extra per Xbone copy sold.

I suck at math, but how ungodly many copies would you have to sell to have that one extra dollar make up for 45% of overall sales lost on PS4?

I guess it's worded wrong. I meant, if you trust these numbers, Microsoft will give them $16 in addition to the $15 they get from the consumer.
But those numbers are high, anyway. A game may be $15 wholesale, but when you take out the COGS, freight, and incremental costs of PS4 dev/QA/marketing, the number will be a good amount below that.
 
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http://www.painkillerrecords.com
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26. Re: Morning Consolidation Oct 30, 2013, 13:36 NewMaxx
 
pupsikaso wrote on Oct 30, 2013, 13:31:
If we take a look at CoD sales for one of the consoles, and even if we take less, something like 75% of that, how many hundreds of millions of dollars is that? I find it hard to believe that Microsoft would pay that much for a single exclusive deal.

There are other factors. Respawn is a "new studio," so they are looking to forge relationships in the industry and build a reputation. Strangely enough, exclusivity makes your titles look more elite. Second, the article points out that the lifespan of the deal was "brokered" by EA. EA has the clout and wealth to play the bigger game in the market. Lastly, other games in the Titanfall series will come to the PS4.
 
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25. Re: Morning Consolidation Oct 30, 2013, 13:33 Beamer
 
pupsikaso wrote on Oct 30, 2013, 13:31:
If we take a look at CoD sales for one of the consoles, and even if we take less, something like 75% of that, how many hundreds of millions of dollars is that? I find it hard to believe that Microsoft would pay that much for a single exclusive deal.

Hundreds of millions in revenue, not profit.
Take out COGS, freight, Sony's fee and the retailer markup and you have, what, maybe $5-8 per sale at full price and maybe $1-2 at the end of the tail?

If Microsoft really did pay $50 million for a timed exclusive on GTA DLC, which is idiotic, I could see them putting this out, easily, for something that genuinely gives the Xbox One an advantage.
How much is the PS4 version really worth to EA? Upper end is $8 times units sold, which is maybe 10 million, right, so $80 million? Given what they did for the DLC, I could see that.
 
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24. Re: Morning Consolidation Oct 30, 2013, 13:33 Creston
 
Beamer wrote on Oct 30, 2013, 12:32:
HorrorScope wrote on Oct 30, 2013, 12:29:
pupsikaso wrote on Oct 30, 2013, 12:28:
I don't understand deals like this. What could Microsoft have possibly offered them that would make up for the lost sales of the game on PS4?

A: A lot of money.

Yup.
"You think you'll have 45% of sales on the PS4? And you'll make $15 per sale, on average, for the life of the title? We'll give you $16 per copy sold on the Xbox One, so you'll end up better off without the PS4."

Did you just word that wrong, or do you think that's how it works? Because what you're saying is that by shunning the PS4, they'll make just one dollar extra per Xbone copy sold.

I suck at math, but how ungodly many copies would you have to sell to have that one extra dollar make up for 45% of overall sales lost on PS4?
 
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23. Re: Morning Consolidation Oct 30, 2013, 13:31 pupsikaso
 
If we take a look at CoD sales for one of the consoles, and even if we take less, something like 75% of that, how many hundreds of millions of dollars is that? I find it hard to believe that Microsoft would pay that much for a single exclusive deal.  
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22. Re: Morning Consolidation Oct 30, 2013, 13:27 NewMaxx
 
pupsikaso wrote on Oct 30, 2013, 12:28:
I don't understand deals like this. What could Microsoft have possibly offered them that would make up for the lost sales of the game on PS4?

Basic finance. Certain money, today and from one source, is worth more than uncertain money over time from multiple sources. Take for example lottery winnings: how many winners take the default win package versus considerably less money with the lump sum option? (it's a rhetorical question; none of them do)

Quite literally in raw numbers you can invest a principal today and achieve more wealth in the long-term rather than getting it piece by piece. This is not subjective, there are very specific financial calculations involved in this. I admit it's one reason banks package loans together, which in turn led to the recession over mortgages, but I digress.

Calculating "lost sales" from not being on a console is a bit like calculating "lost sales" from piracy. You are losing money for certain, but there's a question of how much. You can make estimates based on projections, risks, etc., but that all comes back to the same financial equations that tell you that by taking a lump sum today you are simply selecting the low-risk solution.

There are many other subtle factors at play here (such as relationships between developers and the hardware manufacturers) of course, I don't mean to over-simplify it, but it does come down to money.
 
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21. Re: Morning Consolidation Oct 30, 2013, 13:08 xXBatmanXx
 
Ben Buja's GTA V Stunt Reel.

It is amazing what people find to do in the game. There is no way any of those things were anticipated by R*.
 
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20. Re: Morning Consolidation Oct 30, 2013, 13:05 Beamer
 
Verno wrote on Oct 30, 2013, 12:53:
Panickd wrote on Oct 30, 2013, 12:47:
I don't think EA screwed them. They're ostensibly an independent studio. That means they have to take the best deal so that they can make that next game.

Screwed was the wrong word, Respawn certainly needed startup funds and EA was there to provide. He actually does say that EA did it without their knowledge though. I have a hard time seeing Microsoft cutting a check that would cover an entire potential platform worth of sales for a major title but then again they were dumb enough to spend 50mil on timed GTA 4 exclusivity so I guess anything is possible.

I don't think "screwed" is necessarily the wrong word. EA Partners is just a distro, known to be very dev-friendly, but this isn't a dev-friendly decision. I doubt Respawn thought they had the authority to do this. Maybe Respawn was involved in the decision, but Zampanella is making it sound as if he wasn't (which doesn't mean he wasn't.)

 
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19. Re: Morning Consolidation Oct 30, 2013, 12:54 pupsikaso
 
Panickd wrote on Oct 30, 2013, 12:47:
Verno wrote on Oct 30, 2013, 10:27:
For all we know the developers never meant to push Titanfall to consoles in the first place and Microsoft came to the table and made it rain to get a cool title for their console.

Lol what are you talking about? Titanfall is first and foremost a console shooter. Have you even seen it?
 
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18. Re: Morning Consolidation Oct 30, 2013, 12:53 Verno
 
Panickd wrote on Oct 30, 2013, 12:47:
I don't think EA screwed them. They're ostensibly an independent studio. That means they have to take the best deal so that they can make that next game.

Screwed was the wrong word, Respawn certainly needed startup funds and EA was there to provide. He actually does say that EA did it without their knowledge though. I have a hard time seeing Microsoft cutting a check that would cover an entire potential platform worth of sales for a major title but then again they were dumb enough to spend 50mil on timed GTA 4 exclusivity so I guess anything is possible.
 
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17. Re: Morning Consolidation Oct 30, 2013, 12:47 Panickd
 
Verno wrote on Oct 30, 2013, 10:27:
nin wrote on Oct 30, 2013, 10:14:
Still curious about the phrase "through the life of the title". That would seem to imply anything after the first one was still up for grabs...


Zampella literally says they will make games for the PS4 in his tweet, EA just screwed them on this one.

I don't think EA screwed them. They're ostensibly an independent studio. That means they have to take the best deal so that they can make that next game. If Microsoft ponied up enough cash that they would have been losing money to publish it on the PS4 they would be foolish not to take the deal. For all we know the developers never meant to push Titanfall to consoles in the first place and Microsoft came to the table and made it rain to get a cool title for their console.
 
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16. Re: Morning Consolidation Oct 30, 2013, 12:32 Beamer
 
HorrorScope wrote on Oct 30, 2013, 12:29:
pupsikaso wrote on Oct 30, 2013, 12:28:
I don't understand deals like this. What could Microsoft have possibly offered them that would make up for the lost sales of the game on PS4?

A: A lot of money.

Yup.
"You think you'll have 45% of sales on the PS4? And you'll make $15 per sale, on average, for the life of the title? We'll give you $16 per copy sold on the Xbox One, so you'll end up better off without the PS4."

An opening pitch. Obviously there are more things to consider, like how sales on one platform will increase sales on the other, etc., but it's a basic way a deal can be structured to make exclusivity good for a publisher for that specific title.
 
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http://www.hydrahead.com
http://www.painkillerrecords.com
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15. Re: Morning Consolidation Oct 30, 2013, 12:29 HorrorScope
 
pupsikaso wrote on Oct 30, 2013, 12:28:
I don't understand deals like this. What could Microsoft have possibly offered them that would make up for the lost sales of the game on PS4?

A: A lot of money.
 
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14. Re: Morning Consolidation Oct 30, 2013, 12:29 HorrorScope
 
"However, EA last night confirmed that the exclusivity deal is in fact “for the life of the title”.

That’s not to say that there will never be a Titanfall game on PS4. Indeed, when asked whether the deal was for the IP or just the first game Respawn co-founder Vince Zampella said that his studio will “of course” make games for PS4."

That is some pseudo-politics blah blah in that writing. Twisted.
 
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13. Re: Morning Consolidation Oct 30, 2013, 12:28 pupsikaso
 
I don't understand deals like this. What could Microsoft have possibly offered them that would make up for the lost sales of the game on PS4?  
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12. Re: Morning Consolidation Oct 30, 2013, 12:18 SpectralMeat
 
CrimsonPaw wrote on Oct 30, 2013, 11:41:
Ugh, seems my PS4 may not be used as much as I originally thought off the bat.
One of the reasons why I've canceled my preorder.
All good things come to those who wait
Killzone does look awesome but not a system seller for me.
 
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11. Re: Morning Consolidation Oct 30, 2013, 12:16 Agent.X7
 
SpectralMeat wrote on Oct 30, 2013, 10:08:
PS4 and PC is still the way to go.
At least TitanFall will be out on the PC as well, not just Xbone

Yup, Titanfall was always a PC game for me anyway. Anything FPS is PC if I can help it, because I can't use a controller to play them.
 
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