Game Profitability Clarification

Electronic Entertainment Design and Research (EEDAR) sends a follow-up to reports that surfaced last week saying they claim only 4% of games that make it to market are profitable. This seemed like a head-scratcher at the time, and sure enough, EEDAR clarifies that they were mis-quoted in the interview, and the proper statistic is that 4% of games "that enter production" return a profit. For clarity, here is the entire explanation:
On Friday, November 21th, Forbes.com did an article on Electronic Entertainment Design and Research. The article is located here http://www.forbes.com/ebusiness/2008/11/21/games-eedar-developers-tech-ebiz-cx_mji_1121eedar.html. Unfortunately, there was a miss-quote in the article that a lot of sites noticed and reported on. Below is the line from the article.

“Only 4% of games that make it to market actually make a profit, he says. About 60% of a game's budget is spent reworking or redesigning a game. Armed with all this data, companies can make those tough calls early in the development process.”

The actual statistic is only 4% of games that enter production will return a significant profit. Of games that are released to the market, only 20% will produce a significant profit. (Source for the second sentence: Secrets of the Game Business by Francois Dominic Laramee).

We understand that miss-communications can happen, especially during phone interviews, but given the inaccuracy of the statistic and how many other sites have picked up on the story, we wanted to ensure that the major media outlets received the correct statistics on the subject.

Geoffrey Zatkin, EEDAR’s President and COO, has provided some clarity on the subject:

“Only 20% of games that begin production will ever finish. Of those 20% that are finished and released to the market, only 20% of them will ever realize a significant profit (Source: Secrets of the Game Business Francois Dominic Laramee).That equals 4% of games that start production return a significant profit.

During the concept and design process of a game, publishers and developers often analyze every feature in a game to ensure proper implementation for a successful release. At EEDAR, we believe that enough historical information is now available to aid publishers and developers during the concept and design process of a game. The EEDAR database, which now consists of over 6 million historical data points, can help remove the burden for publishers and developers from having to justify every feature in their title. Specifically, our DesignMetrics™ reports help publishers and developers by identifying early in the development cycle the correct feature combinations most likely to meet consumer expectations. This allows developers to focus more time and resources on creating a high quality and well polished video game.”
View : : :
20 Replies. 1 pages. Viewing page 1.
Newer [  1  ] Older
20.
 
Re: Game Profitability Clarification
Nov 25, 2008, 04:18
20.
Re: Game Profitability Clarification Nov 25, 2008, 04:18
Nov 25, 2008, 04:18
 
Dagok, I'm sure he'll tell you to note the use of the capital 'H'.

Except that he puts the numbers in laymans terms so that the average human here on Blues can understand what it means.

Of course it's bait, but you were the only one to take it

This comment was edited on Nov 25, 2008, 04:19.
Avatar 17249
19.
 
Re: Game Profitability Clarification
Nov 25, 2008, 01:47
19.
Re: Game Profitability Clarification Nov 25, 2008, 01:47
Nov 25, 2008, 01:47
 
Signifigant implies 300% or more ROI. Used to be a time not to slong ago whne 100% was a great, and viable target for any business. Now just about any medium or large corporation sees anything less than 300% as unacceptable. A minimum of 300% is pretty much a corporate standard these days in any industry. Where or why they decided that number is beyond me. Whatever the number, it all comes down to excessive greed.

Hell, look at Activision just a few short weeks ago publically stating that any IP they couldn't make a signifigant annual return on is something they would drop or simply not pursue. So even an unfinished game that has poor sales - most likely due to it being rushed out the door by the beancounters in the first place...can you say "irony" - is something that will stay unfinished and unpatched. I for one sincerely hope this will occur. Why? Because this will elad to class-action suits against these companies, and we'll finally get an acceptable, enforceable standard for software releases and/or any ensuing support. That or it'll put these assholes out of business once and for all, and we'll move back to a smaller, more dynamic model.
18.
 
Re: Game Profitability Clarification
Nov 24, 2008, 21:31
Kxmode
 
18.
Re: Game Profitability Clarification Nov 24, 2008, 21:31
Nov 24, 2008, 21:31
 Kxmode
 
During the concept and design process of a game, publishers and developers often analyze every feature in a game to ensure proper implementation for a successful release. At EEDAR, we believe that enough historical information is now available to aid publishers and developers during the concept and design process of a game. The EEDAR database, which now consists of over 6 million historical data points, can help remove the burden for publishers and developers from having to justify every feature in their title. Specifically, our DesignMetrics™ reports help publishers and developers by identifying early in the development cycle the correct feature combinations most likely to meet consumer expectations. This allows developers to focus more time and resources on creating a high quality and well polished video

Mr Geoffrey tear down this wall! Wall

This comment was edited on Nov 24, 2008, 21:41.
"What does Ramen mean? It means Japanese spaghetti."
Avatar 18786
17.
 
Re: Game Profitability Clarification
Nov 24, 2008, 21:29
Kxmode
 
17.
Re: Game Profitability Clarification Nov 24, 2008, 21:29
Nov 24, 2008, 21:29
 Kxmode
 
I guess it's too much to simply ASK your customer base what they would like in a game. No, we're too retarded to offer any kind of input... except, of course, when that input involves dollars and cents.

This comment was edited on Nov 24, 2008, 21:38.
"What does Ramen mean? It means Japanese spaghetti."
Avatar 18786
16.
 
Re: Game Profitability Clarification
Nov 24, 2008, 21:18
16.
Re: Game Profitability Clarification Nov 24, 2008, 21:18
Nov 24, 2008, 21:18
 
The idea is to make a lot of money, so if it makes just a little money, well, that's not enough to be deemed "profitable".

In our humble eyes, it probably would be, but you know these suits, they want enough to be able to have their cake AND eat it too.

Incidentally, 4% seems awfully low for an industry where so many sequels tend to get released. You know, Sims, Need for Speed, Neverwinter Nights, all the CSI games, Command and Conquer, all of the Blizzard and EASports sequels, GTA, Fallout, Tomb Raider, Far Cry, Call of Duty... etc... etc... etc...

If only 4% of games returned a significant profit, we wouldn't have nearly so many sequels.

Except we don't know how profitable they are exactly. The armchair economists/market researches/developers that people here act like automatically jump on a completely unfounded assumption based on their dislike of corporations. A game that breaks even plus one dollar I would not consider profitable and if included, would make the number even more meaningless. Of course by definition it would be, but the purpose isn't to be a scientific study, it's to be of value to the purchaser of the info.

Plus, the measurement takes into account games gone into production, not games released. I would expect games the percentage of games released to be higher than games in production, but we don't know how many games go into production and are canned, especially at big studios like EA or Ubi, where it is treated more like an industry of producers than some new art form.

If anything, a low percentage of profit seems like reason for more sequels. Stick with what's worked in the past.

This comment was edited on Nov 24, 2008, 21:19.
15.
 
Re: Game Profitability Clarification
Nov 24, 2008, 16:46
15.
Re: Game Profitability Clarification Nov 24, 2008, 16:46
Nov 24, 2008, 16:46
 

Really, though, my main point was that these companies bitch about being unprofitable--but, oh, wait, no, they really just mean that they're not making as much money as WoW.

Good point and your right about the niche market some of my favorite games fall into that category.

Unforchanatly these days game development is more of a Hollywood style no brains big explosions multi platform affair run by suits with a bottom line to think about.

The good old days of garage games and small game studios that had vision and cool ideas are long gone.
14.
 
Re: Game Profitability Clarification
Nov 24, 2008, 16:37
14.
Re: Game Profitability Clarification Nov 24, 2008, 16:37
Nov 24, 2008, 16:37
 
For every Fallout 3 there are thirteen Deer Hunter sequels and spin-offs. These probably do not count as "significantly" profitable, but probably make enough money to keep the business moving along

Oh, I think they are probably immensely profitable (well, maybe not all the spin-offs, but the originals). They are cheap to make and sell pretty well. Granted, looking at absolute profits they probably won't be in the same league as AAA titles. But I'd imagine that the profit percentage is just as high, if not higher.
Fully automatic backups with Ocster Backup Pro 3
http://www.ocster.com
13.
 
Re: stiffeling innovation
Nov 24, 2008, 16:37
13.
Re: stiffeling innovation Nov 24, 2008, 16:37
Nov 24, 2008, 16:37
 
our DesignMetrics™ reports help publishers and developers by identifying early in the development cycle the correct feature combinations most likely to meet consumer expectations.

Design By Demographic in action.
Avatar 20715
12.
 
stiffeling innovation
Nov 24, 2008, 16:23
12.
stiffeling innovation Nov 24, 2008, 16:23
Nov 24, 2008, 16:23
 
our DesignMetrics™ reports help publishers and developers by identifying early in the development cycle the correct feature combinations most likely to meet consumer expectations.

This just doesnt sit well with me. What would happen to the Portal(TM) gun? "Get rid of it, it's just too weird! Give them a shock cannon like the one that worked in Unreal"

11.
 
Re: Game Profitability Clarification
Nov 24, 2008, 16:23
mag
11.
Re: Game Profitability Clarification Nov 24, 2008, 16:23
Nov 24, 2008, 16:23
mag
 
Incidentally, 4% seems awfully low for an industry where so many sequels tend to get released.

Keep in mind that the games we hear about on BN are not the whole industry. For every Fallout 3 there are thirteen Deer Hunter sequels and spin-offs. These probably do not count as "significantly" profitable, but probably make enough money to keep the business moving along (or they wouldn't get made anymore).
10.
 
Re: Game Profitability Clarification
Nov 24, 2008, 16:14
10.
Re: Game Profitability Clarification Nov 24, 2008, 16:14
Nov 24, 2008, 16:14
 
Ah, so companies should be satisfied with good enough?

You're missing the point.

The idea is to make a lot of money, so if it makes just a little money, well, that's not enough to be deemed "profitable".

In our humble eyes, it probably would be, but you know these suits, they want enough to be able to have their cake AND eat it too.

Incidentally, 4% seems awfully low for an industry where so many sequels tend to get released. You know, Sims, Need for Speed, Neverwinter Nights, all the CSI games, Command and Conquer, all of the Blizzard and EASports sequels, GTA, Fallout, Tomb Raider, Far Cry, Call of Duty... etc... etc... etc...

If only 4% of games returned a significant profit, we wouldn't have nearly so many sequels.
9.
 
Re: Game Profitability Clarification
Nov 24, 2008, 16:12
mag
9.
Re: Game Profitability Clarification Nov 24, 2008, 16:12
Nov 24, 2008, 16:12
mag
 
The attitude that anyone should be satisfied with their current successes is absolutely disgusting. Maybe you among others who complain here prefer mediocrity, but the rest of us not so much.

Some genres of video games that I like are not immensely popular. Companies obsessed with getting maximum dollar do not make good niche games. Hence, wonderful studios die: Clover, Black Isle, Looking Glass, Origin, Westwood.

Really, though, my main point was that these companies bitch about being unprofitable--but, oh, wait, no, they really just mean that they're not making as much money as WoW.
8.
 
Re: Game Profitability Clarification
Nov 24, 2008, 16:11
8.
Re: Game Profitability Clarification Nov 24, 2008, 16:11
Nov 24, 2008, 16:11
 
See Blue this is where telling someone like Surf to 'STFU" for blanket statements is justified.


Actually Surf, Derek has provided some great insight into what goes on 'behind the curtain' of gaming on Blues.
He's quite enjoyable to talk to when he's not discussing his games.
Avatar 12670
7.
 
Re: Game Profitability Clarification
Nov 24, 2008, 16:00
7.
Re: Game Profitability Clarification Nov 24, 2008, 16:00
Nov 24, 2008, 16:00
 
Breaking even and paying everyone their salary isn't enough, they need to make mega-millions-dollars-bills.

Ah, so companies should be satisfied with good enough?

The attitude that anyone should be satisfied with their current successes is absolutely disgusting. Maybe you among others who complain here prefer mediocrity, but the rest of us not so much.
6.
 
Re: Game Profitability Clarification
Nov 24, 2008, 15:36
6.
Re: Game Profitability Clarification Nov 24, 2008, 15:36
Nov 24, 2008, 15:36
 
He knows the industry and he takes time to explain things. Yes, he is a complete dick when it comes to his own games and responding to any kind of criticism, but again, what relevance does this have?

My input to that would be that, he is still human, and we all know that just because someone is a game developer does not make them insightful, nor does it make every word uttered out of their mouths to be correct. There has been more than a few occasions that Derek has been proven wrong with fact, but he refuses to admit that he is ever wrong about...anything.

dmsart - Except that he puts the numbers in laymans terms so that the average Homo here on Blues can understand what it means.

Seems Derek should owe an apology to those that he insulted for disagreeing with him the other day. Is it even possible for Derek to post something on Blues without throwing insults at the Blues userbase?

This comment was edited on Nov 24, 2008, 15:49.
5.
 
Re: Game Profitability Clarification
Nov 24, 2008, 15:21
mag
5.
Re: Game Profitability Clarification Nov 24, 2008, 15:21
Nov 24, 2008, 15:21
mag
 
Yeah, the key word here is definitely "significant." Presumably only 20% of games do well enough to allow the companies' execs to buy yachts.

Breaking even and paying everyone their salary isn't enough, they need to make mega-millions-dollars-bills.

This comment was edited on Nov 24, 2008, 15:22.
4.
 
Re: Game Profitability Clarification
Nov 24, 2008, 14:52
4.
Re: Game Profitability Clarification Nov 24, 2008, 14:52
Nov 24, 2008, 14:52
 
I still think 4% is hella low.

That or its because most people only watch games they want. The games they want are usually the ones that make money. There must be a METRIC FUCKTON of games that get released, fly below the radar of most Blues News readers making 4% sound like a load of cow pies.
3.
 
Re: Game Profitability Clarification
Nov 24, 2008, 14:51
Quboid
 
3.
Re: Game Profitability Clarification Nov 24, 2008, 14:51
Nov 24, 2008, 14:51
 Quboid
 
Because being #1 has what relevance? He knows the industry and he takes time to explain things. Yes, he is a complete dick when it comes to his own games and responding to any kind of criticism, but again, what relevance does this have?

Your post is no better than him at his worst.
Avatar 10439
2.
 
Re: Game Profitability Clarification
Nov 24, 2008, 14:48
2.
Re: Game Profitability Clarification Nov 24, 2008, 14:48
Nov 24, 2008, 14:48
 
Ya, we need Derek to show us "common folk" and "retards" how his game made a profit. I mean his games have been number 1 for how many weeks?

Oh wait, he's never had #1 game, ever.

I smell bullshit, oh wait, here comes Derek!
1.
 
Re: Game Profitability Clarification
Nov 24, 2008, 14:45
Quboid
 
1.
Re: Game Profitability Clarification Nov 24, 2008, 14:45
Nov 24, 2008, 14:45
 Quboid
 
Great, now define "significant".

(I can honestly say that I hope Derek Smart contributes to this thread.)
Avatar 10439
20 Replies. 1 pages. Viewing page 1.
Newer [  1  ] Older