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, did an article on Electronic Entertainment Design and Research. The article is located here 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.”