Square enix says tombraider did not hit sales target

cloud493

3.4 million copies of Tomb Raider have been sold in four weeks, publisher Square Enix has revealed, which is not enough to hit the game's sales target.

Fellow Square Enix title Hitman Absolution sold 3.6 million units since its launch in November last year, while Sleeping Dogs sold 1.75 million since last August.

There's no mention of what the company's internal sales expectations were for the trio, just that all three missed their respective marks.

Square Enix expected 14.9 million retail game sales from North America and Europe combined in its six-monthly forecast last September. Considering the fact that Tomb Raider, Hitman Absolution and Sleeping Dogs were the only big releases for these regions and accounted for a combined 8.75 million sales worldwide, it's clear that their targets were a good deal higher.

Today's numbers, published in Square Enix's latest financial report, do not count digital sales.

The figures are predicted totals for the current financial year. With five more days to go, they're unlikely to change very much unless you personally go out and buy 500,000 copies of Tomb Raider right now.

The business' North American sales momentum was singled out as being particularly "ineffective". The continent recorded just two thirds of Europe's sales. Back in September, Square Enix had forecast that North American sales would be higher than Europe's.

Price protection - where a publisher is forced to compensate retailers for any games shifted at cut cost - added to Square Enix's woes.

The company revealed earlier this morning that its net sales and total profits would be significantly lower than expected for the current financial year.

In large part this is due to a restructuring of its games business, a measure necessary due to lacklustre sales of its console game portfolio. Company president Yoichi Wada has also been replaced

http://www.eurogamer.net/articles/2013-03-26-tomb-raider-has-sold-3-4-million-copies-failed-to-hit-expectations



Now I'm no business whiz as these things goes, but its a pretty odd situation when sales of 3.4 million units is considered bad. The problem seems to be that not every new game is gonna sell like call of duty, assassins creed, whatever. To say thats bad is crazy, they must have turned a good profit there, even with costs, marketing etc.

Zillah

cloud493 wrote: »

To say thats bad is crazy, they must have turned a good profit there, even with costs, marketing etc.

Are you privy to these expenses? I think they're in a better position to say if sales were disappointing or not. Big games are like big movies - they invest obscene amounts of money into them and need to make back even more obscene amounts for the business model to be effective.

Otacon

Budgets have now gotten far too big. They basically need every game to be COD-like in order to 'meet expectations'.

krudler

Pity if it didnt because it's well worth playing, but do remember the franchise was tarnished for years with crap games, Angel of Darkness, shudder. Underworld or whatever it was called was good though.

sweetie

its only barely two weeks old!

krudler

Even if it was a disappointment sales wise, it got good reviews and was well recieved by anyone who played it, thus breathing fresh life into the TR franchise again, expectations go up, people become interesting in a sequel, sequel makes more money, wheels keep turning. I just hope it doesnt go down the EA route of "you didnt outsell everything ever so thats the end of your franchise"

GTR63

Wonder how much money they burned on the Multiplayer that nobody asked for and nobody is playing.

calex71

GTR63 wrote: »

Wonder how much money they burned on the Multiplayer that nobody asked for and nobody is playing.

What makes that worse is that they have said they have no plans for single player DLC only for multiplayer

GTR63

calex71 wrote: »

What makes that worse is that they have said they have no plans for single player DLC only for multiplayer

If that doesn't change its such a blown opportunity, the game not having challenge rooms/tombs was such a mistake too.

Zero-Cool

Crazy, it's only a few weeks old and is a brilliant game. It was a 'success' in the gaming world as it is generally considered a very good game.

Mad how little Sleeping Dogs sold and that was the 3rd best game of last year imo.

FutureGuy

sheehy83 wrote: »

Crazy, it's only a few weeks old and is a brilliant game. It was a 'success' in the gaming world as it is generally considered a very good game.

Mad how little Sleeping Dogs sold and that was the 3rd best game of last year imo.

Unfortunately, games are like movies. They can be sh!te and sell a ton or be brilliant and fail miserably sales-wise.

I think Square Enix made a dreadful mistake by saying there was no plans for single player DLC. Lots of people traded it in as a direct result of that announcement. SE also seem to think that the multiplayer is good enough for people to keep the game and seem to be focusing on it to make more money post launch, as Bioware/EA did so successfully with FIFA and Mass Effect 3 multi player.

The ponly thing is, the TR MP is garbage of the highest order.

The second hand market is now flooded meaning new sales will grind to a halt.

It looks like this game won't get a sequel now

Reekwind

Otacon wrote: »

Budgets have now gotten far too big. They basically need every game to be COD-like in order to 'meet expectations'.

Exactly. The big publishers are killing themselves with this mad pursuit of blockbuster games. Inflated budgets need massive sales to justify what is very obviously an unsustainable and highly risky strategy

Gunmonkey

And its only going to get worse next gen, as the art and animation departments have to be increased further across the board to take advantage of the extra oomph the PS4 and NextBox will have. And if they dont, irrespective of how well it plays/was written/is fun/etc, will be written off as "HUR DUR that looks like a Wii game hurrhurr" and tank in the charts.

Stev_o

Gunmonkey wrote: »

And its only going to get worse next gen, as the art and animation departments have to be increased further across the board to take advantage of the extra oomph the PS4 and NextBox will have. And if they dont, irrespective of how well it plays/was written/is fun/etc, will be written off as "HUR DUR that looks like a Wii game hurrhurr" and tank in the charts.

Think the gaming crash is going to hit fairly soon once the new consoles come out. Bubble is about to burst (or is already bursting if you want to be more accurate)

Red Crow

Otacon wrote: »

Budgets have now gotten far too big. They basically need every game to be COD-like in order to 'meet expectations'.

That's it. Plenty of people are more than happy to stick to franchise gaming: Fifa, CoD, Madden etc. When a game is being developed the main goal is to maximise profit, obviously. That goal however is leading to micro-transactions, DLC on the disk etc. I think at the same time that €50 a game is pretty expensive especially considering the hours people can get from CoD, FIFA etc. compared to buying games like Dead Space, Sleeping Dogs, Batman, Tomb Raider etc. that only last a couple of hours.

This creates two markets: one for the massive franchise games and then a smaller pool for games looking to become popular but who are never going to reach that "franchise" popularity.

krudler

GTR63 wrote: »

If that doesn't change its such a blown opportunity, the game not having challenge rooms/tombs was such a mistake too.

That, the secret tombs are all piss easy, its one small switch pulling excercise they could have been so much more, DLC with big old school style tombs would be brilliant, forget the MP its rubbish, plays identical to Uncharted's.

Stev_o

Eli Manning wrote: »

That's it. Plenty of people are more than happy to stick to franchise gaming: Fifa, CoD, Madden etc. When a game is being developed the main goal is to maximise profit, obviously. That goal however is leading to micro-transactions, DLC on the disk etc. I think at the same time that €50 a game is pretty expensive especially considering the hours people can get from CoD, FIFA etc. compared to buying games like Dead Space, Sleeping Dogs, Batman, Tomb Raider etc. that only last a couple of hours.

This creates two markets: one for the massive franchise games and then a smaller pool for games looking to become popular but who are never going to reach that "franchise" popularity.

Considering the attempts to push games up to 59.99 with even less content then before you can just see the negative reaction from a mile away.

Retr0gamer

All three games sold extremely well and Square Enix should have been happy with those sales. The problem was that they got greedy and over stocked suppliers with the games expecting CoD level sales which means any profit they made is being eaten away by the discount on credit Square Enix has to give retailers to clear stock. this means you'll be seeing Tomb Raider for 15-20 euro very shortly.

It's a complete and total failure on managements part.

Zero-Cool

Hopefully, they might set a small budget for the sequel using the same engine. Although, it doesn't help the sequel (if any) will be next gen which will need a few more quid pumped into it.

Things like this is what makes the execs demand taked on multiplayer because thats how COD makes their money and microtransactions.

Capcom already said there goal is to make "COD Money" and they were actually hoping Resi 6 would sell huge. I know people that only play COD & Fifa, they don't care or know about any other games coming out. Devs\execs can make their games COD like all they want but will never reach that height. They need to accept it and come back to gaming reality.

sweetie

I won't be too disappointed if there's no follow up because as good as TR was it wasn't really a tomb raider game due to those crappy tombs/puxxles and lack of platforming. A new Uncharted will suffice.

Randall Floyd

FutureGuy wrote: »

Unfortunately, games are like movies. They can be sh!te and sell a ton or be brilliant and fail miserably sales-wise.

I think Square Enix made a dreadful mistake by saying there was no plans for single player DLC. Lots of people traded it in as a direct result of that announcement. SE also seem to think that the multiplayer is good enough for people to keep the game and seem to be focusing on it to make more money post launch, as Bioware/EA did so successfully with FIFA and Mass Effect 3 multi player.

The ponly thing is, the TR MP is garbage of the highest order.

The second hand market is now flooded meaning new sales will grind to a halt.

It looks like this game won't get a sequel now

Yup, hello Bioshock Infinite.

Dravokivich

sheehy83 wrote: »

Mad how little Sleeping Dogs sold and that was the 3rd best game of last year imo.

Remember they are not counting digital sales, which I'd expect is how those 3 games have been sold in quite considerable numbers.

GTR63

Retr0gamer wrote: »

This means you'll be seeing Tomb Raider for 15-20 euro very shortly.

Better not happen by Friday, I needs money for Luigi.
Are many games selling 5m copies nowdays anyway?
I doubt GOW: Judgement or Ascension are selling near as well as the Trilogy finales.
No offence to Sleeping Dogs but that game is a 2m seller if you ever saw one. A sequel to a vaugely remembered francise that was canned then picked up renamed and shipped. I think Tomb Raider will sell better long term, good reception and a lot of people are just waiting for a price drop.
I dread the restructuring lines these companies come out with.

Retr0gamer

To be honest Square Enix is in desperate need of a restructuring, the japanese sector anyway. They were worried about staff getting poached by other developers that they specialised them so much that they wouldn't be attractive for poaching. It got so bad that they quite literally had 'cobblestone girl' working in their art department who specialised in creating cobblestone textures. They learned how inefficient and costly that structure was when they made FFXIII and have been desperately trying to restructure into a more western development process.

Kirby

Didn't their head honcho resign yesterday? That could be part of the steps they are taking.

Kinski

Retr0gamer wrote: »

It got so bad that they quite literally had 'cobblestone girl' working in their art department who specialised in creating cobblestone textures.

That sounds like a job that could only end in suicide. Probably by throwing yourself from a great height onto cobblestone paving.

ancapailldorcha

If publishers are so stupid that they think the long term fans of their franchises secretly want the games to play like COD or whatever's selling well then they deserve to go bust.

Turtwig

Just another little theory that I'm putting out there. Pure speculation, of course.

It's not clear what the individual targets for Tomb Raider were.

Square Enix expected 14.9 million retail game sales from North America and Europe combined in its six-monthly forecast last September. Considering the fact that Tomb Raider, Hitman Absolution and Sleeping Dogs were the only big releases for these regions and accounted for a combined 8.75 million sales worldwide, it's clear that their targets were a good deal higher.

Consider this, TR sold 3.4 Million in under four weeks. It'd be incredibly premature to say that a game didn't reach it's targets. (How much do BF4, Half Life 3, Pokemon I forget etc. sell in four weeks?). My suspicion is that this is a translation error ,poor wording or a combination of both. Collectively the trio of titles sales failed to meet the target and are a disappointment. TR of course is still very active in sales and already accounts for half the sum of the other two titles. So either Squeenix have ridiculously silly expectations for a franchise they dug through the mud or their official report was just worded badly. I'd say if you were to ask them for a press release they'd be praising the game's sales so far.

But, again just speculation and conjecture.

Retr0gamer

Games companies don't care about sales after the first month. After that month that are selling the games cheap and possibly losing money on stock they sold to distributors since they are taking a credit hit so retailers can discount the software.

It definitely isn't a translation error.

ShadowHearth

3.4mil sold in few weeks and not including digital versions ( which most PC version would be i assume ) is worded as bad. Where the 6 month plan is to sell 15mil?
I honestly dont get their logic. I would love to know how much they spent on that games development.
Even if you sold each tomb raider game for 20eu ( real average price would be about 40eu ) these last two weeks in it still 68mil alone in first two weeks. I know its not pure profit, but holy ****, thats only first two weeks. Unless game development budgets are counted in billions and not millions these days!

Pixelbastardo

wait, "not counting digital sales" where they make most profit with zero manufacturing and shipping costs....

richymcdermott

so 3.4 million is bad now ? i dunno what to say to this.

if they were expecting tomb raider to make , what was it ? 14-15 million in sales, you are sure to be disappointed.

keep your expectations low , especially for 1 game they Resurrected from the grave with sleeping dogs and two reboots.

Overheal

I think the real disappointment here is that 20 million people bought Call of Duty..

Pushtrak

richymcdermott wrote: »

if they were expecting tomb raider to make , what was it ? 14-15 million in sales, you are sure to be disappointed.

That was across 3 games, not one, if I'm not mistaken.

chrislad

It would be a shame if these were killed - Tomb Raider and Hitman are both established franchises so I don't expect them to be canned truthfully - I've actually just started Sleeping Dogs. It's definitely a unique take on the sandbox genre so far, and it's always nice to be able to drive on the proper side of the road

Grumpypants

Games cost a huge amount these days, a pretty average game to get from concept to stores costs around the $120 million mark. That's developing it and marketing and shipping to stores. The Reckoning for example racked up debts of about 120 mill. It had around 150-200 people working on it. Those 200 people have to sit in a studio for 2-3 years so there are huge costs for wages, rent, health care etc. Then they each need a super hot PC with expensive licensed software. Then you have to market it, so you need PR teams, TV adverts, magazines, trade shows etc.

If it is a new IP/New engine/ new studio those costs can easily get out of control when simple errors are not caught and rectified early.

COD costs around $300 million afaik and is split 150 to develop and 150 for marketing but they really market it to sell to the COD fan base who prob wouldn't read in-depth articles on PC gaming sites and need adverts in the super bowl and champions league final.

So for something like Tomb Raider you are talking new engine, new dev team building a game that looks that good and shipping/marketing it could be anywhere between $100-150 million being conservative. Throw similar money at Hitman and Sleeping Dogs it would be safe to assume SE invested a good $400 millish

Digital sales are not counted yet but they still have a cost attached, SE have to pay Steam or Origin a cut, plus there is not a big a difference in cost between digital and physical as many think.

It costs around 50 cent per game to burn in a factory. People have the misconception that digital is practically free but they forget the huge costs in delivering the data and paying for bandwidth (especially in the states) and having the structure in place to do that and support it. There is a much higher mark up for the company but at the same time you have discount code sites selling games at discounts before they are even released.

Look at Bioshock Infinite a game that should walk out the door at €50 and easily sell 5mill copies was available for pre order with 2 extra free games for €28. That eats into the publishers margin which knocks on down the line.

Then you factor in the rise in PC gaming and the rise again of huge rates of piracy. It is not a coincidence that less people are buying on console and more playing on PC/cracked consoles and the sales figures are simply not matching up.

It is no wonder every publisher wants a COD or Battlefield to depend on.

gizmo

I was going to mention this in the Thief thread when people complained about their stated desire to reach a wider audience but it seems to be relevant here too, consider the following...

The original Thief was released way back in 1998 by Looking Glass. By about 2000 it had sold around two million copies and was deemed commercially successful by Eidos. Over the course of its roughly two and a half year development cycle and $3m budget, about fifty people worked on the game in total.

Now look at modern games, look at their team sizes, length of development cycles, engine/tool creation or licencing costs, the quality of the assets featured in these games, the marketing needed to reach anything approaching a decent audience across multiple territories etc... Now look at how much they're charging for them. Now, do you really think that it's unreasonable for a publisher to not jump for joy when their latest game using a hugely popular IP with new engine only sells 3.4m copies?

Hell, with many AAA-games failing to break two million and even more only limping past the one million figure after months on sale, it's not like they'd be alone in such disappointment. That being said, as I mentioned in the Dead Space thread, publishers really do need to revisit the mid-tier level of games again but in this case Tomb Raider is most certainly not a mid-tier game. I expect Squeenix expected 5m+ sales in the first month or so so it's not particularly surprising that they're unhappy with the current estimates.

The multiplayer is an odd one too, as someone said below and as someone questioned on the TR thread itself, the inclusion of multiplayer is simple - get people to buy the game early at closer to RRP, hold onto their copies after completion, not trade them in, spread the word to their friends, increase sales and brand loyalty and, based on that, sell more multiplayer content which will have, generally speaking, much higher profit margins that single player content. Now, as with seemingly everyone else, I still don't like its inclusion in TR, nor for that matter did I want to see it in ME3. While the latter has proven to be extremely successful at least it's nice to see TRs not do so well. Hopefully this will encourage some SP DLC to be developed and, in terms of a sequel, Squeenix to realise a cheaper game can possibly be made by dropping this mode going forward.

cherryghost

Just to compare, Tomb Raider 2 sold over 5 million copies, Tomb Raider 1 just over 4.5 mill, Tomb Raider III sold 3.5m and The Last Revolution sold and underwhelming 2.5m. The series was in decline since TR3. 3.6m sold in less than a month is respectable in retrospect.

COYVB

Grumpypants wrote: »

Games cost a huge amount these days, a pretty average game to get from concept to stores costs around the $120 million mark. That's developing it and marketing and shipping to stores. The Reckoning for example racked up debts of about 120 mill. It had around 150-200 people working on it. Those 200 people have to sit in a studio for 2-3 years so there are huge costs for wages, rent, health care etc. Then they each need a super hot PC with expensive licensed software. Then you have to market it, so you need PR teams, TV adverts, magazines, trade shows etc.

If it is a new IP/New engine/ new studio those costs can easily get out of control when simple errors are not caught and rectified early.

COD costs around $300 million afaik and is split 150 to develop and 150 for marketing but they really market it to sell to the COD fan base who prob wouldn't read in-depth articles on PC gaming sites and need adverts in the super bowl and champions league final.

So for something like Tomb Raider you are talking new engine, new dev team building a game that looks that good and shipping/marketing it could be anywhere between $100-150 million being conservative. Throw similar money at Hitman and Sleeping Dogs it would be safe to assume SE invested a good $400 millish

Where on earth are you getting those ludicrous figures from? A triple A game costs in the region of $50-65m usually (though I can think of quite a few notable exceptions). An average game, quarter to half that

ShadowHearth

COYVB wrote: »

Where on earth are you getting those ludicrous figures from? A triple A game costs in the region of $50-65m usually (though I can think of quite a few notable exceptions). An average game, quarter to half that

I have to agree. Even fat googling shows that average game budget is about 30mil dollars.

I might see some games toping 50-60mil, but 120mil as average to make AAA game these days is a bit out of proportions. Unless every second staff is on sick leave and Claus millions from company like a big part of high payed medical staff in Ireland.

hooradiation

gizmo wrote: »

Now look at modern games, look at their team sizes, length of development cycles, engine/tool creation or licencing costs, the quality of the assets featured in these games, the marketing needed to reach anything approaching a decent audience across multiple territories etc... Now look at how much they're charging for them. Now, do you really think that it's unreasonable for a publisher to not jump for joy when their latest game using a hugely popular IP with new engine only sells 3.4m copies?

Gamers don't understand how games are made, in much the same way people who go to the cinema don't understand how a film gets made. Not that it stops either group from going on at length about how they feel they ought to be made.

Which kind of explains the clusterfuck we have now where the price of a game has more or less remained static (accounting for inflation) for decades while the cost of making one has risen in order to keep up with the demand for higher fidelity that gamers themselves are driving.

the formula being put forward seems to be that "games must look good, be cheap with no DLC, collectors editions or microtransactions and not expect to sell very much, because to do so would be greedy".

I'd like to see the voodoobullshitmaths that they'll use to make that equation work.....

Gunmonkey

hooradiation wrote: »

Which kind of explains the clusterfuck we have now where the price of a game has more or less remained static (accounting for inflation) for decades while the cost of making one has risen in order to keep up with the demand for higher fidelity that gamers themselves are driving.

the formula being put forward seems to be that "games must look good, be cheap with no DLC, collectors editions or microtransactions and not expect to sell very much, because to do so would be greedy".

I'd like to see the voodoobullshitmaths that they'll use to make that equation work.....

Except it has to have extra content after release...for free...and not be anything similar to the base game because that would have been cut from it, obviously.....but also cant be different from the main game as its not what they payed for. It also has to look photo realistic, run on something as powerful as a tamagotchi, have the best netcode ever (and still be in the wrong if its the users connection being ****), not have a single bug, come with a manual bigger than the collected Wheel of Time books, etc etc etc.

Venom

hooradiation wrote: »

Gamers don't understand how games are made, in much the same way people who go to the cinema don't understand how a film gets made. Not that it stops either group from going on at length about how they feel they ought to be made.

Which kind of explains the clusterfuck we have now where the price of a game has more or less remained static (accounting for inflation) for decades while the cost of making one has risen in order to keep up with the demand for higher fidelity that gamers themselves are driving.

the formula being put forward seems to be that "games must look good, be cheap with no DLC, collectors editions or microtransactions and not expect to sell very much, because to do so would be greedy".

I'd like to see the voodoobullshitmaths that they'll use to make that equation work.....

You fail to take into account how much bigger, more mainstream and much more profitable the games market is these days compared to how it was "decades ago" when it was a very niche market.

Sir Digby Chicken Caesar

well yeah for the likes of cod, fifa, gears, etc

it's everyone else that has to worry.

sarumite

sheehy83 wrote: »

Crazy, it's only a few weeks old and is a brilliant game. It was a 'success' in the gaming world as it is generally considered a very good game.

Mad how little Sleeping Dogs sold and that was the 3rd best game of last year imo.

I started playing sleeping dogs now as I have it on PS+. It is a game that never even entered my radar and I am surprised by how good it was. I

gizmo

Venom wrote: »

You fail to take into account how much bigger, more mainstream and much more profitable the games market is these days compared to how it was "decades ago" when it was a very niche market.

Except it's not?

The market may be bigger in terms of the console install base and number of gaming-ready PCs but as I've repeatedly pointed out, the sales of the non-massive AAA games haven't increased in line with these changes.

As for it being more profitable, how can that be true if sales aren't increasing, prices are stagnant and development costs are skyrocketing?

The last couple of posts provide a perfect example of this. Thief, with it's $3m buget and 2m sales was deemed commercially successful back in 1998 yet the average modern game with its $30-50m budget is selling around the same figure these days.

hooradiation

Venom wrote: »

You fail to take into account how much bigger, more mainstream and much more profitable the games market is these days compared to how it was "decades ago" when it was a very niche market.

Unless games sales have been universally trending upwards with increase in development costs then this isn't really relevant is it?

lets compare some numbers, shall we?

The original tomb Raider was made by a team of six people, over 18 months and sold 7 million copies
The current tomb raider was made by crystal dynamics, a company of about 170 odd people now, given they laid off 30 people in '09 to focus "solely on tomb raider" lets say about 150 people, and this was over the course of five years and has sold 3.4 million copies.

Now, what part of the market being larger do you think has a bearing on those numbers
And what makes you think I failed to take that inconsequential factor into account?

Kirby

hooradiation wrote: »

Unless games sales have been universally trending upwards with increase in development costs then this isn't really relevant is it?

lets compare some numbers, shall we?

The original tomb Raider was made by a team of six people, over 18 months and sold 7 million copies
The current tomb raider was made by crystal dynamics, a company of about 170 odd people now, given they laid off 30 people in '09 to focus "solely on tomb raider" lets say about 150 people, and this was over the course of five years and has sold 3.4 million copies.

Now, what part of the market being larger do you think has a bearing on those numbers
And what makes you think I failed to take that inconsequential factor into account?

3.4 million is a soft number.....it doesn't include digital sales which I would imagine would be quite large. You are also failing to take into account digital sales profit which is close to 100%. There is no manufacturing costs, no paper costs, no delivery costs, no defective returns costs etc.

You are focusing on "sales" when you should be focusing on "profits". There is quite a large difference.

Retr0gamer

Interesting points. Research might be coming out saying that gaming is bigger and more ubiquitous than ever but that's counting people that play the odd free to play mobile game and aren't rushing out on release day to pick up Tomb Raider.

Looking at the ever unreliable VGchartz has the combined 360 and PS3 sales at 140 million. Take into consideration how many people rebought a console due to reliability isues and it's not far off the 120 million of the PS2. I don't really see how these game budgets can be sustainable, most of the work on these games is already outsourced to the likes of China and India.

I still think a lot of it is down to bad management. They should be a little more realistic with expected sales and budget accordingly.

hooradiation wrote:

I'd like to see the voodoobull****maths that they'll use to make that equation work.....

You can be gauranteed there's bean counters in every major publisher applying some equation they got out of the latest financial journal and coming up with bull****.

Azza

I imagine profit on digital games is higher than retail, but I doubt its close to 100%, the content provider will be taking a cut and there is going to be a cost to all the bandwidth used and server storage.

gizmo

Kirby wrote: »

3.4 million is a soft number.....it doesn't include digital sales which I would imagine would be quite large. You are also failing to take into account digital sales profit which is close to 100%. There is no manufacturing costs, no paper costs, no delivery costs, no defective returns costs etc.

You are focusing on "sales" when you should be focusing on "profits". There is quite a large difference.

Those physical costs make up (approximately) less than 8% of the actual retail price of a video game though, a figure which translates into a fairly small portion of the overall development cost.

What the usual argument against higher pricing on the digital market also fails to recognise is that services such as Steam et al also take a remarkably large cut of the sale. While we'll never know exactly how much due to various agreements publishers and developers alike would need to sign, I generally assumed it was along the lines of the 30% Apple and such had adopted however in a recent interview on the success of Garry's Mod, Newman was quoted as saying that his company sees less than half of the money from the sales and that's before the taxman even gets his hands on it. So, unless he also has some sort of other deal with Valve due to how his mod leverages the game, their cut could be even higher than I and others assumed.