Let's consider this as an example. Let's say that for a $60 game, only $45 (i.e. 75% of the purchase price) actually goes to the publisher (the rest to retail, distribution, and printing). In order to break even, the publisher is required to sell approximately 4.4-4.5 million new copies. If the publisher only retains $30 of the sale price (i.e. 50%), then they would have to sell a whopping 6.7 million new copies, JUST TO BREAK EVEN! Even in the most optimistic scenario where the publisher retails all $60 of the retail price, he would still need to sell 3.3-3.4 million new copies, AGAIN JUST TO BREAK EVEN!. So, yes, there is good reason to believe that the reason these high sell numbers are disappointing is because the budgets for these games has spiraled out-of-control to a completely unsustainable level. Please note that this little calculation has the implication that unless Bioshock Infinite successfully sells 5-6+ million copies, there is a good chance the publisher will consider the game a complete failure, by current thinking.Azhrarn-101 said:
Basically, the budgets that are being put into these games are not market-sustainable. There simply can never be expected to be sufficient market penetration of any game, simply because of the sheer number of titles and the cost of each title to purchase, to cover these massive budgets. People just don't have enough time and money to be able to afford so many big-budget triple-A titles. Game publishers need to obtain better analysis and understanding of their target markets such to allow them to make better projections of likely sells numbers and then budget accordingly, rather than casting a budget and than having to expect some necessary number of sales to cover that budget. If you already know from the beginning that a given game is likely to sell only 1-2 million copies, then you will know to better budget the game around $20-40 million to allow a better chance for profit or, at the very least, breaking even. That market understanding would also include knowing what appeals to the game's target audience so the game can be designed accordingly, ensuring a greater likelihood to maintain sells in accordance with analysis expectations and protecting investment. Right now, game publishers are seemingly running their business by throwing darts, rather than having any real understanding of their market. Maybe they are doing some of this, but there is a disconnect going on somewhere because these budgets are just stupid.
ADDENDUM: Oh, another thing about that market analysis, it has to consider also the games that have been recently released and the games that are going to be released in the near future (in other words, understand the playing field and where your competition sit in it). People only have just so much money; so, one needs to consider the viability of selling one's game at a particular time versus any other time. This is another basic problem of the triple-A industry; it's become so over-crowded with releases that the density of titles at the current typical price makes impossible for every game to do well. The typical game buyer can only buy a certain number of titles in a given period of time. Once the density of titles exceeds this, then sells of particular games will see a decrease because the total cost exceeds the ability of a large majority of the population. Think of it as a graph where the horizontal axis is the total cost in games that can be afforded and the vertical axis in the number people that can maximally afford that exact total cost. This may look like a Bell curve or a Lorentzian with the tail at the low end (I admit, I'm just guess here on the shape). Now if we integrate from highest total cost to lowest total cost to obtain a population of the total number of people that can afford a particular total cost, we would likely get a graph that looks like an asymptotic exponential with an inflection. As we lower the total cost, the number of people able to afford the games increases till it reaches an asymptote, at which point further cost reduction does not yield significant increases in the number of people able to afford all games on the market. So, there is a best total cost that sits at the upper knee of the curve that would allow for reasonable budgets while ensuring that every title produced has a good chance of obtaining sufficient sales to be profitable. In my opinion, this is where the industry wants to sit, right at that knee, and there are two ways of getting there: 1) lower the average purchase price of titles or 2) reduce the number of titles released over a given time period. Doing this, I think, would improve the overall viability of the triple-A industry.
EDIT: Apologies for the wall-of-text.
