Square Enix Financials: Net Sales Up, ¥13.7 Billion Lost

[JamesBr]

So wait, they make an overpriced game that sells really well, but was in fact so expensive that no number of reasonable sales figures could match the cost, and they blame it on the state console industry?

I would start looking at the the overhead cost of making these games than blaming the customers for not buying enough. 3,4 million sales by March is nothing to sneeze at, if your very successful game isn't turning a profit, maybe you should not pay so damn much to get it made.

Or they could start charging less and reaching a broader audience, ala Hollywood movies. Because hyperbole aside, an average Hollywood blockbuster still costs two or three times as much as an expensive AAA game, yet Hollywood makes money hand over fist on those movies. Reason being, Hollywood charges between a sixth and a third of what the game corporations charge, and sell an order of magnitude more volume as a result.

Either option could work, I'm just tired of all the blame being put on the cost of making games, instead of the ridiculous cost asked to /buy/ them. I know for a fact these companies are losing sales by charging such an absurd rate, because I know quite a few people who only buy used or on sale. You could argue that they aren't losing /money/ despite losing those sales, but it looks like Squeenix just showed that argument to be wrong.

I may be mistaken about this, but hasn't the price point for games remained largely the same while the cost to create them has gone up? I seem to remember always paying ~60$ for a new game, even back in the SNES era. Even counting inflation, game budgets have ballooned. Would this not mean that you are in fact paying less for a game, considering the time/money spent on it? While I do agree that game prices are awfully high and is part of the problem with nailing those high sales figures, that actual number on the price sticker hasn't changed much relative to the budgets (to my knowledge, I could be remembering incorrectly).

Only if you ignore the economy of scale, the unit cost, wage stagnation, and the fact that those high prices people keep quoting from the past all come from overpriced stores. Notice that nobody has ever produced a Walmart flyer to compare to that Electronics Boutique one that keeps showing up?

True, though I'll admit I don't remember prices varying a great deal way back in the day, to be fair though I was a kid and not paying the closest attention to prices at the time. Pretty sure I was buying games at Walmart and such though, small towns in New Brunswick didn't have video game retailers in the 90's. /shrug Point is, I don't price shop much though, so if there is/was a major difference in price between outlets for new releases, I haven't noticed it.

 

[Lunar Templar]

like I said when Capcom blamed the west for its problems.

'Don't let the door hit you on the way out'

 

[Owyn_Merrilin]

So wait, they make an overpriced game that sells really well, but was in fact so expensive that no number of reasonable sales figures could match the cost, and they blame it on the state console industry?

I would start looking at the the overhead cost of making these games than blaming the customers for not buying enough. 3,4 million sales by March is nothing to sneeze at, if your very successful game isn't turning a profit, maybe you should not pay so damn much to get it made.

Or they could start charging less and reaching a broader audience, ala Hollywood movies. Because hyperbole aside, an average Hollywood blockbuster still costs two or three times as much as an expensive AAA game, yet Hollywood makes money hand over fist on those movies. Reason being, Hollywood charges between a sixth and a third of what the game corporations charge, and sell an order of magnitude more volume as a result.

Either option could work, I'm just tired of all the blame being put on the cost of making games, instead of the ridiculous cost asked to /buy/ them. I know for a fact these companies are losing sales by charging such an absurd rate, because I know quite a few people who only buy used or on sale. You could argue that they aren't losing /money/ despite losing those sales, but it looks like Squeenix just showed that argument to be wrong.

I may be mistaken about this, but hasn't the price point for games remained largely the same while the cost to create them has gone up? I seem to remember always paying ~60$ for a new game, even back in the SNES era. Even counting inflation, game budgets have ballooned. Would this not mean that you are in fact paying less for a game, considering the time/money spent on it? While I do agree that game prices are awfully high and is part of the problem with nailing those high sales figures, that actual number on the price sticker hasn't changed much relative to the budgets (to my knowledge, I could be remembering incorrectly).

Only if you ignore the economy of scale, the unit cost, wage stagnation, and the fact that those high prices people keep quoting from the past all come from overpriced stores. Notice that nobody has ever produced a Walmart flyer to compare to that Electronics Boutique one that keeps showing up?

True, though I'll admit I don't remember prices varying a great deal way back in the day, to be fair though I was a kid and not paying the closest attention to prices at the time. Pretty sure I was buying games at Walmart and such though, small towns in New Brunswick didn't have video game retailers in the 90's. /shrug Point is, I don't price shop much though, so if there is/was a major difference in price between outlets for new releases, I haven't noticed it.

True. And I may be wrong on the size of the price variation at the time -- I was a kid myself at the time. But the other points still stand. For example, game cartridges cost a fortune to produce, and the bigger the cart, the more expensive the game. Today you either get your game on a disc (which has a unit cost of something like $0.15 once you start pressing on an industrial scale), or download the game and pay for the storage separately (unit cost for the publisher: effectively free.)

Beyond that, a game in the 90's was a pretty big seller if it was in the high hundreds of thousands, let alone if it broke a million. Completely ignoring how many sales need to be made to break even on titles today, the comparatively higher sales figures suggest the market was much, much smaller at the time. I saw a figure today that put the number of consoles in the US and UK alone at 200 million, yet major AAA games tend to average what, 1 or 2 million sales worldwide? Somewhere around 1% of the install base of two countries. That is absolutely pathetic, especially compared to the kind of sales numbers you see for books and movies -- which routinely cost quite a bit less than videogames to buy, but sell millions more. Movies not only cost less to buy, but cost more to make, yet they're bigger mass market items than either books or videogames, aside from a very few best selling books, usually one of which gets released every couple of years.

The point is, though, that videogames sell a tiny amount of product at an overinflated cost, when they would make a /lot/ more money if they dropped the price and sold to more of that massive install base.

 

[Chicago Ted]

So wait, they make an overpriced game that sells really well, but was in fact so expensive that no number of reasonable sales figures could match the cost, and they blame it on the state console industry?

I would start looking at the the overhead cost of making these games than blaming the customers for not buying enough. 3,4 million sales by March is nothing to sneeze at, if your very successful game isn't turning a profit, maybe you should not pay so damn much to get it made.

Or they could start charging less and reaching a broader audience, ala Hollywood movies. Because hyperbole aside, an average Hollywood blockbuster still costs two or three times as much as an expensive AAA game, yet Hollywood makes money hand over fist on those movies. Reason being, Hollywood charges between a sixth and a third of what the game corporations charge, and sell an order of magnitude more volume as a result.

Either option could work, I'm just tired of all the blame being put on the cost of making games, instead of the ridiculous cost asked to /buy/ them. I know for a fact these companies are losing sales by charging such an absurd rate, because I know quite a few people who only buy used or on sale. You could argue that they aren't losing /money/ despite losing those sales, but it looks like Squeenix just showed that argument to be wrong.

The big problem with comparing blockbusters to games like that though is you're forgetting a very major factor that bars many consumers, that being the purchase of a console. Let's look at the United States for an example:

Population = 311,591,917 (July 2011)
Xbox 360 Sales = ~25,400,000 (Dec 2010)

While a blockbuster film can appeal to most of the population, that game that you're trying to sell, even on its most broadened form, can only be sold to maximum 8% of that audience. While I do agree that games could use a bit of a price adjustment, comparing them to Hollywood blockbusters in such a way just doesn't work because they don't have nearly the size of a market that can be sold to.

 

[Glademaster_v1legacy]

Time for the FF VII remake so they can print some money then?

 

[Owyn_Merrilin]

So wait, they make an overpriced game that sells really well, but was in fact so expensive that no number of reasonable sales figures could match the cost, and they blame it on the state console industry?

I would start looking at the the overhead cost of making these games than blaming the customers for not buying enough. 3,4 million sales by March is nothing to sneeze at, if your very successful game isn't turning a profit, maybe you should not pay so damn much to get it made.

Or they could start charging less and reaching a broader audience, ala Hollywood movies. Because hyperbole aside, an average Hollywood blockbuster still costs two or three times as much as an expensive AAA game, yet Hollywood makes money hand over fist on those movies. Reason being, Hollywood charges between a sixth and a third of what the game corporations charge, and sell an order of magnitude more volume as a result.

Either option could work, I'm just tired of all the blame being put on the cost of making games, instead of the ridiculous cost asked to /buy/ them. I know for a fact these companies are losing sales by charging such an absurd rate, because I know quite a few people who only buy used or on sale. You could argue that they aren't losing /money/ despite losing those sales, but it looks like Squeenix just showed that argument to be wrong.

The big problem with comparing blockbusters to games like that though is you're forgetting a very major factor that bars many consumers, that being the purchase of a console. Let's look at the United States for an example:

Population = 311,591,917 (July 2011)
Xbox 360 Sales = ~25,400,000 (Dec 2010)

While a blockbuster film can appeal to most of the population, that game that you're trying to sell, even on its most broadened form, can only be sold to maximum 8% of that audience. While I do agree that games could use a bit of a price adjustment, comparing them to Hollywood blockbusters in such a way just doesn't work because they don't have nearly the size of a market that can be sold to.

So there's 25.4 million Xbox 360's alone in the United States alone, but major AAA titles have a hard time selling one million units worldwide. See the problem?