Please switch the engine now before its too late..

[Andryah]

last I check it was blizzard-activision not just blizzard and they pump out the CoD franchise

 

Actually.. it's currently Activision-Blizzard.. since you appear to want to get clinically precise over a company name rather then stay topically conversant.

 

My earlier statement stands. A disproportionate share of A-B revenue comes from one game property ---- WoW. They are poorly diversified for a game holding company. From a practical operations perspective.. the core blame for this rests with the large success of WoW coupled with life as a part of Vivendi. Time will tell if they are able to create a better diversity model over time or not as they unwind from Vivendi (given they are allowed to do so.. since there is a court injunction in Delaware blocking it at the moment).

[Hazed]

Actually.. it's currently Activision-Blizzard.. since you appear to want to get clinically precise over a company name rather then stay topically conversant.

 

My earlier statement stands. A disproportionate share of A-B revenue comes from one game property ---- WoW. They are poorly diversified for a game holding company. From a practical operations perspective.. the core blame for this rests with the large success of WoW coupled with life as a part of Vivendi. Time will tell if they are able to create a better diversity model over time or not as they unwind from Vivendi (given they are allowed to do so.. since there is a court injunction in Delaware blocking it at the moment).

 

WoW is not their money maker its Call of Duty (spelled out since you ignored it previously)

 

It is released annually and probably generates more revenue than annual box sales of Madden (which is EA's yearly product)

 

So ultimately as an investor (I have held EA stock in the past and sold on the uptick earlier this year), you are faced with two publishers who hold two very lucrative franchises

 

Activision/Blizzard - Call of Duty

EA - Madden

 

The other games are just bonuses, and if you are investing in the company without those two games weighing heavily on your decision you know nothing about investing.

 

BTW markets are cyclical you know that, that is why a "yearly" title is so important. The buzz around the release of the game usually creates a sellers market for the stock as new investors pour in on the good news.

 

Yeah

[Andryah]

WoW is not their money maker its Call of Duty (spelled out since you ignored it previously)

 

It is released annually and probably generates more revenue than annual box sales of Madden (which is EA's yearly product)

 

So ultimately as an investor (I have held EA stock in the past and sold on the uptick earlier this year), you are faced with two publishers who hold two very lucrative franchises

 

Activision/Blizzard - Call of Duty

EA - Madden

 

The other games are just bonuses, and if you are investing in the company without those two games weighing heavily on your decision you know nothing about investing.

 

BTW markets are cyclical you know that, that is why a "yearly" title is so important. The buzz around the release of the game usually creates a sellers market for the stock as new investors pour in on the good news.

 

Yeah

 

22% of revenue for Activision-Blizzard in their Q3-2013 financials come from WoW online subscriptions. For a game holding company.. that represents disproportionate revenue dependency on one aspect of one game property. And.. it's down from about 30% a year earlier... which exemplifies how exposed they are to subscription loss as an impact to revenue earnings.

 

I did not say CoD was not an important part of their business pal. I said that they not adequately diversified as a game holding company.

 

The damage and risk from this is somewhat mitigated because the margins on subscription revenues are very high.. but that is a two edged sword as well because for every dollar of subscription revenue lost.. they need to sell 2 or 3 dollars of product sales revenue to make up the loss in bottom line profits. So again.. overly invested in one aspect of one gaming property leaves them financially vulnerable on a dollar for dollar basis much more so then EA. EA is much better diversified.

[DOHboy]

WoW is not their money maker its Call of Duty (spelled out since you ignored it previously)

 

It is released annually and probably generates more revenue than annual box sales of Madden (which is EA's yearly product)

 

So ultimately as an investor (I have held EA stock in the past and sold on the uptick earlier this year), you are faced with two publishers who hold two very lucrative franchises

 

Activision/Blizzard - Call of Duty

EA - Madden

 

The other games are just bonuses, and if you are investing in the company without those two games weighing heavily on your decision you know nothing about investing.

 

BTW markets are cyclical you know that, that is why a "yearly" title is so important. The buzz around the release of the game usually creates a sellers market for the stock as new investors pour in on the good news.

 

Yeah

 

ouch..dented my desk.

 

WoW pulling in $12 a month + expansions for 10 million sales.

CoD - may have 10million in sales every year. But that would be roughly 5 months of sales for WoW. So no WoW is much more important for revenue than CoD.

 

As previously stated. Madden isn't even listed in their quarterly since on a per quarter basis the game makes nothing. It will sell 20 million copies in one or two week time frame maybe even over a whole quarter (that's 3 months not $0.25). Howver, a game selling subscriptions or having monthly sales will have a greater impact on revenue than one that sells once a year every year for 1 month.

 

10 million copies at $60 = 600 million

 

$600 million /$12 per month = 50 million gamer months / 10 million gamers = 5 months.

 

This means that in 5 months of sustainable 10 million gamers paying a subscription will equal ALL of the entire sales of that one game.

[JimG]

Someone at bioware just needs to pull the plug and quickly switch engines.

Thanks! I needed a good laugh.

[TUXs]

CoD - may have 10million in sales every year. But that would be roughly 5 months of sales for WoW. So no WoW is much more important for revenue than CoD.

 

"After six weeks on release, Activision reported that Black Ops had exceeded $1 billion in sales."

 

(slightly higher numbers than you are guessing)

[Hazed]

ouch..dented my desk.

 

WoW pulling in $12 a month + expansions for 10 million sales.

CoD - may have 10million in sales every year. But that would be roughly 5 months of sales for WoW. So no WoW is much more important for revenue than CoD.

 

As previously stated. Madden isn't even listed in their quarterly since on a per quarter basis the game makes nothing. It will sell 20 million copies in one or two week time frame maybe even over a whole quarter (that's 3 months not $0.25). Howver, a game selling subscriptions or having monthly sales will have a greater impact on revenue than one that sells once a year every year for 1 month.

 

10 million copies at $60 = 600 million

 

$600 million /$12 per month = 50 million gamer months / 10 million gamers = 5 months.

 

This means that in 5 months of sustainable 10 million gamers paying a subscription will equal ALL of the entire sales of that one game.

 

Your still operating on the fallacy that the gaming enviroment today is the same as it was in the late 90's early 2000's. Neither company can support a subscription model going forward.. the players entering the game space are more geared towards "consoles" and "collectibles" which both companies are making headroom into.

 

BTW if WoW is 23% of ATVI's revenue.. what percentage is FIFA of EA's revenue?

[Hazed]

ouch..dented my desk.

 

WoW pulling in $12 a month + expansions for 10 million sales.

CoD - may have 10million in sales every year. But that would be roughly 5 months of sales for WoW. So no WoW is much more important for revenue than CoD.

 

As previously stated. Madden isn't even listed in their quarterly since on a per quarter basis the game makes nothing. It will sell 20 million copies in one or two week time frame maybe even over a whole quarter (that's 3 months not $0.25). Howver, a game selling subscriptions or having monthly sales will have a greater impact on revenue than one that sells once a year every year for 1 month.

 

10 million copies at $60 = 600 million

 

$600 million /$12 per month = 50 million gamer months / 10 million gamers = 5 months.

 

This means that in 5 months of sustainable 10 million gamers paying a subscription will equal ALL of the entire sales of that one game.

 

what about the DLC?

[DarknessInLight]

Apparently it don't take much to develop a quality environment as demonstrated by the student's video.

 

Just sayin' you can't say "oh this can't be done" when clearly it can, if they use the proper engine.

 

So a quick fly by video = a Full Game written on a rendering engine? Impressive. Most Impressive.

 

/sarcasm

[DOHboy]

"After six weeks on release, Activision reported that Black Ops had exceeded $1 billion in sales."

 

(slightly higher numbers than you are guessing)

 

10 million in sales is the number of units, not the dollar value of revenue.

 

$1billion would be roughly 17million units. Which is assuming a 1:1 ratio of units to dollars which is not quite true. Since more than likely for every unit there would be a 75% revenue to the company. figure 8-10% off the top for retailers, a small% for shipping and %manufacturing.

[Andryah]

Your still operating on the fallacy that the gaming enviroment today is the same as it was in the late 90's early 2000's. Neither company can support a subscription model going forward.. the players entering the game space are more geared towards "consoles" and "collectibles" which both companies are making headroom into.

 

BTW if WoW is 23% of ATVI's revenue.. what percentage is FIFA of EA's revenue?

 

Well.. you keep doubling down on this.. dragging your own thread farther off topic....... but...

 

EA is not totally transparent with their financial data (they don't have to be) but from reading their ongoing quarterly financials.. their box distributions sales appear to be pretty consistently about 35% of their gross revenues. The exact mix each quarter is different as EA is constantly rolling out new releases, and they sell the bulk of a new release in one to two quarters. As an example: 10Million box sales is worth about 50-70 Million in net revenues against gross revenues of 120-150M (the companies share of the revenue from the total box sale). Now.. granted EA probably does better then this since they are very well developed in digital sales which probably doubles or triples profit per sale. But it's almost impossible to find out what their sales splits are.

 

Again.. even though it is a terminal business model in the genre of MMOs.. subscriptions are very high margin, and when you have an incumbent MMO with still high population counts and a constant rotation in and out from an even larger installed base of inactive subscribers.. you have a large contribution to bottom line net revenue. This is precisely why MMO game companies still "crave" subscriptions. They are very high margin revenues with relatively fixed operations costs.

 

The problem with trying to directly compare gross sales of console box games with MMO sub revenues is that the game company only earns revenue on a fraction of each retail box sales (generally 25-40%) depending on the retailer. And the margins to the game company on each boxed sale is ~ 30% of that revenue share from a box sale they earn. Generally speaking.. a game holding companies contribution to net revenue from a boxed sale like CoD is about $5-7 (more if it is a digital sale).

 

22% of revenue from subs for a game company is roughly 3 times as profitable in terms of contribution to the bottom line compared to boxed game sales. For every percentage point of loss in subscriber revenue therefore requires $3 in new box sales. It's a nasty sales slope to have to face to replace sub revenue. As such.. a large game holding company would ideally want to limit it's revenue exposure to any single game to roughly 5% in order to be diversified enough to ignore the effects of a product erosion. Sure.. they will take every dollar they can.. but boxed sales are short cycle.. where as subscriber revenues (be they pure, or freemium) are more persistent. This is precisely why EA and A-B are trying so hard to build mobile gaming as it represents "high margin" flexible but persistent revenue generating business models.

[TUXs]

10 million in sales is the number of units, not the dollar value of revenue.

 

$1billion would be roughly 17million units. Which is assuming a 1:1 ratio of units to dollars which is not quite true. Since more than likely for every unit there would be a 75% revenue to the company. figure 8-10% off the top for retailers, a small% for shipping and %manufacturing.

 

What? I linked the article...$1 billion over 6-weeks. Are you contending that?

[Andryah]

10 million in sales is the number of units, not the dollar value of revenue.

 

$1billion would be roughly 17million units. Which is assuming a 1:1 ratio of units to dollars which is not quite true. Since more than likely for every unit there would be a 75% revenue to the company. figure 8-10% off the top for retailers, a small% for shipping and %manufacturing.

 

I agree that gross retail sales are meaningless for boxed games, unless the game company is doing only direct sale (which is not at all the case, even with the proliferation of digital direct sales).

 

I disagree with your estimates on the companies share on a boxed sale. It's actually much less because they use normal consumer distribution sales channels for boxed sales. Even digital sales.. they are using consumer distribution channels in addition to their own. Amazon digital sales probably exceed EAs digital direct sales to be honest.

 

Consumer sales of boxed entertainment products still follows pretty close to the 25/25/50 rule. The front store retailer gets 50% from direct sale, the middle layer distribution gets 25%, and the game company gets 25%. Big companies like EA probably do a bit better on their end because of volume agreements and block agreements to deliver X titles per year for consideration of a smaller cut in the distributions. Small companies like Funcom are probably lucky to get 20% from a sale... and big companies like EA probably get closer to 30% (but they also heavily discount to promote sales too.. so it's probably a wash in a sales cycle). And the company eats the production costs.. which are probably about $5 per unit.. which is why EA and others want to move customers to digital distribution as it lowers production costs significantly, and it also lowers distribution splits.

[gorstram]

Please switch the engine now before its too late..

 

It's too late.

 

/thread

[DOHboy]

I agree that gross retail sales are meaningless for boxed games, unless the game company is doing only direct sale (which is not at all the case, even with the proliferation of digital direct sales).

 

I disagree with your estimates on the companies share on a boxed sale. It's actually much less because they use normal consumer distribution sales channels for boxed sales. Even digital sales.. they are using consumer distribution channels in addition to their own. Amazon digital sales probably exceed EAs digital direct sales to be honest.

 

Consumer sales of boxed entertainment products still follows pretty close to the 25/25/50 rule. The front store retailer gets 50% from direct sale, the middle layer distribution gets 25%, and the game company gets 25%. Big companies like EA probably do a bit better on their end because of volume agreements and block agreements to deliver X titles per year for consideration of a smaller cut in the distributions. Small companies like Funcom are probably lucky to get 20% from a sale... and big companies like EA probably get closer to 30% (but they also heavily discount to promote sales too.. so it's probably a wash in a sales cycle). And the company eats the production costs.. which are probably about $5 per unit.. which is why EA and others want to move customers to digital distribution as it lowers production costs significantly, and it also lowers distribution splits.

 

Was just trying to point out that saying $1billion in SALES will not be $1billion in revenue for a company. I suppose i should have posted YMMV.

 

I think any company would take 1 million subscription months vs 10 million unit sales since one is almost pure profit when compared to original investment where as the other is break even at best. The reason CoD never changes year over year is that they want to keep acutal costs to a minimum. Spending $100million on developing a new game only to sell 10million units every year would be a fast tract to poverty.

 

Now take that $100 million cut it down to $30million a year and make an incremental releases each year so that every 3 years you essentially have a NEW game. will significantly increase revenue each year.

 

I think everyone would agree:

 

MMO Subscritpions are High margin and require low volume to be profitable. The more you get the more profit

Single unit games are low margin and require high volumes to approach profitability.

[CosmicKat]

...

 

I think everyone would agree:

 

MMO Subscritpions are High margin and require low volume to be profitable. The more you get the more profit

Single unit games are low margin and require high volumes to approach profitability.

 

The profitability of MMO's, as well as their popularity, are greatly exaggerated.

 

If they were half as popular/profitable as they claim, there would be far more of them. One only has to look at SOE, owned by Sony, as an example. Sony makes dozens of big-budget movies per year chasing the "blockbuster" status. The rate/chance of return on movies is low, something like 90% of the money being made by 10% of the movies in any given year. With that low potential, they still continue to pour hundreds of millions into making them. The b.s. numbers thrown around for MMO subscription numbers, if factual, would make nearly every MMO a high margin success. Given these facts, why would Sony bother making any movies for a 10% chance of profitability? Why not just pour that development money into MMO's and release a new one every month?

[Andryah]

The profitability of MMO's, as well as their popularity, are greatly exaggerated.

 

If they were half as popular/profitable as they claim, there would be far more of them. One only has to look at SOE, owned by Sony, as an example. Sony makes dozens of big-budget movies per year chasing the "blockbuster" status. The rate/chance of return on movies is low, something like 90% of the money being made by 10% of the movies in any given year. With that low potential, they still continue to pour hundreds of millions into making them. The b.s. numbers thrown around for MMO subscription numbers, if factual, would make nearly every MMO a high margin success. Given these facts, why would Sony bother making any movies for a 10% chance of profitability? Why not just pour that development money into MMO's and release a new one every month?

 

You are funny CK. You are the one that was lecturing me a month or two ago about how massively profitable WoW subscriptions are for Blizzard. I agreed with you at the time, just not that it was as high as you claimed. I think you claimed the margin was close to 90%, which it is not.

 

The cost to enter the market is incredibly high... to the point of being largely prohibitive now days for small studios.

 

Where as...the profit margin from subscriptions on live MMOs on the other hand is much higher then the margins on box sales.. which is what was being discussed in this particular side-car discussion.

[CosmicKat]

You are funny CK. You are the one that was lecturing me a month or two ago about how massively profitable WoW subscriptions are for Blizzard. I agreed with you at the time, just not that it was as high as you claimed. I think you claimed the margin was close to 90%, which it is not.

 

The cost to enter the market is incredibly high... to the point of being largely prohibitive now days for small studios.

 

Where as...the profit margin from subscriptions on live MMOs on the other hand is much higher then the margins on box sales.. which is what was being discussed here.

 

The difference is that you think everything said by anyone not affiliated with EA is complete fantasy, while I think everything every developer says is complete fantasy.

[DOHboy]

The profitability of MMO's, as well as their popularity, are greatly exaggerated.

 

If they were half as popular/profitable as they claim, there would be far more of them. One only has to look at SOE, owned by Sony, as an example. Sony makes dozens of big-budget movies per year chasing the "blockbuster" status. The rate/chance of return on movies is low, something like 90% of the money being made by 10% of the movies in any given year. With that low potential, they still continue to pour hundreds of millions into making them. The b.s. numbers thrown around for MMO subscription numbers, if factual, would make nearly every MMO a high margin success. Given these facts, why would Sony bother making any movies for a 10% chance of profitability? Why not just pour that development money into MMO's and release a new one every month?

 

MMOs can be profitable. Popularity plays a big piece of that puzzle. At release SWTOR only needed something like 500k subs to be profitable, however, it was not deemed a success since it did not have 10 million subs.

 

Popularity plays into whether a company feels the investment is worth the cost. And how quickly a product will be released.

 

Quality, time, money...

 

A low popular game will take longer to develop a quality expansion/update. The more popular it is, or the more money it generates can yield updates faster. If quality is poor but quick, it was cheap to produce, but will cost subs in the end potentially.

 

As a subscription model SWTOR is still profitable and marginally successful. however, when going f2p the micro transaction has significantly improved its profitability. Since the number of subs can still be considered profitable (i.e keeps the lights on covers most costs), the CM is what is driving the revenue. Again, it is a fairly high margin product (costs very little to produce cm coins and cm items), but can have both a high volume AND high price.

 

Economics of scale is why not many people go into MMOs. And depending on the FotM as far as MMO's go, subscriptions can fluctuate quickly.

[Drake_Hound]

Long argument short arguement , SWTOR was a success at start , but failed to capitalise on what was important .

Sensible feedback , the human EGO , SWTOR was deemed a failure same as GW2 any other PC game MMO will be deemed a failure , cause Blizzard WoW hit the market just at the right time , and capitalise on the feedback .

 

Some hardcore people still are in denial and dream state about 40 people raids , 10000 people zones .

Well go play iphone games , even there you have a limit of how many people you can see .

 

WoW introduced group finder , oh the debate about it was horrible blah blah , same as who can now live without flashpoint finder , wow dis cross server groupfinder , raid, or battle group zones , why ?

Cause they predicted people don't have logic and patience anymore , in swtor a small handfull still try to stop progress, cause in there eyes everything must be fine , since they are not suffering from issues .

 

feedback analysist in SWTOR is terrible , cause listening to some part of hardcore of the community is terrible .

You create a casual game , you analyse the casual behaviour , from the casual always a new group of hardcore will form , same as pvp , one top group leaves the server , another take it place .

 

Sorry if you want to bash something bash the people who don't think for the casuals ,

but think for them , what are casuals , they just want to have fun , but don't mind the grind as long it is fun .

What are casuals who want all for nothing , they are just lazy .

[_Psi_]

Trying to update an MMO engine, is a lot like sliding a sugar packet under a leg of a table to keep it from wobbling.

 

Trying to replace an MMO engine is a lot like trying to solve a giant puzzle on top of a card table while someone dismantles the very table the puzzle is on and tosses it aside while you frantically try to keep the puzzle pieces floating in mid air with no support structure as the guy brings in a new table.

 

 

Just sayin'.

[Darth_Victus]

Are you for real?! If that was the reason this engine was chosen (which it is not - it was chosen for its modular adaptability) it has failed spectacularly.

 

Plenty of people with low end systems are complaining about the performance issues. Heck plenty of people with high end systems are complaining about the performance too!

 

I have an i7 ivy bridge (4770K) OCed to 4.2Ghz and a GTX670 OCed to 1GHz and at times Im getting as low as 20fps in certain instances. When this game first came out I could run it fairly well on high settings on my 4 year old laptop.

 

But oh wait, the engine is running fine

 

First off, don't put words in my mouth.

 

That is one of the reasons why the Hero Engine was chosen. However, BioWares modifications of the engine is what screwed up the optimizing. Hence the issues a lot of players are having with low FPS. Work on your reading comprehension before you decide to jump off the deep end again.

[Andryah]

The difference is that you think everything said by anyone not affiliated with EA is complete fantasy

 

Not true at all. I am one of the more prolific linkers and quoters of 3rd party sources with no affiliation to EA at all.

 

while I think everything every developer says is complete fantasy.

 

From my observation.. /agree. Though in fairness.. you do at times appear have a personal bias for EQ devs being stink free.

[TUXs]

A low popular game will take longer to develop a quality expansion/update. The more popular it is, or the more money it generates can yield updates faster. If quality is poor but quick, it was cheap to produce, but will cost subs in the end potentially.

 

Given this description, I can only surmise that you feel SWTOR is LOW popularity...right?

[Arkerus]

The profitability of MMO's, as well as their popularity, are greatly exaggerated.

 

If they were half as popular/profitable as they claim, there would be far more of them. One only has to look at SOE, owned by Sony, as an example. Sony makes dozens of big-budget movies per year chasing the "blockbuster" status. The rate/chance of return on movies is low, something like 90% of the money being made by 10% of the movies in any given year. With that low potential, they still continue to pour hundreds of millions into making them. The b.s. numbers thrown around for MMO subscription numbers, if factual, would make nearly every MMO a high margin success. Given these facts, why would Sony bother making any movies for a 10% chance of profitability? Why not just pour that development money into MMO's and release a new one every month?

 

Unless you haven't been watching, the MMO scene has exploded in the past 8 years. Ever since WoW a lot of major publishers and developers want a piece of the pie.

 

Anyway...

 

There are far more now (and other MMO types of game) than there were 10 years ago. Profitability is applied to each product individually. You can't even start to claim they are or are not profitable because you don't have all the data you need to make that argument. You are just making blanket assumptions based on data you don't have. That isn't a good way to make an argument.

 

The only data we DO have is anything reported financially. Most financial analysis internal to the company looks at ROI. As long as a product is producing the ROI they expect, then the product is supported and funded. If the ROI dips too low typically companies will look at ways to either produce a better ROI (reduce cost, increase revenue) or remove the product (taking all sunk cost with them).

 

There is no blanket statement you can make about MMOs because each game is an individual case study. And no, not every company is going to have one because that is a bigger decision a company has to make.

 

Do they want to compete in the market?

Do they have the staff to support the product?

Do they believe the market will be steady in 10 years? How about 20?

Can they market the product?

 

This is called a feasibility study and normally it occurs well in advance to any real decision making. They take a look at the market and they decide if they can compete.

 

When talking about SWTOR all we know is what was in the last report. We know that SWTOR is in EA's top profit producing category but we don't know the exact financial details. However, being in a company's number 1 profit category is certainly a good thing.

 

The bottom line is this...

 

You are making blanket statements (probably in good faith) that you can't back up with data. Do we really know companies are greatly exagerrating MMO profitability? Yes and No. We know some data based on financial shareholder reports and we know other by official outlet or press release. We know that data has to be "real". We also know some companies use algorithms to report their numbers but those accounts are not "full account". Blizzard uses some sort of method to estimate subs since the Asian Pacific market doesn't use a sub account to pay for the game. You have to look at each product individually to get the real story.

 

Each game should be judged on its own and not against some blanket statement.