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Forbes Breaks Down Next Gen Game Costs

Posted by Christopher Sasaki Categories: Culture, PlayStation 3, Wii, Xbox 360

Gears of War For gamers with an Xbox 360 or a Playstation 3, game costs are rising; most games for these new consoles now cost $60, a 20% increase over the previous generation’s games. Many developers claim that the increased capabilities of the new consoles and the ever-increasing complexity of developing games have increased budgets to the point where a price increase is inevitable. With game companies needing to sell anywhere from 500,000 to 1 million units to start seeing a profit, the publishing community is becoming increasingly risk averse.

Forbes attempts to break down the $60 that a gamer will spend on a next generation experience like Gears of War. Some of the interesting costs broken out include roughly 45% for art design and programming, about $27 out of the $60 MSRP. Retailers grab another $12 off the top, with wholesale prices ranging at about $48. A little over 10% of the product’s cost goes towards console licensing fees; this averages about $7 going to the hardware manufacturer for each console sold. Other cuts go to the publisher, marketing, distribution, and packaging for the game.

Despite the additional cost to the consumer, it seems like game publishers and developers aren’t seeing their profitability increase. If game costs do break down like the estimates from Forbes, and game development costs are rising, one has to wonder how long a model like this is sustainable. Nintendo has made a conscious choice not to follow the escalating budget path, while other developers investigate other revenue streams like in-game advertising, downloadable content, and episodic releases.

Read More | Forbes

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Robbie Bach Talks Zune, Xbox, Movies, And Sony

Posted by Christopher Sasaki Categories: Hardware, Xbox 360

Robbie BachDean Takahashi from Mercury News was able to speak with Robbie Bach a couple of weeks ago, and they talked about a number of the challenges and achievements of the Entertainment and Devices Division at Microsoft. Bach first discussed the recently launched Zune; as an iPod killer the device has gotten mixed reviews, but Takahashi also investigated why the company chose to enter that arena, rather than challenge Sony or Nintendo in the portable gaming realm. For Bach, the question was a matter of focus, and where the company wanted to put its energies; Bach actually felt that a lack of focus might be hurting Sony in this regard.

Bach also tied the Zune into the company’s efforts with Windows Vista and the Xbox 360, leading the discussion to Microsoft’s next generation console. Bach still feels that they are on track to make their goal of 10 million consoles shipped by year’s end, and with Sony floundering on console availability, this target now seems more likely. Bach also discusses the general financials for the Entertainment division; Microsoft still feels that they are on track for profitability in the division by 2008, but with the diversity of offerings in the group, this doesn’t mean that the Xbox 360 will necessarily hit that goal by then.

Bach also talks about the Halo movie, and the difficulties of managing original intellectual property. Part of the answer seems to be that Microsoft will do things with Halo when it feels right, and that seems to be part of the reason that the movie deal fell apart. While Microsoft would certainly like to see more game releases in the Halo realm, they also seem cognizant of the dangers of saturation. Overall, the interview gives decent insight into the business aspects of the Entertainment division, while not really addressing future developments.

Read More | Mercury News

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