Wednesday, July 30, 2008

Game Publisher Profit & Loss

Via Kotaku, profit and loss margins for the 20 top game publishers. On its face this reflects what might be thought to be common sense; publishers who produce quality make a profit, while publishers that make rubbish pay for it.

It's not quite that simple, of course. The numbers include hardware divisions, so Microsoft shows a large loss representing their ongoing efforts to advance their market share. I seem to recall that Microsoft actually posted their first games division profit last quarter so next year's chart might look very different. Sony, of course, were more focused on launching Blu-Ray than they were on winning the console war this time around so their massive losses are less of a defeat than they are an investment in the company's ongoing future.

EA have recently come out and said they made a mistake by not backing the Wii as the winner in this console generation; their somewhat blinkered focus on the PS3 and 360 hasn't helped them over the last year. Ubisoft, on the other hand, are doing quite well, probably deriving both from their excellent Montreal and Montpellier studios, and from the way they were astoundingly quick to fill the Wii market with shovelware.

Atari, Midway and Sega are all victims of their own poor quality titles. These companies couldn't find quality gaming if you shackled it to their wrist.

My guess on Take 2's dismal performance here is that it's got something to do with their ongoing legal troubles. Take 2 of course includes Rockstar, whose games sell like hotcakes but can't seem to stay out of court. It's probably also worth noting that the chart above caps out before the release of Grand Theft Auto 4 so the profits from that are obviously not included.

Namco, Capcom and Squeenix are all excellent examples of producing good games based on original IP on a regular basis. We like what they make, and we pay them money for it. Everyone's a winner.

Vivendi is of course just another way of saying "Blizzard and Sierra"; most of that profit you see there is World of Warcraft alone. Vivendi's now merged with Activision so it's not unreasonable to expect a monster result next year from the resulting juggernaut.

Konami's interesting in that it feels like it should be down next to Capcom and Namco but instead they're storming the market. It's especially interesting as this chart predates the release of Metal Gear Solid 4. Konami's doing unusually well for a company that's shown such partisan support for this generation's console loser, the PS3. Does anyone have insight as to what's going on here?

Disney comes as a surprise to hardcore gamers; this is mostly just licensed games being made dirt cheap and sold by the truckload. It's a bit depressing that this kind of rubbish is so very profitable. Disney does own a few smaller studios like Lumines creator Q Entertainment, though.

And finally Nintendo tops the chart; they're the only company currently making a profit (and a fairly massive profit at that) on their hardware division, through both the Wii and the DS, but they're also the major developer for both those platforms, and platform-exclusive games like Super Smash Bros Brawl and Super Mario Galaxy spent significant periods of time at the top of sales charts across all consoles. Nintendo was making a profit even during the lame-duck years of the Gamecube, and now that they've actually got quality hardware on the market they're unstoppable.

4 comments:

JayCatMac said...

Just found your blog and it's great! keep up the amazing work.

Forgive my ignorance, but I just want to ensure that I have my facts straight. In Australia, some government body rates the game (much like the ERSB ratings in Canada: where I am). Now, the highest rating you have there is 15+ (sort of like rated T+). So if anything is higher than a 15+ (like a rated M game) it can't be sold in Autralia?

When was this law put into place? It seems very archaic. Very "Video games are only made for children" type thinking. What were the reasonings behind such a restrictive rating?

It's a shame because the gaming industry brings in a ton of $. The Canadian gov't has provided incentives to the industry and now Montreal is rapidly becoming a bit of a gaming mecca. High paying, creative jobs with technical know how? sounds like a winning recipe to me!

anyway: if you could set me straight I would appreciate it!

cheers!

Fargo said...

Regarding Disney's profits: Don't forget that Disney runs some VERY profitable online games. ToonTown Online brings in a lot of cash (as I understand it) and represents a relatively small investment (for an MMO). Similarly, I think these numbers reflect Club Penguin as well. These online games have been really profitable for Disney.

Great Blog! -Fargo

GregT said...

Fargo - thanks for the clarification. I wasn't even aware ToonTown online was still operating.

Jaycatmac - Yes, the highest rating for games currently available is MA15+, which covers games deemed too mature for a 15 year old but suitable for any audience older than 15. Games unsuitable for those under the age of 18 are currently refused classification, which has the effect under state and territory law of prohibiting them.

It's not a matter of the law being put into place; as I understand it previously our rating system did not cover videogames at all. In the 90s a new scheme was introduced to cover games but it only provided for classifications up to MA15+. Changing that scheme now requires the agreement of the Attorneys-General of each State, Territory and the Commonwealth, and the whole process is being blocked (most notably) by South Australian A-G Michael Atkinson.

Hope that clarifies. Thanks for your interest!

generic cialis said...

haha this is just great, nintendo have been the best since always, no one can "race" against nintendo.
Life for nintendo haha