Sales Projections

[MReed]

 

We should clarify our points…I agree.  It seems we are on different sides of the fence on this one.

 

Point #1:  I believe the cost analysis on what it would take to create Pillars of Eternity contained a profit from the get-go.

Point #2:  It seems the other thought is that the game was quoted bare bones with just enough to cover the development and the profit to be made on release. 

 

If that the latter is correct then I wonder a few things:

• Why would they take a chance on a very niche 2D Isometric Hardcore RPG game that their entire profit would come after development when the bulk of the sales possibly** could have been met before the game’s official release?
• Why wouldn’t they factor in a 10% profit (at the very least)?  Companies exist to make money.  Also, to help mitigate any potential drop off in sales due to a bulk of it coming up front.  It seems like a wasted sales opportunity.
• How does quadrupling the revenue while possibly only doubling the staff not offer increased profit?  (You only have to pay rent one time which I am sure is factored in their SG&A.  If they doubled their staff and doubled the time period to produce the game you would need a $2,000,000 barebones quote to do that.  How does $4,000,000 affect the bottomline when the staff was not quadrupled, nor the production time, nor the equipment, nor their insurances,  or their benefits.

 

 

Responding in order:

 

* Because they wanted to make this particular type of game, but recognized that such a product probably wouldn't recover its costs.  With Kickstarter, though, they don't have to recover their costs, so even if the game was a flop (and they were aware that this was a very real risk) they would only loss they would incur is opportunity cost associated with assigning valuable resources (mostly staff) to a project with less profit potential than other projects that they could have worked on.  I suspect that the morale boost (the staff wanted to do this project), the gain in skills (the developers have learned how to work with Unity) and IP rights (both technological and otherwise) factored into this decision as well.

* Including a 10% profit margin into the Kickstarter goal is possible, and for all we know they may have done this.  I'd consider that to be very unethical, however, and I would never even consider backing a project that announced it was baking profits into the base Kickstarter figure.  Now, salaries are just fine, and at the individual level that could be considered "profit", as is budgeting money for overruns (unallocated funds "just in case"), but my expectation (and, I suspect, the understanding of most backers) is that 100% of the money contributed via Kickstarter (less fees and backer awards) will be used directly or indirectly to fund product development.

* They have added additional staff to accelerate PoE's development, based on Obsidan posts that I've seen.  Much of this is additional manpower investment is in the form of contracting out specific development tasks rather than direct hiring, some of it is in the form of moving resources that would have otherwise been allocated to a different project to PoE, and a small portion of it is in direct hiring.  You are correct that there are economies of scale in game development (as in most things), but my understanding is that the savings realized as a result of this are being re-invested in the game (by further increasing the scale, adding additional features, improving reactivity, additional testing, accelerating the development pace, and so forth) so that a break-even situation is created.

[Monte Carlo]

* Obsidian have successfully funded running costs;

 

* Net profit atm is too tough to call, staff costs and development will have eaten our backing money;

 

* On the bright side, our Obz has invested our money wisely by creating this project: they have trained and developed their staff, they have funded business continuity and development, they have created a new IP which they can re-use in the future to generate more profit, they are being talked about a lot and the KS has been good for marketing...

 

This project is a smart long-medium term business move by Ferg. He's funded a whole new indie IP for himself and got us to help fund it, which we all wanted to do and with our eyes wide open. That's how I'm viewing this project.

 

I hope this game is like the Dragon Age franchise for smart people.

[Sarex]

I hope this game is like the Dragon Age franchise for smart people.

 

Although I don't know how to feel about that last part, I personally liked origins.

[PK htiw klaw eriF]

^I liked killing **** with the drunk, gay elf dude, and golem in DAO too, but it could have done combat much better and quite a bit of quests were boring. I hope PoE does both combat mechanics and quests better than DAO.

[Monte Carlo]

 

I hope this game is like the Dragon Age franchise for smart people.

 

Although I don't know how to feel about that last part, I personally liked origins.

 

 

I really liked Origins too. I'm smarter now.

[IndiraLightfoot]

Origins was, despite its blatant shortcomings and weird DLCs, a pretty fantastic game! And heh, Shale alone was a pretty unforgettable player companion! Now that was an interesting gender transition, if I ever saw one. And the background story and the ancient history behind all that was going on in those dwarven halls were pretty great, but the political parties facing off there were pretty annoying. Sometimes, faction squabbles actually bore me (that's almost a statement ripe for the heretic thread!).

 

MC: I really do hope you are right about this being the smart and classy version.

[Monte Carlo]

Origins was, despite its blatant shortcomings and weird DLCs, a pretty fantastic game! And heh, Shale alone was a pretty unforgettable player companion! Now that was an interesting gender transition, if I ever saw one. And the background story and the ancient history behind all that was going on in those dwarven halls were pretty great, but the political parties facing off there were pretty annoying. Sometimes, faction squabbles actually bore me (that's almost a statement ripe for the heretic thread!).

 

MC: I really do hope you are right about this being the smart and classy version.

 

If you play DA:O with Shale and The Dog (+1, I took Wynne for the healing) then it's a completely playable, good fun CRPG.

[ravenshrike]

 

using a quicker development timeframe

 

Wut?

 

This game hasn't enjoyed a particularly fast development cycle. I'm not complaining, but I don't see this.

 

I could see quicker development. Maybe only by a month or three, but given the familiarity with the engine, even if they upgrade to 5 there could be time saved. Not to mention that much of the outright world building is already done and expanding the lore should be quicker than coming up with everything in the first place

[Sensuki]

On the profits front:

 

Obsidian licensed the Pillars of Eternity tools (not sure how many tools, but it included the Environment Art Pipeline stuff - also possibly an updated version of their Dialogue/Quest tool) to inXile for Torment: Tides of Numenera.

 

This deal likely added a fair amount of dough into the PE development fund.

[StrangeCat]

Sorry looks like I wrote that wrong.  When I said 100 thousand.  I am talking about Units as Physical Units in first month of Sales.

100,000 X 50 dollars for there Quarterly Profit.

 

See Ya.

[Karranthain]

Hopefully PE sells enough to allow funding of different games made on the same engine, starting another IE-like cRPG renaissance.

 

Enough cooking Tim - make Arcanum 2, stat (recruit Ben Houge while you're at it)!

[sarkthas]

How much would the Arcanum license be worth at this point anyway? Uhm if anyone has a fair estimate.

[Gorbag]

How much would the Arcanum license be worth at this point anyway? Uhm if anyone has a fair estimate.

I don't believe anyone could even wildly guess that. I don't even know who is holding it at this point. Activision?

[Karranthain]

How much would the Arcanum license be worth at this point anyway? Uhm if anyone has a fair estimate.

 

 

How much would the Arcanum license be worth at this point anyway? Uhm if anyone has a fair estimate.

I don't believe anyone could even wildly guess that. I don't even know who is holding it at this point. Activision?

 

 

Yes, it's Activision. And it wouldn't be worth much at all at this point. Unfortunately, however, it's the same reason they won't sell it. Big corporations tend to stockpile intellectual property even if they have no intention of ever using it.

 

That said, I wouldn't exactly mind a spiritual successor of sorts to be honest.

[Sensuki]

They have no reason to sell it, as selling it is just putting money in their competitors hands.

[Lephys]

^ True, but, in all fairness, by the very definition of "sell," selling it is putting money into Activision's hands, too.

[Sarex]

Licenses are worth as much as someone is willing to pay for them. The best example is the Homeworld license. There were some guys that wanted to buy it and they got 20k dollars, or something similar to that, from the community, what happened when it got to the action is that it ended up being sold for 1.35 million dollars to gearbox.

[Sensuki]

Activision don't need a few million dollars from selling a license. The IP isn't worth much, so they're just gonna sit on it and make sure no one else gets to use it. That's what being a monopoly is all about.

[Jarmo]

What probably happens with licences, is they're counted as property, estimated worth maybe a million a piece.

So a company with 50 licences gets to mark themselves as having 50 millions in IP.

A company with a lot of value can get loans and stuff easier.

 

If the company sells a such license for 100K, they get 100K, but have to mark that up as a loss of 900K.

Because that's how much less they got than the estimated value. So they wont sell.

 

There's probably a huge bunch of other things at play, but...

[whiran]

Addressing the first question:  it depends if this game is any good or not.

 

If the game is really bad then sales will be terrible.

If the game is good then sales will be good.

[Quadrone]

 

If the game is really bad then sales will be terrible.

If the game is good then sales will be good.

 

Mind = Blown

 

 

Though one could argue that with the help of great marketing some bad games have sold well and vice versa.

 

[Lephys]

*nod nod*. It's just like the game, Monopoly. If you've got Baltic avenue, you don't sell it to another player, even though it's hardly of any use to you.

[Hassat Hunter]

There have been games I have been foiled in buying full price I dislike (Oblivion and Black&White come to mind).

 

Also a lot of good games sold horrible.

[Bryy]

Licenses are worth as much as someone is willing to pay for them. The best example is the Homeworld license. There were some guys that wanted to buy it and they got 20k dollars, or something similar to that, from the community, what happened when it got to the action is that it ended up being sold for 1.35 million dollars to gearbox.

I actually really want to see a license get sold off via crowdsourcing.

[AGX-17]

I've always thought that PewDiePie should be one of the few people who plays this game on his youtube channel. That basically guarantees a few more sales. Although, I dno't know if RPGs, especially those you have to read, really games that you can do LPs of. "Let's Read Along with PewDiePie!"

Yeah, he's totally gonna play a text-heavy RTwP RPG and make videos of it for the interbutts' entertainment. Shrieking about goats' apparent sexual relations with ragdolled humans is a different ballgame from reading copious amounts of well-written dialogue.

Edited May 15, 2014 by AGX-17