Profitability: Revenue Split Take One
i may have overstated MSFT's profit position in these games (i think the most fair method would be $1.50-$1.75, or 120-140 points, for every copy of a game sold to the publisher - though that is highly, highly variable), or maybe i didn't. i can't help but think MSFT's take percentage-wise is a little larger (combining both Krome and MSFT) than XBLA as their contracted partner Krome is doing a substantial amount of the actual work. In XBLA, MSFT handles the space to store/list the games, but ultimately there is a publisher that has to be paid. With Game Room, it is like MSFT is the publisher and Krome/Konami, etc is the developer. So, MSFT probably should get a little bigger slice of the pie in Game Room. Don't get me started on the concept of Game Room profit sharing (which i highly doubt exists).
Game Room Promotion: Take One
So, what would MSFT rather promote? Would it be some place where they can get 30% of $10 or $15 ($3.00, $5.00) in a much higher exposure area that they built up since the 360's launch or 50% of $3.00 ($1.50) in an area just getting off of the ground (with a smaller target group). The volume in Game Room just isn't there to make up the difference in pricing (and it will never be). Though, as a smaller scale endeavor Game Room probably has better profitability rates. In other words, i suspect that Game Room as a percentage is more profitable (especially if they use flat rate licensing) than XBLA for MSFT, but is dwarfed in absolute dollar sales. The bottom line really is important.
XBLA vs Game Room: The First Round
XBLA vs Game Room: The First Round
Let's illustrate with Centipede (one of the 20K leaderboard games). i would estimate that Centipede sold about 15,000 @ 3.00, for about $45,000 in sales. If MSFT got 50% of that, they would receive $22,500. Now it time for the unfair XBLA comparison (i am using http://www.gamerbytes.com/2010/07/indepth_xbox_live_arcade_sales_11.php ) for the sake of comparison. The game i will use here is Ancients of Ooga. Ancients of Ooga (my favorite style of platformer) had 2,134 people on their leaderboard. If you assume 75% sales like i did with Game Room, MSFT gets Ooga revenues of $4,800. Which means i picked a bad example, these things happen. The difference there was Game Room by $17,700 for a game released for one week in that "reporting period". Now, using that same source - let's look at Puzzle Quest 2 (released the same week as Ancients of Ooga). Using the same 75% of leaderboards as purchase thing i used above, Puzzle Quest 2 sold 15,585 copies for $15 a piece. In that scenario, MSFT (at 30% take) gets $70,132.50. That is Puzzle Quest by over $47,000. Game Room would need 3 Centipede sales level games plus another 1,709 or so sales to equal the Puzzle Quest 2 XBLA revenue in that one week (if you can assume 30% MSFT take for XBLA titles). In other words, the estimated revenue to MSFT from one week of Puzzle Quest 2 (at 30%) would be the equivalent of 46,710 individual Game Room sales (at 50%). If you had the services, what do you chose to promote?
Yeah, i probably should look at a bigger game. What was said was what i was essentially saying on the last paragraph of the last post (from a business sense), with the Puzzle Quest 2 example. i found it interesting that if MSFT got 30% (estimated) of the revenue for sales from XBLA and 50% for Game Room, that it would have taken 46,710 Game Room sales to equal Puzzle Quest 2.
i started a bigger fan of XBLA, but kind of left when they retro stuff dried out and the type of games seemed to have changed (and the prices and file sizes increased). Ok, lets try Limbo (using all of the same assumptions above) - this is going to be scary. i'll assume that Limbo is 1,200 MSFT points. So, if i assume 75% of leaderboards are purchasers, that is about $2.8 million. At 30% of revenue, that would be over $852,000 to MSFT. The equivalent number of Game Room games, for the same revenue to MSFT, would be 568,437 individual Game Room games. To catch up, Game Room would have to more than double cumulative sales and Limbo would have to sell nothing.
i started a bigger fan of XBLA, but kind of left when they retro stuff dried out and the type of games seemed to have changed (and the prices and file sizes increased). Ok, lets try Limbo (using all of the same assumptions above) - this is going to be scary. i'll assume that Limbo is 1,200 MSFT points. So, if i assume 75% of leaderboards are purchasers, that is about $2.8 million. At 30% of revenue, that would be over $852,000 to MSFT. The equivalent number of Game Room games, for the same revenue to MSFT, would be 568,437 individual Game Room games. To catch up, Game Room would have to more than double cumulative sales and Limbo would have to sell nothing.
XBLA vs Game Room: The Second Round
What angle to consider now? Let's go with Game Room vs XBLA
Some of the early projections of Game Room sales were obviously done with previous XBLA releases in mind. By my count (as of August 17, 2010) 10 titles have been released on both XBLA and Game Room. i don't have nearly as much data on these titles as i would like (as i only have 3 of the 10 titles on XBLA). Most of my retro XBLA games are Namco. The three games i have on both are Asteroids/Deluxe, Centipede/Millipede and Time Pilot. i do not have the games Battlezone, Missile Command, Tempest, Scramble, Yie Ar Kung Fu, Gyrus or Warlords for XBLA (i do have them for Game Room). This will be based off of leaderboard entries.
Asteroids/Deluxe had 27,675 leaderboard entries for about 22,140 sales. Using same assumptions in previous posts, that would be a total gross revenue of around $110,700 (about $33,210 going to MSFT). On Game Room, i would estimate that Asteroids and Asteroids Deluxe sales were around 14,080 units combined (for a gross revenue of about $42,240). i estimate Game Room sales of those titles accounted for about 38% of the revenue the XBLA game did.
Centipede/Millipede is a bit better selling story on XBLA. i would estimate that Centipede sold around 46,759 units (for gross revenue of about $233,759). Centipede/Millipede did about the same on Game Room as Asteroids/Deluxe (14,080 units for a gross revenue of about $42,240). The Game Room versions of the Centipede/Millipede would be about 18% of the revenue of the XBLA version.
Time Pilot: the leaderboards for the XBLA game are not conducive to seeing how many spots are on the leaderboard (as a page seems to be 7 scores and you actually have to scroll through them). i scrolled down to about 71,000th place (at about 45,000 pts) before i accidentally hit the thumb stick the wrong way. Time Pilot was also a game that was given away as a pack-in for a controller (and maybe otherwise). So, i'll estimate 100,000 leaderboard entries for about 80,000 sales (about $400,000 in gross revenue). i would estimate that the sales of Time Pilot in Game Room would be about 3,200 units (for gross revenue of about $9,600). That would be about 2.4% of XBLA revenue.
Some of the early projections of Game Room sales were obviously done with previous XBLA releases in mind. By my count (as of August 17, 2010) 10 titles have been released on both XBLA and Game Room. i don't have nearly as much data on these titles as i would like (as i only have 3 of the 10 titles on XBLA). Most of my retro XBLA games are Namco. The three games i have on both are Asteroids/Deluxe, Centipede/Millipede and Time Pilot. i do not have the games Battlezone, Missile Command, Tempest, Scramble, Yie Ar Kung Fu, Gyrus or Warlords for XBLA (i do have them for Game Room). This will be based off of leaderboard entries.
Asteroids/Deluxe had 27,675 leaderboard entries for about 22,140 sales. Using same assumptions in previous posts, that would be a total gross revenue of around $110,700 (about $33,210 going to MSFT). On Game Room, i would estimate that Asteroids and Asteroids Deluxe sales were around 14,080 units combined (for a gross revenue of about $42,240). i estimate Game Room sales of those titles accounted for about 38% of the revenue the XBLA game did.
Centipede/Millipede is a bit better selling story on XBLA. i would estimate that Centipede sold around 46,759 units (for gross revenue of about $233,759). Centipede/Millipede did about the same on Game Room as Asteroids/Deluxe (14,080 units for a gross revenue of about $42,240). The Game Room versions of the Centipede/Millipede would be about 18% of the revenue of the XBLA version.
Time Pilot: the leaderboards for the XBLA game are not conducive to seeing how many spots are on the leaderboard (as a page seems to be 7 scores and you actually have to scroll through them). i scrolled down to about 71,000th place (at about 45,000 pts) before i accidentally hit the thumb stick the wrong way. Time Pilot was also a game that was given away as a pack-in for a controller (and maybe otherwise). So, i'll estimate 100,000 leaderboard entries for about 80,000 sales (about $400,000 in gross revenue). i would estimate that the sales of Time Pilot in Game Room would be about 3,200 units (for gross revenue of about $9,600). That would be about 2.4% of XBLA revenue.
XBLA vs Game Room: Round 3
Before i get to my hunch/"conclusion" regarding the two (without enough data points), let's take another look at the Asteroids and Centipede games. Just for fun, let's add in the 2600 ports.
* Asteroids: that would only add another 400 or so units and bring the estimated gross revenue up to $43,440 (or about 39.2% of the XBLA sales)
* Centipede/Millipede: adding the 2600 ports would add about 5,760 units and bring up estimated gross revenue to about $59,520 (or 25.46% of the XBLA sales).
"Conclusion"/hunch: sales of Game Room titles will probably generate about 5-10% of the revenue that the XBLA version in the near term (first 6-9 months). Some games will generate higher percentages. In the longer term, i would peg 15-25% as the total amount. The amount of games listed on both simultaneously will hopefully increase (as Game Room gets more titles). As far as money to the publishers or MSFT, who knows. However, Game Room sales of a title (like the ones in my example) can, and will, still increase. The leaderboards for Game Room are pretty imprecise. The 3 XBLA titles i used have been out for, or almost 3 years (i don't recall if these were ever discounted).
To answer a previous thread (using leaderboard data), i believe Pac-Man would sell at least 24,000 copies on Game Room in the first 6 months.
* Asteroids: that would only add another 400 or so units and bring the estimated gross revenue up to $43,440 (or about 39.2% of the XBLA sales)
* Centipede/Millipede: adding the 2600 ports would add about 5,760 units and bring up estimated gross revenue to about $59,520 (or 25.46% of the XBLA sales).
"Conclusion"/hunch: sales of Game Room titles will probably generate about 5-10% of the revenue that the XBLA version in the near term (first 6-9 months). Some games will generate higher percentages. In the longer term, i would peg 15-25% as the total amount. The amount of games listed on both simultaneously will hopefully increase (as Game Room gets more titles). As far as money to the publishers or MSFT, who knows. However, Game Room sales of a title (like the ones in my example) can, and will, still increase. The leaderboards for Game Room are pretty imprecise. The 3 XBLA titles i used have been out for, or almost 3 years (i don't recall if these were ever discounted).
To answer a previous thread (using leaderboard data), i believe Pac-Man would sell at least 24,000 copies on Game Room in the first 6 months.
XBLA vs Game Room: Round 4: Newer Data
* Asteroids/Deluxe - 4,000 / 20,000 (est. sales - 21,000)
* Asteroids 2600 - 1,000 leaderboard
* Centipede / Millipede: still the same 20K / 2K (est. sales 19,250)
* Time Pilot - 5,000 leaderboard (4,375 sales est)
* 2600 ports: Asteroids - 1,000 (875 sales set), Centipede - 700 (612), Millipede - 7,000 (6,126 sales est)
My Expectations:
the most simple terms the statement by Ruined is true. i would prefert the phrase "leveraging previously non-performing assets" on the Xbox 360 console, though (to be fair they do leverage titles on Game Room they do use elsewhere).
Based on what Game Room is, it has far surpassed my sales expectations for it (but then, even the recent packs surpass that). To me, Game Room is a runaway success with a very strong start that has normalized since then. As long as MSFT and the publishers can make money on it, i see no reason for Game Room to stop. As soon as i get my new Xbox 360, i will get some games for my secondary account too.
XBLA is like a blockbuster movie (with higher production costs), Game Room is closer to a low budget major studio movie - the expectations are lower and it takes less sales to be a success. It is like comparing Star Wars: The Empire Strikes Back (XBLA) to Animal House (Game Room), from a sales perspective.
Based on what Game Room is, it has far surpassed my sales expectations for it (but then, even the recent packs surpass that). To me, Game Room is a runaway success with a very strong start that has normalized since then. As long as MSFT and the publishers can make money on it, i see no reason for Game Room to stop. As soon as i get my new Xbox 360, i will get some games for my secondary account too.
XBLA is like a blockbuster movie (with higher production costs), Game Room is closer to a low budget major studio movie - the expectations are lower and it takes less sales to be a success. It is like comparing Star Wars: The Empire Strikes Back (XBLA) to Animal House (Game Room), from a sales perspective.
Changing Estimate Assumptions:
i decided to change some of my assumptions: the first is that i am now using a point estimate of 87.5% of leaderboard entries as purchases (basically 85% + 2.5% for leaderboards being a little more than what is listed). Someone at gamerbytes (where i started thinking of using data after looking at it) said that they estimate that XBLA titles have 90% purchase rates (i don't believe it, but i'll use a higher number). i have modified my estimates of one medal games to 1% of ranked game totals. i might try to look at how games sales (or the representation given to games increase monthly, or so, for legacy titles - i can't afford to keep up with all of the new ranked games). Misc:
Yeah, it can be tricky with licensing. Some companies seem to get it, some don't. Some companies want the extra money from licensing their properties, while others are content to just sit on them. Unfortunately, XBLA seemed to dry up for these retro releases (now it has to be remixed, remade, or whatever other term you may use). This, literally, is not going to be easy to read.
Price point on Game Room seems less of a big deal than most people seem to think. Let's play the role of publisher of retro content right holder here in completely made up pseudo dialog form.
* MSFT: Game Room titles will sell for up to $5.00 (400 pts) each and will be on Games for Windows Live (GFWL) too, thus reaching a larger potential audience that the Xbox platform. It is the new portal for retro titles for the Xbox going forward.
* Publisher: Wait a second, did you say up to? What is the pricing structure here? What kind of sales do GFWL do?
* MSFT: The price will be $3.00 (240 points) for one game on one platform plus a $.50 (40 points) for one play of a title.
* Publisher: what potential responsibilities do we have and what would we get if we signed on?
Enough of that, since i don't know MSFT's next line. Here is how things would play out if i were an arcade rights holder approached for Game Room.
1) Find out how many games they want (also what games, add a few games to the mix)
2) Set prices: my initial offer would be in three scenarios - $10,000 per game (settle for $5K) / $2.50 per game (settle for $1.50) / $5k per game + $1.50 for every sale over 3,000 (the sales threshold depends on the prices of both). The percentage basis for me would always be based off of the $5.00 per game figure. i would want to be paid monthly or quarterly. i would see if MSFT would give me a guaranteed minimum. i would want the contract to cover at least 25 titles and be for more than $100K (preferably $250+ K in USD, maybe for 50+ games). Never sign an exclusivity deal for retro IP, unless well compensated for it (and release on all the platforms you can).
3) Wait for counter-proposals and accept it if it were in the correct range.
4) Do what the contract stipulates. Profit.
Price point on Game Room seems less of a big deal than most people seem to think. Let's play the role of publisher of retro content right holder here in completely made up pseudo dialog form.
* MSFT: Game Room titles will sell for up to $5.00 (400 pts) each and will be on Games for Windows Live (GFWL) too, thus reaching a larger potential audience that the Xbox platform. It is the new portal for retro titles for the Xbox going forward.
* Publisher: Wait a second, did you say up to? What is the pricing structure here? What kind of sales do GFWL do?
* MSFT: The price will be $3.00 (240 points) for one game on one platform plus a $.50 (40 points) for one play of a title.
* Publisher: what potential responsibilities do we have and what would we get if we signed on?
Enough of that, since i don't know MSFT's next line. Here is how things would play out if i were an arcade rights holder approached for Game Room.
1) Find out how many games they want (also what games, add a few games to the mix)
2) Set prices: my initial offer would be in three scenarios - $10,000 per game (settle for $5K) / $2.50 per game (settle for $1.50) / $5k per game + $1.50 for every sale over 3,000 (the sales threshold depends on the prices of both). The percentage basis for me would always be based off of the $5.00 per game figure. i would want to be paid monthly or quarterly. i would see if MSFT would give me a guaranteed minimum. i would want the contract to cover at least 25 titles and be for more than $100K (preferably $250+ K in USD, maybe for 50+ games). Never sign an exclusivity deal for retro IP, unless well compensated for it (and release on all the platforms you can).
3) Wait for counter-proposals and accept it if it were in the correct range.
4) Do what the contract stipulates. Profit.
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