Analysis: The Real Costs Behind Video Game Production and Revenue Trends

Check, among other things
YouTube: Video Games Aren’t Too Expensive To Make | Creep feature

Who put together some numbers available from various sources to create a graph of what is called cost of goods sold – ie direct logistics costs for production, transport, sales and administration – of the ‘big three’: EA, Ubisoft, and Activision.

This graph shows a sharp downward trend between 2010 and 2017, corresponding to the period when the digital-only share of the market rose significantly.
That’s actually a little more than 1~2%.

(The reason Activision suddenly shot up in that graph in 2017 was the acquisition of King, anyway. No indicate that the pattern has been broken.)

Later they also have research and development data – ie actual development costs for new games – being compiled. And it turns out that these costs have actually remained relatively stable during this period. (For EA even one that is clearly visible shrinking line.)

The same goes for marketing costs, which have also remained constant for these big three.

That video makes an interesting argument, with which I can agree:
Annual revenue has remained the same for all three companies, and the number of games they release each year has increased. well has fallen significantly. Less new products, less direct sales, less direct sales revenue. But again: the annual turnover has remained the same.

This can be partly explained by the reduction in logistics costs (‘cost of goods sold’), but was partly compounded by items such as war passes; online passes; microtransactions; game advertisement; etc. – all of which are said to be ‘necessary’ to keep the selling price under control.
Although it seems that what is going on is that fewer titles are being sold, so somehow more profit must be extracted from a smaller collection of products.
Which, assuming that the retail market is not growing enough to sell more units of the same products, can only be done in one way: creatively using other methods to collect money from these same materials.

So it is more likely that what is going on is exactly what is going on with the major publishers. Especially if you look at sources that claim to have data showing, for example, that 50% of EA’s annual revenue comes from ‘post sales for FIFA’ – ie. FUT loot boxes. Then all the shares are just completely lost.

[Reactie gewijzigd door R4gnax op 11 mei 2024 22:51]