I don't really understand and it's always made me curious:
They spend millions (billions?) on research and development
They release a console and sell at a loss
They manage big budget games like Killzone, Lair, etc
Those games consequently flop in sales
PSN continues to sell at a loss
They spend millions on advertising
PS+ sells free/half priced content, which seems to work counter-productively with their advertised sales like free K3 DLC
They have a ton of smaller devs like thatgamecompany that manage to make quality games, but how much do they really profit off of these games?
PSN hack has cost them dearly
Lawlsuits for Dualshock, PSN, etc
They fund studios
Sony plans to sell the Vita at a loss for THREE YEARS
I really don't get it. They are continuing to push a variety of exclusives but how do they profit?? MS makes billions off of LIVE and ads and superior sales, Nintendo has captured an entire demographic, and Sony struggles.
How exactly does it work? For both Sony and modest developers. I'm just very curious how money is made and how much is lost.
People say a game needs to sell 1 million to break even, but how? A game like Journey (amazing beta, Flower meets Shadow of the Colossus) costs $X which Sony probably funds in some way. The team is relatively small, I think 12 people. If the game is sold at $10, Sony say, makes $2.
So that's $8 to thatgamecompany, multiplied by how many copies sold... I dont know how much these kind of game sells but compared to what people like these days, I can't imagine much exposure. But if it breaks a million, 12 of those employees make 666,666. But how much is gone towards advertising, development, etc? How much does a publisher put in? And how likely is it that Journey sells a million?
Alpha-Male22
There is a LOT wrong about your post.
First, selling consoles at a loss is a relatively new thing but Sony and MS both do it. Nintendo didn't sell the Wii at a loss at launch but they are now the exception. The idea is the console is sold at less than the cost to make it, but that money will be made back in other areas.For example, buying extra controllers, hard drives, games, etc. Or, in the case of MS, XBL gold memberships, and for Sony, BR market conrol and sales.
"Flopping" in sales is relative. Who are you, or any other fanboy here, to say what constitutes a "flop" in sales? You don't know how much money the game is bringing in. You don't know what the plans are for marketing and sellig the game. You don't know what their expectations are. Just because Killzone doesn't sell Halo numbers, doesn't mean it "flopped". That is just fanboy "logic" that doesn't apply to the real world.
PSN continues to sell at a loss? What does that even mean? You may as well say the internet sells at a loss. Online gaming is free all over the place. PC gamers have been playing free online for decades. In what world do you live in that online gaming costs a fortune and not charging fees = "selling at a loss"?
People PAY for PS+ which is how Sony makes money by giving discount content.
How do developers profit off games? I don't know, how do they profit off of the Humble Indie Bundle? Or when Steam sells games for like %60 - %80 off?
Lawsuits? What company isn't in lawsuits these days. I'm pretty sure these things area write-off.
Games need to sell 1 million to break even? Are you serious? If that is the case then maybe 7 games out of the hundreds that come out each year make money. Most games only sell in the tens of thousands to hundreds of thousands. Only a very, very small percentage of all games sell more than a million copies. Not all games costs tens of millions to make. Many are made on a much small, more modest budget and so they don't need to sell as many.
Basically, you are confused because you are taking a bunch of different bits of incorrect information, and stringing them together as if ALL of them apply to every single game.
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