Video Game Corporation

[xbxDaniel]

Right now in the Video Games Corporation there are three Major Companies: Nintendo, Microsoft, and Sony. Any way you look at it, these three coroporations control console gaming. PC gaming is much more versatile, mmorpgs and the various publishers that produce the games for them, but other than the computer there is a monopoly-like effect in video games.

Usually publishers, Rockstar;Take Two Interactive; Capcom; Bungie; etc., work for either one company, or all three companies. While removing first-pary games (Mario, Sony-Liscenced Characters, Master Chief) from this option, usually these third-party publishers play no favorites. Occasionally a publisher will opt out for another system if not obligated by a contract (see Halo). Usually the game in question will come out for all systems. Primarily because the more ways the game is developed, the more likely money is to come. Grand Theft Auto being the most relative response. Sony had a time-specific contract with Take Two interactive, after the contract had expired the game came out on Xboxs.

The price rarely lowers between systems, Grand Theft Auto became cheaper on Xbox when it became cheaper on Playstation. Resident Evil 4 is still sold for fifty dollars on both Playstation and Gamecube.

With the introduction of the Xbox 360 people are in high demand of both games and the actual console. That is the reason for the sky-high prices for both. Undoubtedly Microsoft will lower the cost of their system when the PS3 comes out, but the demand is high now so they're limiting supply and keeping a high price. The games are, if you haven't noticed, going to sixty dollars apiece.

The making of a game follows, usually, a pattern: Planning, Programming, Production. Intracies are laid between these three broad categories, but these are ultimately the three branches of making a game. The planning phase is carried out by Developers, Managers, Directors, Artists, etc. and consists of a basic phase to design the game overall. The Programming phase is obviously to code and debug the game. The Production branch requires the publisher to make X amount of games for the demand. More are made when needed (Halo most prime example). The Production phase is the least manual aspect of the production.

Mass production of any disc product is carried out by a machine with little user interface. The actual disc is worth little money and the mass production of this disc costs corporations a small portion of their total income. Usually less than two%.

Console and portable software sales: $6.2 billion

Considering that about five-hundred-thousand copies can be sold at the price of fifty$ and make an income of 25,000,000 dollars, it's pretty safe to say that most companies can pay for the salaries demanded by the employees. If you add that 295,734,134 people live in America alone and that at least a quater of those people (approx. 73,933,533 people) play console video games then it seems like the companies are making plenty of money.

Also, keep in mind, most publishing companies make more than one game series (Ubisoft-Prince of Persia, Splinter Cell) which means they recieve the income from all of those games. I thought that needed to be clear. Some of the profit does return back to the respective console publisher (Nintendo, Microsoft, and Sony), but the majority goes right back into the publishers hand.

First-party publishers, when they own the rights to the game, pay only their own development team and keep the revenue.

With these facts present, and the that the Video Game industry is doing better then any other entertainment industry right now, it's easy to derive that it's somewhat odd that the industry has yet to pay back their customers with any special discounts in costs. Obviously, money is put towards unique titles that aren't as certain to gain the same revenue (Beyond Good and Evil, Prince of Persia).

The issue remains that their is an excess of money running through the industry. I propose that these console publishers are keeping the cost of all the games equal as to keep a type of monopoly on the business. I compare this to the Automotive industry which monopolized the business in America until the Japaneese became an active participant in the production of automobiles.
These are merely observations though, but there is suspicion to the underworkings of the Video Game Industry.

Please remember that this was in reference to Console systems and games and that I'm not taking PC games into account.

-Daniel

[EisigerBiskuit]

Is that long message playable?

[xbxDaniel]

I'm releasing a three-CD behind-the-scenes edition soon. Commentary by the director, composer, and actors.

[Schimid]

great!!

[Chojin]

Also, keep in mind, most publishing companies make more than one game series (Ubisoft-Prince of Persia, Splinter Cell) which means they recieve the income from all of those games. I thought that needed to be clear. Some of the profit does return back to the respective console publisher (Nintendo, Microsoft, and Sony), but the majority goes right back into the publishers hand.

99-110% of the time, these companies have entirely seperate development teams to handle these seperate franchises. Payroll is by far a company's largest expense, and you aren't factoring in even basic overhead costs. Also consider that most large companies have several offices, often internationally, and then also consider that a software company's game development staff is way under 50% of the people working there.

I'm sure plenty of people would be upset at you for calling the development stage 'programming', as well. ;<

[xbxDaniel]

True, I did neglect that. Bad information on my part. I was forgetting about the companies I was actually describing. When I wrote this I was just searching through sites and not checking information. My fault entirely.

[AChimp]

Your three phases thing is wrong. The lines between all three parts are extremely blurry. Planning occurs simultaneously throughout the entire development process, for example. There isn't a set day where you say, "okay, it's all planned out so let's get to coding."

The "production" phase as you call it is the most important part because it is what dictates what gets planned and created to begin with. To simplify it for you, it starts with Production and is followed by Stuff.

[xbxDaniel]

I'm trying to grasp this, please excuse my ignorance. Obviously my knowledge on the overall process of making a game is limited. My concerns were with how the money was distributed throughout the company or corporation. Chojin helped me realize that the payroll for the employees is a major expense. Larger groups of developers (EA) are going to have to pay more people, and the more independent groups are going to have to pay their own team along with the publisher. Is this correct? If not, please comment back.

[Chojin]

Publishers pay developers, not the other way around. Usually developers end up taking a tiny cut of the sales of a game (or in some cases a full-blown one-time payout). In return, the publisher takes the game to market and will oftentimes pony up the working capital for the developer to make the game to begin with.

[xbxDaniel]

Thanks.

[AChimp]

Many times the developers are a small independent company, as well, that basically creates the game on a shoe-string budget in the hopes that a publisher will actually care enough to buy the game and distribute it. I have a couple friends that are working in companies like that on the West Coast.

A big company like EA acts as a publisher for small companies and develops and publishes its own games.

[xbxDaniel]

Does the group make the game with a specific publisher in mind?

Edit: Other than teams that work solely with one publisher i.e. Maxis with EA.

[AChimp]

It depends on stuff like whether or not they already have a contract with the publisher, etc. If the company is new, they're usually willing to sell to the publisher that they can get the best deal from.

Sometimes they will try to market themselves towards specific publishers if they're making something that fits with the type of games that a publisher has released before (i.e. a publisher for FPS games probably won't be interested in an RTS game).

Normally, if you're just starting out, though, you want to be as open as possible to increase your chances for sucess.

[xbxDaniel]

Thanks.

[Royal Tenenbaum]

Originally Posted by AChimp

Your three phases thing is wrong. The lines between all three parts are extremely blurry. Planning occurs simultaneously throughout the entire development process, for example. There isn't a set day where you say, "okay, it's all planned out so let's get to coding."

The "production" phase as you call it is the most important part because it is what dictates what gets planned and created to begin with. To simplify it for you, it starts with Production and is followed by Stuff.

Generally what gets made it dicated in "pre-production." Production would be the actual creation of the product. You obviously have to staff, develop ideas, etc. before you can begin "production." Pre-production is when you decide what you are going to "produce." You don't decide that in production.

[AChimp]

In this case, "production" was refering to what the publisher/client wants. It's the wrong term to use, but I was trying to tie it in to the earlier posts.

[Supafly345]

Is this a research paper?