Square Enix to report record 22.1 billion yen loss
(twitter.com)
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That's basically the cost of a AAA game these days.
So how much of that loss came from Luminous and those non-Japanese studios it got rid of?
All of it. They're describing the loss as a write off due to content abandonment.
On top of that, Squeenix has always been particularly bad with budgeting. A game like Mankind Divided can make millions but it didn't make quite the number of millions they expected so it's a failure.
Which is still their own fault for setting it up with a disastrous marketing campaign that got them multiple independent controversies all on its own, as well as tacking on a multiplayer mode no one cared about and loading it with MTX to try and recoup losses.
Both of those cut into the profit margin before it even released and set them up for failure unless it became a groundbreaking hit. Which was impossible because it ends on a fucking cliffhanger.
They learned the lesson of Multiplayer in the original Deus Ex. Multiplayer was a metric fuckton of work. No one wanted it.
And here we are again. Remember that the original Ion Storm went bust due to project bloat.
This one wasn't competitive at least, it was just "everybody does these pre-made short levels, beat their time/score." So it couldn't have been that much work considering most of it wasn't even textured because it was "VR" in universe.
It was just completely tacked on so that way they could try to sell some kind of MTX after the "Augment Your Preorder" thing killed their plans for the single player ones.
That's an everyone problem right now. Budgets so freakishly bloated, there's no possible way they could ever profit without literally being the most popular thing of all time.
The mindset seems to be “when we release, it will magically be ‘our turn’ to dominate twitch, YouTube, Twitter, etc., and this will translate directly into big sales numbers”. As if bringing any sufficiently expensive AAA game to market is a guarantee of some level of viral success along the lines of games like BG3 and HD2.
It almost smacks of the labor theory of value; they say “we did everything right, so why didn’t we get paid?” You didn’t get paid because you forgot to make sure that people actually wanted the thing that you spent $100 million and five years making. All that time and money spent doesn’t have inherent positive value.
Guys, I've got a great idea! Y'see, all the runaway hits have been small and/or passionate projects that did something new or explored it in an interesting way. So, what we're gonna do is... Focus test and run everything by committee to create the safest, most generic and least offensive content that was popular 3 years ago.
Furthermore, if we alienate our entire audience, I believe we could quintuple our profits by pandering to the pedo-communists with no money or interest in our product.
You are absolutely right about the labor theory of value point. They think that because they worked hard they deserve money.
I could run a cemetery and dig the graves with a spoon. That would be hard work but I wouldn’t deserve a million dollar salary for it because I didn’t produce much value for the world.
The story of Marvel's Midnight Suns. It's an okay game, had several million in sales... But cost ten times what it earned. In pure revenues, any game with those numbers would be a success, but it needed to sell more than there are gamers in the world, in order to turn a profit.
How many times now have they almost bankrupted themselves?
The AAA space has hit the law of diminishing returns. Back in the 00’s if you spent an additional 10 million on a game there was a noticeable improvement. Now an additional 10 million barley makes an impact. If devs were smart they would cap their budgets and settle for not having the most beautiful game possible. Instead they decided to try to spend ungodly amounts of money in the fruitless attempt to overcome the law of diminishing returns.
The independent scene doesn’t have additional millions to waste so they have to actually be efficient with their budget.
You can still drop 10 mil on a game and make a SIGNIFICANT improvement.
The problem isn't the present value or money, or the concept of diminishing returns, it's WHAT they're spending the money on.
Four million to GaymerX consultations with a million sidebarred for Sweet Baby Inc., and five million more to have Treehouse localize the game into English, you've dropped 10 mil, but each of those decisions will REDUCE your overall sales, not increase them, not even keep them static. Put down 2 mil on an HR push for inclusion in the workplace, and you're down 4 mil in net profit. Put that same 2 mil into actual game devs, or artists, or the HR screening the artists for those who actually match the "vision" of making a game that sells rather than one that is approved by committee, or into the voice acting, or the music...
Hell, put that 10 mil into a perpetuity annuity that pays out 1 million dollars in tournament prize money per year (through university education grants, so it's also a charitable donation), and it would be a FAR better way to spend the money than what AAA companies are doing presently. At least that would be cash-neutral marketing with a double-dip in tax deductions, rather than pissing away sales by trying to appease the rainbow mafia.