Support NeoGAF

[elcapitano]

Does Sony even make money on the mainline Spiderman games? These production budgets are astronomical. Combine that with the leak that Disney takes a HUGE amount of money in royalties per copies sold (including a whooping 50% cut on hardware bundles) it's clear to see why their margins are so low.

Not sure why anyone is surprised.

I always said these licenced games from Marvel would likely need to sell mother than double that of a standard Sony IP to make the same money.

The again I suppose even though Sony make less money total it's guaranteed sales compared to new IPs and they are easier to churn out as well.

 

[Go_Ly_Dow]

What would be the main difference in selling a game?

If the potential leaked slide is reporting on estimated net revenue rather than gross, then presuambly this is the amount they would get after deductions, such as retailer/digital store cut, platform holder cut, royaly deductions, packaging and distribution expenses etc... Whilst the slide you've linked may be reporting the gross revenue, aka before these deductions (number of sold copies x average $ per copy). This is just a guess to provide another possible reason for the discrepency on your slide vs this so called leaked slide.

 

[Darsxx82]

Does Sony even make money on the mainline Spiderman games? These production budgets are astronomical. Combine that with the leak that Disney takes a HUGE amount of money in royalties per copies sold (including a whooping 50% cut on hardware bundles) it's clear to see why their margins are so low.

It is evident that Sony does not sign these exclusivity agreements with Marvel because of the returns on game sales but rather it has more to do with selling consoles and attracting users to its ecosystem.

It can be said that Sony has not done badly in that regard, but depending so much on third-party licenses is not the best in the long term.

 

[Insane Metal]

Insane how a game can cost 300, 400M $. Jesus.

 

[Del_X]

Isn’t there some data that shows Sony’s gaming divisions make about 7% margin while Xbox makes 12%?

Sony needs their own big multiplayer hit. Makes sense why they bought Bungie.

 

[The artful mincer]

If the potential leaked slide is reporting on estimated net revenue rather than gross, then presuambly this is the amount they would get after deductions, such as retailer/digital store cut, platform holder cut, royaly deductions, packaging and distribution expenses etc... Whilst the slide you've linked may be reporting the gross revenue, aka before these deductions (number of sold copies x average $ per copy). This is just a guess to provide another possible reason for the discrepency on your slide vs this so called leaked slide.

Got you! So net revenue is the money Sony get back after all the deductions. The deductions are less because Insomniac is first party right.

I guess we can include the Marvel cut in those deductions as well

 

[AJUMP23]

I guess Ratchet and Clank is dead. no ROI, no reason to invest in it.

 

[MaulerX]

It can be said that Sony has not done badly in that regard, but depending so much on third-party licenses is not the best in the long term.

That's a good point. Heavily tying your system with games/franchises/characters (and depend on those for your systems popularity) that aren't yours has a potential to really backfire in the future even if it seems to be working out at present. I can now see why they were so heavily opposed to the ABK deal and losing COD marketing.

 

[Go_Ly_Dow]

Got you! So net revenue is the money Sony get back after all the deductions. The deductions are less because Insomniac is first party right.

I guess we can include the Marvel cut in those deductions as well

Yeah, so for example if a game sold 5mil copies x $70 per copy the gross revenue would = $350mil.

Then let's say the say after deducting the expenses I mentioned the developer is left with $35 per copy, then the net revenue would be 5mil x $35 = $175mil.

Let's say the development budget for this particular game is $100mil (development + marketing), then the gross profit would be $175mil net revenue - $100mil budget = $75mil.

Finally from the $75mil gross profit if corporation tax is 20% on gross profit then the net profit would be $75mil gross profit - 20% taxes = $60mil.

This is overly simplified and there are many factors to consider that are variable and not fixed, such as background deals, royalties, country, how certain industries are taxed etc...

 

[twilo99]

Well. They are paying 9-18% of digital sales to Marvel as royalty fee
19-26% on physical copies
19-26% on DLC content
35-50% of wholesale bundle price

I guess that is eating to their profits massively.
But on one hand you have at least some guarantee of profits. Otherwise you are left with Ratchet & Clank which didn't even break even.

I had no idea how much leverage Marvel holds over Sony here… crazy

 

[Godot25]

I had no idea how much leverage Marvel holds over Sony here… crazy

Yeah.
When you realise how many Spiderman 2 PlayStation 5 bundles were sold at 449$
While Disney took additional 30$ thanks to royalty fees.

And with physical split you already have probably half of money because you need to pay manufacturing/retailers etc. and then Disney will take additional 19-26%. I wonder how much it leaves to Sony.

Crazy.

 

[The artful mincer]

Yeah, so for example if a game sold 5mil copies x $70 per copy the gross revenue would = $350mil.

Then let's say the say after deducting the expenses I mentioned the developer is left with $35 per copy, then the net revenue would be 5mil x $35 = $175mil.

Let's say the development budget for this particular game is $100mil (development + marketing), then the gross profit would be $175mil net revenue - $100mil budget = $75mil.

Finally from the $75mil gross profit if corporation tax is 20% on gross profit then the net profit would be $75mil gross profit - 20% taxes = $60mil.

This is overly simplified and there are many factors to consider that are variable and not fixed, such as background deals, royalties, country, how certain industries are taxed etc...

Thanks for this!

I remember a slide that ubisoft made 55% on physical sales before all these deductions. We all know digital is 70% for 3rd parties on most stores.

I think first party gamesare usually about 70% physical and 95% digital on there own stores.

Obviously we don't know what marvel/ Disney takes from spiderman games but presumably Sony take less than a average first party title.

Still even if we assume net revenue that Spider-Man remastered figure is still really low. At 30 dollars a unit that's still 120 million gross so they would only be making about 40% net lol.

 

[ChorizoPicozo]

WoW, there are very few benefits for games from big franchises and they cost so much..... It doesn't surprise me how there is so much talk in the industry about "unsustainability".

Games that sell 10+ million units and almost marginal profits. Ratchet is a negative surprise

Licenses with Marvel are double-edged. They squeeze you in fees and % of sales but you get IPs that can attract buyers of your console. Given what this have seen, I think that is Sony's purpose with the Marvel licenses and not so much to make great economic benefits.

to sell consoles.

 

[DenchDeckard]

These cinematic games cost too damn much money and now everyone expects games to be on that level of cinematic quality. The crazy thing is you think spider man 2 cost 315 million......what does a game like last of us 2 cost?

And imagine if these games don't hit sales targets.

Sony built this kind of expectation but I don't think anyone else can actually afford to deliver anywhere close to what they can tbh.

 

[phant0m]

I guess Ratchet and Clank is dead. no ROI, no reason to invest in it.

That's my takeaway, and it's a shame.

But gamers want their spooder-man i suppose

 

[ButchCat]

I would love to see a cost breakdown because $39M for a remaster is obscene, wonder what the marketing/ dev cost split is, 80%/ 20%? With sky-rocketing AAA budgets like these it is very easy to see why very few studios are able to match the fidelity of Sony Studios games but it also shows why Sony has become more risk-averse lately.

 

[Luipadre]

am I the only shocked by this ? After releasing 80€ games, they'll make them in 2 parts at 60€ (in France 50$ always convert to 60€) ? or wait 2 years to get it in 1 part for 80€ ? That's so fucked up.

It is lmao. Wtf is this. Hope its not true.

 

[AtomicStarving]

Examples of some longer AAA games which didn't reuse assets:

 

[Men_in_Boxes]

As much as I hate to admit, we can see with this presentation why executives salivate over GAAS

I tried to warn you guys

 

[Go_Ly_Dow]

Examples of some longer AAA games which didn't reuse assets:

No where near to the same extent as Spiderman 2 which reused and updated all of the city from the 1st game and a lot more. Elden Ring is superficial in comparison.

 

[Fbh]

It's a shame we don't really get a lot of info about budgets in other games because it would interesting to see how the budget of something like Spiderman 2 compares to other games. Like how much did Elden Ring cost? Or Hogwarts Legacy? or a cinematic game from a smaller team like Plague Tale Requiem?

Still 300mill seems extremely high. No wonder most AAA are so bland, when a flop can sink a studio they'll try to make the least risky product possible.

Does Sony even make money on the mainline Spiderman games? These production budgets are astronomical. Combine that with the leak that Disney takes a HUGE amount of money in royalties per copies sold (including a whooping 50% cut on hardware bundles) it's clear to see why their margins are so low.

While they probably don't make a lot of money from the game itself, I imagine the main objective of a lot of exclusives is making the brand stronger and ensuring the console continues to sell well and has an active userbase.
A strong Ps5 means millions of people buying FIFA, Madden, COD, GTAVI, Assassins Creed, Vbucks, etc and Sony takes a 30% cut from all of them

 

[ChuckeRearmed]

SM2 budget is crazy.

 

[Men_in_Boxes]

What I learned from the Insomniac leak:

GAAS >>> AAA Liscensed IP

 

[Carmen Winstead]

Blud thinks releasing a game is only developing the map for it.

 

[twilo99]

Are these slides fake?

 

[Thirty7ven]

BULLSHIT BULLSHIT this slide is pure fucking BULLSHIT!

There's a slide a from fucking Sony linked here that shows that Spider-Man remastered generated 52 million in revenue from 1.5 million units JUST from the PC version.

Marvel’s Spider-Man Remastered PC Sales Cross 1.5 Million, The Last of Us Part 1 Sells 368,000

Insomniac's remaster generated $52 million in revenue, while Naughty Dog's remake earned $15.5 million since releasing on PC.

gamingbolt.com

I dunno about the other leaks but stop taking the information here at face value. If you haven't worked out yet its BULLSHIT!

The Activision “leapfrog dated” slides are fake so I’m wondering what else is fake.

But people caring about game budgets is funny.

 

[truth411]

Really sad about ratchet. I love platformers and I missed them.

Ratchet was released when PS5s were virtually impossible to find. I hope Sony takes that into account. I love Ratchet also.

 

[Flabagast]

Are these slides fake?

No they are real

 

[Little Chicken]

The margins are surprisingly low, but that's just due to the astronomical budgets...!

Remember when $100M was a huge deal? lol.

 

[twilo99]

No they are real

How do you know? Lots of comments on twitter claiming it’s all fake

 

[mckmas8808]

Return of investment. How much money they get in return verses development costs and marketing.

Wild that SM games cost in between 300-400M.

Bro! That's StreetsofBeige he KNOWS how businesses work. LOL! I think it's this leak and "how" Insomniac is getting to their ROI that's confusing.

 

[DeepEnigma]

Examples of some longer AAA games which didn't reuse assets:

 

[hinch7]

Bro! That's StreetsofBeige he KNOWS how businesses work. LOL! I think it's this leak and "how" Insomniac is getting to their ROI that's confusing.

I don't know every user. Also blocked.

 

[mckmas8808]

Crazy of low the projected ROI on these massive AAA games are. 35-40% for +5-6 year projects. Sony could just invest the money in index funds and get better risk-adjusted returns over the development period. Perfectly shows why they are pursuing GAAS projects.

And this type of "suit" thinking is why creative projects die. If 40% profit isn't enough, then gaming needs to die! Kill it all! Because I can promise you GAAS projects won't get 40% profit, because many will fail within the first year.

Making games is supposed to be a thing companies did with love and passion. If your passion could grant you a 40% profit margin.....there's literally nothing better in life to be doing. Yet people like yourself and other executives would rather put that money into Index funds and gamble that profit on GAAS games that fail time and time again.

 

[MikeM]

I wonder how bundles are factored in. Do they count as a full price game then take the hit on the hardware side?

 

[Hugare]

I tried to warn you guys

Doesnt mean that they should all follow it

 

[mckmas8808]

Does Sony even make money on the mainline Spiderman games? These production budgets are astronomical. Combine that with the leak that Disney takes a HUGE amount of money in royalties per copies sold (including a whooping 50% cut on hardware bundles) it's clear to see why their margins are so low.

This is starting to look more and more like an Xbox fanboy FUD campaign, once those Xbox numbers were released. Yall actually believe these numbers? For real?

 

[mckmas8808]

Xbox is the girl that keeps getting injections hoping it fixes problems but can’t fix the problems that’s deeper roooted in her.

So if a gamer wants to play SM3 SP and MP, it's $100 US.

Something doesn't look right with the $50 each. You;d think it might be $70 SP and $30 MP tacked on.

It's because you are smart and have common sense. Of course something isn't right here.

I tried to warn you guys

And yet most GAAS games BOMB hard!

What I learned from the Insomniac leak:

GAAS >>> AAA Liscensed IP

So why does Sony keep winning with their licensed AAA IP then? And why are they canceling their GAAS games, but doubling down on these AAA games? News flash!!!!!!!!!!! It's because one works more than the other!

 

[Xyphie]

And this type of "suit" thinking is why creative projects die. If 40% profit isn't enough, then gaming needs to die! Kill it all! Because I can promise you GAAS projects won't get 40% profit, because many will fail within the first year.

Making games is supposed to be a thing companies did with love and passion. If your passion could grant you a 40% profit margin.....there's literally nothing better in life to be doing. Yet people like yourself and other executives would rather put that money into Index funds and gamble that profit on GAAS games that fail time and time again.

I'm sorry if pointing out that the games industry operates in the real world upsets you. When $300M and 1000 people are involved unfortunately love and passion is the first thing that goes out the window.

 

[Men_in_Boxes]

It's because you are smart and have common sense. Of course something isn't right here.



And yet most GAAS games BOMB hard!



So why does Sony keep winning with their licensed AAA IP then? And why are they canceling their GAAS games, but doubling down on these AAA games? News flash!!!!!!!!!!! It's because one works more than the other!

I like how Marvel game revenue being smaller than expected PLUS Insomniac going ham into multiplayer is somehow proof against the inevitable GAAS future.

What it that psychological effect called when people are presented with evidence that contradicts firmly held beliefs...and they just dig in deeper?

The human mind is a fascinating bundle of nerves.

 

[wvnative]

These cinematic games cost too damn much money and now everyone expects games to be on that level of cinematic quality. The crazy thing is you think spider man 2 cost 315 million......what does a game like last of us 2 cost?

And imagine if these games don't hit sales targets.

Sony built this kind of expectation but I don't think anyone else can actually afford to deliver anywhere close to what they can tbh.

industry fucked itself with this type of game

 

[Salty Popsicle]

I had no idea how much leverage Marvel holds over Sony here… crazy

I remember back in the day when people were adamant that Sony got a sweet deal on these Marvel properties just because of the Spiderman movies

 

[Jigsaah]

WTF 2 parts for Spiderman 3? I don't like this.

 

[twilo99]

I remember back in the day when people were adamant that Sony got a sweet deal on these Marvel properties just because of the Spiderman movies

Maybe it would’ve been worse without the movies but Marvel obviously know their worth and are milking Sony accordingly

 

[Ribi]

Cloud imperium Games has as of now a budget of 650mil for two concurrent games. Spiderman was 300mil and didn't even win goty. Spiderman is a scam

 

[Taur007]

Yikes!! As an Xbox guy I really understand now why Sony wants no part in day one gamepass model, 300m for SM2 is insane, that 70$ is crucial, hell i wanna see starfields budget now just to see what MS is dealing with.

 

[GermanZepp]

I don't know shit about how budgets get passed. But It sounds very expensive. I get it, there are blockbusters games but still..

 

[Jinzo Prime]

Oh no so worried about game budgets

Who gives a shit, good! Spend all that money. Otherwise taking 30% cut from third parties + subs would be feeding what exactly? Trash?

I want high budget games.

Nah, budgets this high cause the bean counters at game companies to want to extract as much money from the game as possible, like wanting more microtransactions, or spitting the game into multiple parts.

And if it misses sales targets, mass layoffs. Just take a look at the rest of the industry.

 

[twilo99]

Do we know if these slides are genuine or made by console warriors ?

 

[X-Wing]

$315mil to make a game that's a lot shorter than some AAA games, reused a lot from the 1st game and is padded out, so how much is it costing to make longer games which aren't reusing previous work?

Examples of some longer AAA games which didn't reuse assets:

Do we assume games are a lot cheaper to make in Eastern Europe and in Asia, so studios outside of the US can get a lot more mileage with their budgets?

Or you know… gameplay time doesn’t necessarily correlate to budget.