I hope PD haven't gone bust

[Scaff]

Scaff, 9M to reach break-even? Care to share that estimate?

PD's operating expenses are around 10M$ annualy for last 7 years, including all possible costs of studio, development and expenses. How did you come to 9M copies to come to break-even?

Here you go:

Are you actually aware of how much GT5 cost to develop?

Rough estimates are that it cost a minimum of $60 million dollar.

Now they have sold 9 million units, at lets say an average of $40 each (that's being generous considering how quickly it went to a budget release), which would give $360 million. Great if PD got all of that, but they get around 15%, which would return around $54 million.

In other words its quite likely that DLC is the only thing that returned PD to profit with regard to GT5 and they would have only got around 15% of that as well, meaning they are most likely still having to be part funded by Sony and certainly could not survive for decades.

As I say in that original post its rough guestimates (as we have no idea how much sideways funding PD gets from Sony).

Edited to add, this will also be relevant:

Given that the vast majority of sales for GT have always been in the first year and the tail (while long) drops off rapidly and becomes significantly less profitable.

I acknowledge that it may pass GT2 and maybe GT1's figures, that still puts it way behind being a strong selling GT title and still shows a decline in sales since GT3.




No it should also apply to them, but be reserved for them? No as that would imply it could never happen to any other titles and never happen to GT.





I disagree, generational sales are what shareholders and the Sony board will look at, that PD have to date only managed one full title this gen is an issue of their own making. Two titles per gen have the advantage of pooling development cost and maximising your return on investment, that PD have failed to do that so far this gen and produced a title that has sold less than the last two full titles are a mark against PD.

The comparison may well be unfair, but that unfortunately is how the world of business works.



OK lets do it


5.5 million at $60 = $330 million, 15% of which is $49.5 million

3.5 million at $20 = $70 million, 15% of which is $10.5 million

Total = $60 million.

So they manage to cover development, still not going to tide them over without a launch for the decades that were claimed, hell they can't even keep paying people at that rate.

GT5 was a financially break even product for PD (Sony would as the publisher have made from it as the advertising costs would have been significantly lower than development and they would retain roughly 20%).

As such with a single full title this gen had PD been an 3rd party studio they would have struggled to stay in business having spent six years developing a product, a $60 million cost and breaking even. Which would then leave nothing for development of the next title.




OK lets take a look at them.

SMS - 6 million units across two titles
T10 - 14 million units across four titles.

Now I know you are going to cry foul about multiple titles, and to be honest I don't care. What investors would see is two companies minimizing development costs and getting full value sales across multiple launches.

Now it failed for SMS as sales for Shift 2 tanked dropping for 5 million to 1 million (maybe a lesson in that - don't assume you will always get the customer). T10 however have used a core development across four separate title in one generation, spreading the development cost and ensuring a maximum return for it.

So in answer to you question from a pure business point of view I would rather have 14 million sales across four launches (because full price launch sales make me far more than tail end sales) than 9 million across one title. Its a better return on each launch and a better use of the development costs, which reduce for each title.

Edited to add - sorry forgot to add in - its four times the DLC sales opportunities as well.

 

[qwbufp]

What was all the fuss about Kaz and his LONG VACATION tweet earlier this week?

 

[realp912]

The day PD gets shut down is the day I quit gaming for good. I severely doubt PD is going anyway because of a slow burn in GT6 sales. They pretty much swimming in money in GT5 sales alone.

 

[tpark103]

Here you go:



As I say in that original post its rough guestimates (as we have no idea how much sideways funding PD gets from Sony).

Edited to add, this will also be relevant:

I admire your approach. You included numbers to back your point. The only thing that this title has in its corner is that it is Sony's all time best selling game and the business minds that decide on whether or not its time to put a cap on the development budget as apposed the potential profit have been making the correct choices thus far as those numbers seem to hold solid.

As far as GT6 goes, I consider it a gateway to the next game like all GT titles. The timing of its release as it coincided with all the new platforms as well as the frantic and some what disappointing and out come of the highly anticipated GT5. What I am saying is, only time will tell what the strategy is over in the Sony camp for there highest grossing title in history and only time will tell if they've have made good or poor business decisions.

 

[phil_75]

It is funny reading such thread titles, to think Sony's most likely profitable thing in the Playstation first party game division since franchise started will go bust, it has to do a lot lower sales to even be remotely possible so much that will be only if market becomes a niche for generations upon generations. PD costs are low I imagine too, if PDI are going to struggle, I worry about others more if that was the case as there are not many games that sell as well with size of development team PDI have. They can also react to such things too.

They also could most likely go generations without selling a copy of the game and still be OK if they had access to all the money the franchise has made. Considering team is getting bigger, foundations have been built, speed of new releases in franchise will become quicker so it is very likely they will sell enough to at least break even. All games so far looked to have made large profits, GT6 is looking like it will make a profit. It is in a way easy money GT6, now they will get costs covered for the years they worked on it and maybe a good few more. Then they will release game engine with all assets at high level, things like new AI and sound engine on PS4, maybe they take the graphics crown and with PS4 potentially releasing a cheaper Slim model in a year or two, I can see them profiting heavily and back to the top of their game.

Sony see no return = No more GT.

Simple as that!

 

[Islaygaz]

I highly doubt that the creators of the most successful playstation series ever will go bust anytime soon!

 

[Sier_Pinski]

Now they have sold 9 million units, at lets say an average of $40 each (that's being generous considering how quickly it went to a budget release), which would give $360 million. Great if PD got all of that, but they get around 15%, which would return around $54 million.

IMO, PD and other game developers should get a lot more money than just 15%. It was they that made the game and put the most effort into the development process - not the publisher who, according to that article, is currently getting double the revenue (30%) of the developers. PD could use that extra money to help fix GT6 and perfect future GT titles.

 

[Swagger897]

What was all the fuss about Kaz and his LONG VACATION tweet earlier this week?

I do want to hear more info to that as well...

 

[IceMan PJN]

GT5p 5,350
GTPSP 4,22
GT5 10,660
GT6 time will tell

Last gen PD earned enough to cover them, easily for a decade or two.

That isn't simply a matter of sales numbers. It's quite a bit more complicated than that. For example, you open up a lemonade stand and sell a thousand cups of lemonade per day. That's a lot for a lemonade stand, so you're surely raking in heaps of profit, right? Well, not necessarily. It depends on what your expenses were and if your income surpassed that. If it cost you $0.72 per cup of lemonade but you only sold them for $0.50, you didn't profit at all, but rather lost money. That isn't a terribly good like-for-like comparison, but serves as an illustration for how there's more to consider than just sales numbers.

We first need to know how much money PD spend making those games, and then we need to know how much revenue they made. Remember, $60 at a retailer isn't $60 straight into the hands of the developer, but rather a lot of people get a cut, especially the store that sold it. I forget where I read it, but revenue is typically something like $15 per new game ($0 per used game) so if a game sells five million units (new) at $60 each, the developer gets $75 million, not $300 million. That of course presumes that those are all at $60, but prices drop over time so a chunk of sales would be at a lower rate. Once we know how much PD actually took in, we can subtract their development costs from that and what's left over is profit.

Still sounds good, right? Well, maybe not as much. Granted, GT games sell more than five million units, but a lot of them are later down the road when prices are lower, so let's just stick with the revenue figure of $75 million. If PD spent $50 million making a game and took in $75 million, that's a decent profit of $25 million. Great, right? Well, for the short term, provided that they continue this trend indefinitely. $25 million wouldn't cover the expenses of another game if they spent a similar $50 million developing it. This means that their income doesn't "cover them easily for a decade or two."

I would imagine that dev costs on GT6 were much lower than they were on GT5, probably less than 1/3 possibly less than 1/4

Development costs are based on how much labor went into producing the game. To be a third or a quarter of GT5's development cost, GT6 would need only a third or a quarter of the people working on it, or for a similar number to work on it for a third or quarter of the time. GT6 came out three years after GT5, which might not be quite as long as the development cycle for GT5, but it certainly isn't a third or a quarter of it. This would then mean that, to spend a third or quarter of the development budget, they must have retired the bulk of the staff. That would be a waste since they could instead have employed them to develop more content, like more Premium cars, damage modeling, a livery editor, et cetera.

 

[Swagger897]

My thought is that soo much stuff was ported from Gran Turismo 5 and 4 that it could not have cost as much as we are thinking of. It's not as if they are sending out people to retake pictures of Le Mans in 2005 again?. I think there are four numbers we really need.
Cost of labor
Cost of production
Cost of transportation
Profit earned (not from individual unit sold, but their percentages of the individual unit sold)

Then I think we will get a good idea. Plus, they get paid as well for adverts timeout and unit stocking so there are more than just one way to make profit for them

 

[Morphisor]

Here you go:



As I say in that original post its rough guestimates (as we have no idea how much sideways funding PD gets from Sony).

Edited to add, this will also be relevant:

Except that, as a first party studio, PD is essentially part of Sony. This means that, from the very breakdown you used, the distributor, console maker and developer are one and the same business.
Going by this estimate, that would mean not 15% return, but 65%. Even with a higher costs estimate this means GT5 was likely to have been a VERY profitable title for Sony.

edit: Actually, marketing is done by Sony as well, so scrap that, and make the return percentage 80%! Even better yet!

 

[twitcher]

I definitely think GT6 will be the biggest flop in GT history, for reasons well documented - most notably the timing of release, disappointment with GT5, and a lack of changes.

However, no matter how poorly GT6 sells, it will not mark the end of the franchise. Sony is too aware of the legacy of GT, and the potential profit to be made from a market that is largely serviced only by GT (and Forza to a degree on Xbox).

What I could see happening though, is Kaz and his team being canned. Sony may give them one more chance at GT7 on PS4, but I have a feeling they will be on a rather short leash after the fiasco that has been GT5 and GT6.

I have mixed feelings about replacing Kaz...I'm a fan of his previous work, but i am growing uneasy with where he seems to be headed. My fear if he is replaced though, is that someone who lacks the passion for cars would be put in his place, and GT would head down the path of Forza or NFS.

 

[Unknown?]

This must be a joke thread, could the mods please lock this?

I definitely think GT6 will be the biggest flop in GT history, for reasons well documented - most notably the timing of release, disappointment with GT5, and a lack of changes.

Yeah yeah yeah we all heard it before with GT5 too. EVERYONE was saying how GT5 would be a flop compared to the rest of the series for various reasons. The reason I heard most is that it took too long and everyone stopped caring.

 

[sumbrownkid]

GT6 had the benefit of being built off an engine that was created for GT5. That alone right there must have saved a lot of development costs.

 

[Unknown?]

This thread is cancer. It's pure speculation and bringing up REALLY stupid ideas. It's like saying, "OH I HOPE ROCKSTAR DOESN'T GO BUST AFTER GTA5"....

 

[Swagger897]

I definitely think GT6 will be the biggest flop in GT history, for reasons well documented - most notably the timing of release, disappointment with GT5, and a lack of changes.

However, no matter how poorly GT6 sells, it will not mark the end of the franchise. Sony is too aware of the legacy of GT, and the potential profit to be made from a market that is largely serviced only by GT (and Forza to a degree on Xbox).

What I could see happening though, is Kaz and his team being canned. Sony may give them one more chance at GT7 on PS4, but I have a feeling they will be on a rather short leash after the fiasco that has been GT5 and GT6.

I have mixed feelings about replacing Kaz...I'm a fan of his previous work, but i am growing uneasy with where he seems to be headed. My fear if he is replaced though, is that someone who lacks the passion for cars would be put in his place, and GT would head down the path of Forza or NFS.

Most of that is untrue.

Timing- had nothing wrong. The past iterations of GT has always been two per console and I still think it will always continue on that basis. Before the game was even released sony ramped up advertisement just for GT. With Greatness awaits and the goal of getting one million views to release never before seen footage of gt6. So timing has nothing wrong about it.

Disappointment with 5- not sure how a failure of one game would transfer to the next title running almost entirely new operating systems for all aspects.

Lack of changes... Boy ohh boy that is such narrow minded..

As Sony's highest selling franchise (note not most profitable) they will never give it away as the idea is too big to destroy. GT was the next best thing after the car was made for the auto industry, as it's a virtual test market as many auto makers have said. It's virtually free of cost for them to advertise and their markets increase ever so much by consumer choice. I know for a fact that is true as it has swayed me from American autos to Audi specifically.

The possibility of Kaz being fired or dropped is not possible, but the short term staff is. Kaz has so much more connections to auto makers affiliates that losing him would mean an end to communication between auto makers and games. He is also a great weapon against other arcade/sim racers being able to think f what the next big thing is. We see current games other than GT, Improve on visual aspects but GT tends to increase the actual driving factor (hence the real driving simulator) of their game each and every release. If Kaz goes! the boat will sink and then people won't buy anymore! causing the series a death. As many people who dislike GT because of Kaz, also have to realize that he is the connection man similar to what I think at least, the games disc cover, where multiple connections in racing are with eachother in some intertwined series of events. That's him to me as to what he's do e with the game. Not perfect, but certainly not horrible, it is as good as one will get for a long time.

I agree with what you last sentence is, as most games make cars as they are cars, but I and along with every other player saw a car on GTR as something they have a passion for in real life. Otherwise, any NFS would do for the. And they would stick with the pretty visuals for that reason only. You don't come across people like that, that often in NFS where they pour everything they have into one car, but you can see it often online with GT... And that's what makes the game the way it is. It's a passion for cars...

 

[Scaff]

Except that, as a first party studio, PD is essentially part of Sony. This means that, from the very breakdown you used, the distributor, console maker and developer are one and the same business.
Going by this estimate, that would mean not 15% return, but 65%. Even with a higher costs estimate this means GT5 was likely to have been a VERY profitable title for Sony.

edit: Actually, marketing is done by Sony as well, so scrap that, and make the return percentage 80%! Even better yet!

Except that's not even remotely close to how the real world works at all.

PD are wholey owned by Sony (as was Studio Liverpool - check how well they are doing now), that doesn't mean that Sony do stuff for them for free and just give them all the profit.

The department I work for (which is a single part of a massive global organisation) still has to show a balance sheet profit and still have to 'pay' for the use of internal resource.

This must be a joke thread, could the mods please lock this?

Yeah yeah yeah we all heard it before with GT5 too. EVERYONE was saying how GT5 would be a flop compared to the rest of the series for various reasons. The reason I heard most is that it took too long and everyone stopped caring.

This thread is cancer. It's pure speculation and bringing up REALLY stupid ideas. It's like saying, "OH I HOPE ROCKSTAR DOESN'T GO BUST AFTER GTA5"....

The staff don't react well to being told what to do. So if you don't like the thread then don't post in it, however as it doesn't break the AUP its not getting closed. So stop the pointless spam posts (because they are against the AUP).

 

[Morphisor]

Except that's not even remotely close to how the real world works at all.

PD are wholey owned by Sony (as was Studio Liverpool - check how well they are doing now), that doesn't mean that Sony do stuff for them for free and just give them all the profit.

The department I work for (which is a single part of a massive global organisation) still has to show a balance sheet profit and still have to 'pay' for the use of internal resource.

Never said Sony did things for free. But Sony does do ALL of the product-related things except developing it. PD's budget comes directly from Sony - this also follows from Sony as distributor being the company that takes the revenue from the retailers.

Of course PD has to account for how they use their money, but they don't receive the money from the sales only to then turn over the profits to Sony. Sony receives the money, Sony makes up the balance. Balance is good, PD gets a pat on the back.

Yes, it's slightly more complicated than that, but the idea is the same. PD works on a budget, but has nothing to do with the revenues except as a performance indicator. Therefore, my point stands, and Sony receives a VERY large cut of the sales, leading to a likely high profitability. That's the advantage of controlling most parts of the product cycle.

 

[Razgriz_2142]

the only way poly will dissapear is if Sony go bust, or sony pulls the plug on poly im pretty sure they are a subsidiary of SCE and offices are in the SCE Japan complex.

 

[Lawndart]

PD have a lot of money in the bank... And GT 7 is likely part of the plan for a ps4 campaign in the future... But drive club is messing up any means of predicting that timeline as they won't release them within 2 quarters (min) of each other so they don't canalize sales... Regardless if they are different, they are technically the same to the mass market on the shelf together...

 

[Unknown?]

The staff don't react well to being told what to do. So if you don't like the thread then don't post in it, however as it doesn't break the AUP its not getting closed. So stop the pointless spam posts (because they are against the AUP).

I didn't tell the staff to do anything, I asked a question politely. This thread is spam and pointless which is why I figured it was breaking the AUP. I don't like pure speculation which is why I was expressing my opinion on the subject like everyone else... The extra post was spam that I admit(sorry).

No one knows how much GT6 sold so far or how they used their budget. Although even if it sold slightly over a million that's still more than most games sell and lots of publishers would be happy with that.

 

[Lambob]

this money glitch has dishonored PD in the eyes of Sony, actual lives would be lost in Japan because of this.
/ Seppuku. It's sad. you cheaters / exploiters should know who you're dealing with. (culture)

 

[Swagger897]

this money glitch has dishonored PD in the eyes of Sony, actual lives would be lost in Japan because of this.
/ Seppuku. It's sad. you cheaters / exploiters should know who you're dealing with. (culture)

Money glitch had been gone for a while now if you updated to v1.02, which is now irreversible... Talk about spam...

 

[montez34]

this money glitch has dishonored PD in the eyes of Sony, actual lives would be lost in Japan because of this.
/ Seppuku. It's sad. you cheaters / exploiters should know who you're dealing with. (culture)

You have dishonored mother Japan!! You shall face death for your crime of cheating in a video game!!

 

[Monatsende]

*as of March 2013

(source: http://www.polyphony.co.jp/english/list.html)

I`m pretty sure we don`t have to become anxious.

 

[twitcher]

This must be a joke thread, could the mods please lock this?



Yeah yeah yeah we all heard it before with GT5 too. EVERYONE was saying how GT5 would be a flop compared to the rest of the series for various reasons. The reason I heard most is that it took too long and everyone stopped caring.

Did you actually read my post? I said in GT history...I think this will be the worst selling GT game so far, only compared to other GT games.


And I guess since YOU don't like speculation, I guess we should all stop, to keep YOU happy. Could a mod please close this thread, along with all other threads involving speculation? We wouldn't want to upset Unknown now, would we.

Most of that is untrue.

Timing- had nothing wrong. The past iterations of GT has always been two per console and I still think it will always continue on that basis. Before the game was even released sony ramped up advertisement just for GT. With Greatness awaits and the goal of getting one million views to release never before seen footage of gt6. So timing has nothing wrong about it.

Disappointment with 5- not sure how a failure of one game would transfer to the next title running almost entirely new operating systems for all aspects.

Lack of changes... Boy ohh boy that is such narrow minded..

As Sony's highest selling franchise (note not most profitable) they will never give it away as the idea is too big to destroy. GT was the next best thing after the car was made for the auto industry, as it's a virtual test market as many auto makers have said. It's virtually free of cost for them to advertise and their markets increase ever so much by consumer choice. I know for a fact that is true as it has swayed me from American autos to Audi specifically.

The possibility of Kaz being fired or dropped is not possible, but the short term staff is. Kaz has so much more connections to auto makers affiliates that losing him would mean an end to communication between auto makers and games. He is also a great weapon against other arcade/sim racers being able to think f what the next big thing is. We see current games other than GT, Improve on visual aspects but GT tends to increase the actual driving factor (hence the real driving simulator) of their game each and every release. If Kaz goes! the boat will sink and then people won't buy anymore! causing the series a death. As many people who dislike GT because of Kaz, also have to realize that he is the connection man similar to what I think at least, the games disc cover, where multiple connections in racing are with eachother in some intertwined series of events. That's him to me as to what he's do e with the game. Not perfect, but certainly not horrible, it is as good as one will get for a long time.

I agree with what you last sentence is, as most games make cars as they are cars, but I and along with every other player saw a car on GTR as something they have a passion for in real life. Otherwise, any NFS would do for the. And they would stick with the pretty visuals for that reason only. You don't come across people like that, that often in NFS where they pour everything they have into one car, but you can see it often online with GT... And that's what makes the game the way it is. It's a passion for cars...

Please don't make blanket statements like "most is wrong" and them fail to logically back up your statement.

Timing - if you think the release of PS4 and Xbone have had zero effect on GT6 sales, you live in a cave.

GT5 - if you don't understand how the reputation of a previous release can effect future releases of that franchise, you need to take a basic marketing course.

Differences - yes, there are big diffences between 5 and 6. I play GT almost every day, so I've noticed the differences. But ask the average, casual gamer what the differences are, and they'll have trouble coming up with a big list.

We're not talking about my personal opinion of GT6, but rather general public reception, and sales numbers.


I agree that Kaz's ties to the auto industry will help him keep his job. But I don't think even that will save him from the only thin that really matters, which is the bottom line.

If GT7 does not absolutely blow people's minds, I can easily see Kaz and his team being let go.


Look at any industry, even the most successful managers and CEOs get fired / let go all the time simply because their latest effort doesn't stack up to current industry standards.

I like Kaz, I like PD, I love GT...I want to see it succeed. But my tongue isn't so far up PD's 🤬 that I can't take a critical look at the franchise.

The bean counters at Sony don't really care about the legacy of GT1 through 5...all they care about is "what have you done for me lately"...and no one, not even Kaz, is safe from that frame of mind.

 

[Scaff]

I didn't tell the staff to do anything, I asked a question politely. This thread is spam and pointless which is why I figured it was breaking the AUP. I don't like pure speculation which is why I was expressing my opinion on the subject like everyone else... The extra post was spam that I admit(sorry).

No one knows how much GT6 sold so far or how they used their budget. Although even if it sold slightly over a million that's still more than most games sell and lots of publishers would be happy with that.

The thread is not spam and its not pointless, your attacks on its content (and by association those posting in it) is however unwarranted.

The staff do not close threads on user request, they close them on the basis of the AUP outlined by the site owner.

This is not a topic for discussion and as I have already said if you don't like a thread then don't post in it. What you will not do is attack those who are contributing to it, dismiss the thread as pointless or ask for it to be closed.

Never said Sony did things for free. But Sony does do ALL of the product-related things except developing it. PD's budget comes directly from Sony - this also follows from Sony as distributor being the company that takes the revenue from the retailers.

Actually we don't know exactly how it all breaks down (I used my example as the only one we really have - a typical split), as PD do get heavily involved in some of the marketing elements of the product.

The split I used was working on the two figures we do know, the rough minimum cost to develop GT5 and the normal return that a developer would get. Which while not 100% accurate is certainly a lot better than just looking at shipped product quantities and going 'well they must have made loads of money, they sold loads of stuff (why not check out how many cars GM sell and then how much profit they made in the past to see that logic can fall over).

Its why GT6 was needed on the PS3 (and why I stated it would be a PS3 title from day one), its a logical development pattern that PD have followed from day one. Main development costs and small profit on first full release on a console, followed by minor dev costs (in comparison) and much larger profits on the second full release on a console.

Its why GT6's performance sales wise is actually quite an important matter.

Of course PD has to account for how they use their money, but they don't receive the money from the sales only to then turn over the profits to Sony. Sony receives the money, Sony makes up the balance. Balance is good, PD gets a pat on the back.

If the balance is good - once again we have that assumption.

Yes, it's slightly more complicated than that, but the idea is the same. PD works on a budget, but has nothing to do with the revenues except as a performance indicator. Therefore, my point stands, and Sony receives a VERY large cut of the sales, leading to a likely high profitability. That's the advantage of controlling most parts of the product cycle.

Why is it likely highly profitable?

Once again a massive assumption. GT5 was one of the most expensive games in terms of development every, costing at least $60 million (and it may have been more). That doesn't even come close to the costs on top of that for production, distribution and in particular marketing (just think about how much the GTA costs worldwide each year - let alone the stand alone release advertising).

 

[J-KiLLA24]

I think its telling that Sony didn't ask/tell PD to make a PS4 launch title.
Lack of confidence in PD ?

No. PD began production on GT6 way before the PS4 was in the discussion.

 

[phil_75]

No. PD began production on GT6 way before the PS4 was in the discussion.

What 2008?

 

[Morphisor]

-snip-

Even if PD do some of the marketing, their budget for that came from Sony. Left way around or right away around, all the costs are for Sony.

In this situation you cannot use the normal figure for what a developer would get, since the developer in question is part of Sony itself. It is pretty evident that Sony also fills in most of the parts of the process that would normally take away a lot of the revenue, therefore all this revenue will go directly to Sony. As per my earlier post, this should 80% if we follow the estimates you used (distributor, marketing, console maker and developer).

Again using your own estimate of revenue generated, which was $360 million, this would mean 0.8x360=288 million.
Now as you said this may be optimistic, but even at half that figure Sony would have to have had some VERY high costs for marketing, distribution & production to not run a profit.

I am not making any assumptions here at all, except for the estimates provided by yourself. I just adjusted these in the perspective of the scope of the corporation that is Sony.