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EA Spends 3x More On Marketing Than Development
G3ckoG33k writes "According to Electronic Arts officer Rich Hilleman, 'the price of producing console games has rocketed, with marketing costing up to three times more than the development of a title.'" Sounds pretty insane, but does anyone know how this compares to the film industry?
Well maybe if they spent more money on the development they wouldn't need so much money into marketing... *sigh*
Software development is a lot like a having a baby. 1 woman, 9 months = 1 baby. You can't add 8 more women to the equation and get a baby in one month. And as projects get larger, the success is dependent on cohesive management, not necessarily additional resources.
However, with marketing -- you can send any number of suit-monkeys out to cut deals with drink manufacturers, t-shirt companies, magazines.. etc. All without detracting from the potential quality of your final product.
If it's in the game, it's likely because one of these marketing people said it needed to be in the game. Thank them for in-game advertising and in-game shops that accept real world money.
Often one heards that research costs drive the price of drugs high, but in fact a similar ratio between marketting and research costs exists in the drug industry.
Maybe if they would make better games they wouldnt have to spend so much on advertising.
Umm, no decent games. Their sports titles are often the best. They get the best reviews and most sales.
That's because EA has signed exclusive agreements with so many relevant leagues (NCAA, NFL, NHL, FIFA). By definition, the only player in a market will get the best reviews because it gets the only reviews.
I take it you've never actually run a business yourself? Believe me, in the modern world you can make the best product but if you can't grab "mind-share" it won't sell. Marketing is always a large proportion of the cost of a product whether it's a videogame, a movie, or a dishwashing liquid.
The problem with this scenario is that marketing helps in the initial, but it does not help in the long term...
Marketing can make caviar from crap. Seriously they can. BUT if EA keeps producing crap people will realize it is not caviar, but crap. Then to make it caviar again you need more marketing. It is a never ending race.
Had they not made crap in the first place then they would not have to spend that much on marketing.
While marketing is needed, the best marketing is when people tell other people that they should buy the product.
Here is an example; Heinz Ketchup. I have lived throughout Europe, and North America, and there is no way I will buy anything but Heinz Ketchup. Yes they have a marketing campaign, but Heinz does do a pretty good job making ketchup. They don't take their clientel for granted. With marketing Heinz could expand. Another example; nutella, Coke, Pepsi, etc...
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
EA has been closing up shops left and right, just like most other large publishers (though really there aren't many large publishers these days, it's basically EA and Blizzard/Activision for PC games).
I think the main issue is that EA specifically, and the industry in general, has spent a lot of time in the last decade complaining about the rising costs of producing games, especially in the console and PC realms, yet EA is willing to spend 3x their development budget on marketing, the cost of which is pretty well within their control.
Of course, EA is also one of the companies that does pretty well controlling their development costs for their biggest selling games. They have a very limited time frame for development of their sports titles, and they do a fair job of deciding what improvements they can make year-to-year to still meet the time constraints and still keep most of their user base happy. They also figured out that it was worth more money to them to buy exclusive contracts with the leagues and player unions than to attempt to continue competing with other publishers and developers to make a better game in those time constraints.
-PainKilleR-[CE]
Q: Why are games so expensive?
A: Because it costs us that much to convince you you want to buy it.
Please help publicise swpat.org - the software patents wiki
There is no longer any company named Maxis. EA published their games for many years but has completely absorbed the company now. Will Wright, the founder of Maxis, doesn't even work there anymore. The Sims 3 is now a first-party EA game by all definitions and, for the record, it is a really fantastic game.
Marketing is not just needed to polish turds, it's needed to get people to buy the good stuff too. In video games, or most other markets, there's a ton of competition. Without marketing, your product gets buried under the pile and no one ever sees it. Sure, you might sell a few copies to your friends, and they might get a couple of their friends to buy it, but that's it. Maybe if you're really really lucky it will go viral, but you're not going to spend tens of millions of dollars developing a game and just hope it will go viral on its own.
Marketing is more than just booth babes and TV commercials. Something as simple as where a product is on the shelf (eye level versus toward the ground, for example), or where your displays are in the store (in the back? at the entrance? How big are they?) is marketing, and it all costs money to do. The news doing a story on lines stretching out the door for the newest game release was probably prompted by a call from marketing. Tech news sites and TV shows featuring documentaries or segments about the "breakthrough" technology your game uses are all part of the marketing effort. Hell, even the guy behind the counter telling you it's a good game (or even the other "shopper" mentioning it in passing) may well be part of the marketing machine.
To claim that your household brands, especially Coke or Pepsi, get by without marketing is silly. Yes, Heinz may not spend as much on visible marketing, but they do pay for prime shelf space at your local store, and they've spent decades honing their image as a superior brand. None of that happened by accident, it was all marketing. The fact that you may not even realize you were being marketed to, and yet still have a preference for their brand, is part of what makes their campaigns so brilliant. Even word of mouth advertising can be primed by a good marketing department. And, of course, both Coke and Pepsi spend ungodly amounts of money making sure their logos are plastered all over just about everything you see. Coca Cola alone spends more than $1 billion annually on marketing.
A lot of people make the mistake of equating marketing with advertising, and in reality it's much, much more than that.
2K doesn't have a soccer game, but Konami does. Pro Evolution Soccer was considered the best soccer game for quite some time. Fifa 09 gave EA the upper hand once again and the competition has forced both of the companies to put a fair amount of innovation in their upcoming titles.
Incidentally, EA bought the rights in response to 2K gaining significant market share on Madden. Additionally, 2K had started to sell their annual edition for $20 (Half of what Madden cost at the time). Rather than enter into a price-war, EA decided they could screw everybody out of their money by making a deal.
Sports games are the ones with the lowest overall development costs for EA. They get to re-use 90%+ of the assets and code from the previous year and get to charge full price. All they need to pay is marketing and licensing. It's a perfect market for a price war, and you can only sustain high prices by changing the rules.