Dysfunctional Console Industry Struggles For New Profit Centers

MojoKid writes "The rumor mill is still churning out quite a bit of information on new consoles this week, including new data on Nintendo's upcoming Wii U. According to unnamed developers, the Wii U actually isn't as powerful as the Xbox 360 or PS3, despite boasting HD graphics and significantly improved hardware. Meanwhile, the Xbox 720, codenamed Durango, is reportedly targeting the holiday season of 2013 as a launch window. Rumors are floating about of a required always-on internet connection and of locking out the used game market. What this discussion truly highlights is just how dysfunctional the entire console industry is and how skewed its profits are. Profits on hardware sales are so small, game shops can't survive on console sales alone. $60 MSRPs are subsidized by exchange and trade-in programs. Kicking Gamestop in the teeth may occasionally sound like fun, but the idea of killing the used games market doesn't make much sense. If used title values collapse and MSRPs stay the same or rise, the entire industry could hamstring itself in the name of higher profits."

Comments

Re:Higher profits

[Enderandrew]

http://www.destructoid.com/max-payne-3-potentially-cost-105-million-to-develop-211058.phtml

I interviewed Brian Fargo recently, and he cited $20 million dollars as the price point to get in the AAA market.

There are only 25 PS3 titles to ever reach 1 million sales. Most games will not sell 1 million copies. When I look at a practical business model, I'm assuming a relatively low budget ($20 million as opposed to $100 million for titles like Max Payne 3) but also assuming I'm not selling 1 million copies.

And funny that you cite Fallout: New Vegas, but Obsidian just ended up laying off 30 people. The owner of the company hasn't taken any salary in over six months and they're fighting bankruptcy. But surely, they're making too much money and should lay off the rest of their staff.