A report from Ibis Capital provides insight into just how difficult it is to succeed in the gaming market.
According to the report the estimated game development costs for an Xbox 360 or PlayStation 3 range between $15 to $30 million per title. Studios must therefore sell between 500 000 and 1 000 000 titles to break even on every release. In addition to this the report revealed that marketing costs can also amount to as much or more than actual development overheads.
As a result of this publishers are now looking more carefully at the third party titles they choose to endorse and release. In an effort to mitigate risk the majority of big publishers within the market are opting for tried and tested franchises such as Call of Duty, God of War, Need for Speed and Battlefield. This could explain the apparent reduction in the release of fresh IP titles over the past few years.
The report also revealed that Nintendo’s Wii is dominating the market in terms of revenue share. The motion controlled console currently captures 47% of global platform revenue. This is followed by Microsoft’s Xbox 360 at 35% and Sony’s PlayStation 3 at 18%. Total console revenue in 2009 amounted to $30 billion in 2009.
Fortunately for developers and publishers alike Ibis forecasts a bright future for gaming. In 2013 the company expects to see total revenue up by over 30% to $40 billion; spurred on by next generation (or “eighth generation” as Ibis refers to them) consoles which are expected to be released in 2013 and 2014.
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