$100 million games need 5-10 million sales to succeed

Tomb Raider’s budget couldn’t have been $100 million.

Posted By | On 27th, Mar. 2013 Under Article, News | Follow This Author @KartikMdgl

Tomb Raider sold 3.4 million, so that’s a good thing right? Apparently not. Square Enix have revealed that the game has under performed. They also posted a massive loss and their CEO Yoichi Wada stepped down.

According to an analyst, Billy Pidgeon, the reasons for Square Enix’s downfall is apparently focusing too much on single player IPs. They have a lot of IPs which have all under performed and due to the competition and high budgets the company is unable to make things profitable.

“The AAA market is extremely competitive. Most of Square Enix’s franchises are single player games, which are less popular than multiplayer. Square Enix has been a leader in that sector, but now faces stronger competition from multiple publishers, both large and small, including Bethesda, Capcom, Xseed, Atlus and Level 5,” he said.

“Square Enix’s franchises are well established and require ever-higher production budgets to match and surpass past performance. The latest Hitman and Tomb Raider sold in the three million unit range and got Metacritic ratings above 8.

“Those numbers would rate as successful for JRPGs that earn more from vendors as exclusives and have manageable budgets. But for games with development budgets approaching $100 million to be truly profitable, ratings have to be above 8.5 and sales need to be in the five to ten million unit range.”

This is an issue for plenty of companies creating AAA games. Game development has become expensive and something has to be done to make them profitable as well.

Tell us what you think in the comments section below.

Via GI.biz.

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