Speaking to the New York Times about the difficulties game developers face in turning a profit, Nintendo’s Reggie Fils-Aime said that Wii games need to sell a million copies on average in order to break even with development costs.
If you’re thinking of joining the development business with a quick shovelware title thrown out on the mega-popular Wii to make a quick buck … well, you might want to think again. According to NOA head honcho Reggie Fils-Aime, the vast majority of Wii titles don’t ever turn a profit: In order to break even, a Wii game needs to sell about a million units.
According to NPD, only 16 out of 486 games on the Wii have ever shipped more than a million copies – and nine of those are first-party Nintendo titles. Not the best of odds, no? Furthermore, Reggie claims that the magic profit threshold for Wii games is intentionally lower than on the other consoles due to the Wii’s inferior graphics: “[Nintendo] deliberately did not add high-definition capability to the Wii so games would be cheaper to make.”
Beyond Reggie, the article itself is an interesting look into the state of the modern games industry and the problems it’s facing. It is true that in terms of sheer revenue, the industry is growing. What isn’t growing are developer and publisher profits – the average cost to make a game this console generation ($25 million) is more than double than what it cost to make a game last generation ($10 million), and the price on the shelf hasn’t risen significantly enough to compensate.
Couple that with piracy, increasingly attractive smaller titles on PSN, XBLA, WiiWare or the iPhone, and you’re looking at an industry that, if it fails to adapt to the times, is going to end up in trouble despite record revenue streams. “The model as it exists is dying,” said Mike McGarvey, a former Eidos executive who is now on board with OnLive, the cloud-based gaming system OnLive, which made waves when it was unveiled at GDC 2009 last week.
It’s a very interesting and sobering look at the state of the games industry and how companies are trying to adapt – if you’ve got a few minutes to kill, the article is definitely worth a read.