Ubisoft (somewhat) admits profit from Wii games fund 360/PS3 projects

BTP

From Reuters.

Video game market to grow 50 pct in 4 yrs: Ubisoft
Wed Aug 22, 2007 12:06PM EDT

LEIPZIG, Germany (Reuters) - The market for video games is expected to expand by half over the next four years as it extends beyond hardcore gamers, the chief executive of French video game publisher Ubisoft (UBIP.PA: Quote, Profile, Research) said on Wednesday.

"There are so many new customers to the business; this is going to grow the market tremendously. I expect the market to grow by 50 percent in the next four years," Ubisoft CEO Yves Guillemot told Reuters at the sidelines of the Games Convention in Leipzig.

"It's a very exciting time for all the developers and publishers," Guillemot said.

Electronic Arts (ERTS.O: Quote, Profile, Research), the world's biggest video games publisher, was similarly bullish about the prospects for more people to play games on consoles, PCs, mobile phones or on the Web.

"There are 150 million gamers worldwide, but 2 billion people are ready to play," EA's managing director for Germany, Thomas Zeitner, told a news conference.

Driven by the runaway success of Nintendo's (7974.OS: Quote, Profile, Research) motion-controlled Wii console, so-called casual games that are targeted at families, older players or women have become the industry's new buzzword.

Ubisoft, known for its realistic military games, on Wednesday announced a new title in its "Games for Everyone" range. "Cranium Kabookii", based on the award-winning board game Cranium, will be made for Nintendo's Wii console and is slated for a December release.

Guillemot said the company's casual games business was "extremely profitable" and helped to finance the initially costly development of games for next-generation consoles -- Sony's (6758.T: Quote, Profile, Research) PlayStation3 and Microsoft's (MSFT.O: Quote, Profile, Research) Xbox 360.

According to the Ubisoft CEO, developing a casual game costs anywhere between 1 million to 4 million euros depending on the number of platforms with which it is compatible.

By comparison, a normal game developed for the Wii costs 5 million to 10 million, and one designed for use with the PlayStation3 and Xbox 360 10 million to 20 million euros.

Casual games are expected to contribute 20 percent of Ubisoft's revenue this year, up from 10 percent last year, Guillemot said. Ubisoft has forecast revenues of about 825 million euros for its financial year until March 2008.

Is it just me, or does something about their logic just not make any sense?

Arde

Basically, by funneling any money from its more profitable division to its most problematic division, Ubisoft hopes to solve any monetary problem they're having.
Y'know, just like how putting every resource we have into the war in Iraq solves any problem US is having.

Yeah, kinda weird how the French company decided that the best policy to use for its business is a debacle of a decision in the American politics.

Ah_Pook

what in the holy hell does iraq have to do with anything, wow

anyway... what about this doesnt make sense? they make some cheap games that they know will sell well and use the profits to fund their more time and cost intensive projects. madness!

Pratley

So basically the shovelware pays for the good games. Gotcha.

Arde

Yeah...bad analogy I know, sorry - haven't slept , need some sleep.

Well, won't it make more sense to create more games for their more profitable console rather than funneling all that money to bigger, more expensive, and riskier projects?

Right now, it looks more like an executive decision to save face to the board members since they bet on the wrong horse and have spent gobs of invenstment on HD engine development.

-SPI-

Shovelware finances more ambitious and costly projects. I thought this was pretty much common knowledge that it's a basic practice for large game companies. There's nothing here to be angry or indignant about.

Stigma

Hey check it out, the Wii is useful!

chaossoldier

And to think everyone (at GAF) thought the Wii was killing gaming

PhoneBone

Pratley wrote: »

So basically the shovelware pays for the good games. Gotcha.

I have no problems with this, in theory. Unfortunately, it seems the 'good games' Ubisoft intends to create are only targeted towards the PS3/XBox360.

I'd rather see some of their shovelware pay for some good, elaborate Wii games instead. You know, like giving something back to the platform that's actually earning you money. :x

Zephyr

a thousand wii fanboys raise their fists in rage.

The Wolfman

This just in: Company uses sales of games to fund other games.

I mean, I'm assuming if it was the exact reverse - using PS3 game profits to fund Wii projects - you guys would be up in arms just the same. Right?

Kalkino

This does seem kind of silly. Of course companies use profits from one area to invest in another - that is how companies enter new markets, diversify risk, retain a wide range of capability etc. Nothing odd about it.

Dr Mario Kart

At some point they should hope that next-gen would be a legitimate enough business model to stand on its own though.

tbloxham

I mean, the only thing it does show is that Ubi (although they have huge faith in the Wiis ability to raise them some cash) don't actually believe motion control does anything fundamental to help games with more serious content or storylines.

A standpoint on which I wholy agree.

Dr Mario Kart

Why would the input have anything to do with serious content or storylines? For that matter, what does high resolution textures or light bloom have to do with it either?

The developers are the only ones to blame when it comes to shoddy content, not hardware functionality.

Gnome-Interruptus

Dr Mario Kart wrote: »

Why would the input have anything to do with serious content or storylines? For that matter, what does high resolution textures or light bloom have to do with it either?

The developers are the only ones to blame when it comes to shoddy content, not hardware functionality.

Exactly, the "Book" has been used for hundreds of years to tell amazing stories very well. In fact, it is still used today to tell amazing storylines. And all of that with as little as black text on a white background. Some later versions have tried to use some rendered colour scenes and occasionaly grey scale.

Sheep

Stigma wrote: »

Hey check it out, the Wii is useful!

Hooray I'm useful! I'm having a wonderful time!

Zek

I think you guys are jumping to conclusions. Reuters is the one that's putting a stupid bias on the article, implying that the Wii isn't a "next-generation console." It doesn't say anywhere that they have no plans to make "hardcore" Wii games.

shutz

The thing is, so-called casual games only cost less RIGHT NOW because the developers and publishers are getting away with it. When they realize that these casual gamers don't buy games that often, and that they have to work harder to grab their attention, budgets (and gameplay depth) are gonna go up.

You can only sell so many Brain Age / Nintendogs / Wario Ware clones before the casuals lose interest (hardcores have already lost interest, mostly.) And innovation costs money.

Just one thing: Wii development is going to keep costing less than 360/PS3 development simply because the artwork doesn't need to be as detailed.

JihadJesus

So, here's good business sense:

1) This division loses fucktons of money.
2) This division over here makes fucktons of money.

No we can keep both, and make a bit of cash, or we could dump the drain on our bottom line and fill up an Olympic swimming pool with hundred dollar bills, coke, and Scandinavian lingerie models. Hmmm, what to do. What to do...

[Note: not meant to be direct illustration of this situation. If you find yourself experiencing the urge to make an ass of yourself, please check your sarcasm and/or hyperbole detectors.]

Accualt

The 360/PS3 division doesn't lose fucktons of money, it just takes more money and time to make the games in the first place. Where as the casual/Wii division doesn't take as much money or time so you bang out some quickies there for quick and easy money. These probably won't be monster selling titles but they were so cheap to make that they don't have to be to turn a profit.

I'm pretty sure Assassin's Creed is going to make more cash than any Wii game Ubisoft has put out by then.

japan

shutz wrote: »

You can only sell so many Brain Age / Nintendogs / Wario Ware clones before the casuals lose interest (hardcores have already lost interest, mostly.)

I'm not convinced that's the case. Particularly when you look at the success of things like Popcap, who were doing the "casual gaming" a good few years before Nintendo released the DS.

Balefuego

Dr Mario Kart wrote: »

Why would the input have anything to do with serious content or storylines? For that matter, what does high resolution textures or light bloom have to do with it either?

The developers are the only ones to blame when it comes to shoddy content, not hardware functionality.

Because textures and bloom are the only things more advanced hardware allows you to do.

quovadis13

I have no beef with Ubisoft using their profits to make more games. I do have a beef with the way this article was written. There seems to be a pretty big emphasis that Ubisoft is using the money they make from the "inferior" Nintendo system to make better games on the "true next-gen" PS3 and 360 consoles. Thats kind of a pretty crappy and slanted view to have of it.

Orogogus

quovadis13 wrote: »

I have no beef with Ubisoft using their profits to make more games. I do have a beef with the way this article was written. There seems to be a pretty big emphasis that Ubisoft is using the money they make from the "inferior" Nintendo system to make better games on the "true next-gen" PS3 and 360 consoles. Thats kind of a pretty crappy and slanted view to have of it.

You're reading this out of... what, exactly?

According to the Ubisoft CEO, developing a casual game costs anywhere between 1 million to 4 million euros depending on the number of platforms with which it is compatible.

By comparison, a normal game developed for the Wii costs 5 million to 10 million, and one designed for use with the PlayStation3 and Xbox 360 10 million to 20 million euros.

So in order of increasing development cost, you have casual games, Wii games and PS3/360 games. According to the article, the first is funding the last category, with no mention of the "real" Wii games other than the development cost. Where is the evil, evil bias?

Nickle

I'd be happy if they started putting some of the money from the Wii games into their Wii games. Something more than a crappy port or a mini-game collection, please.

japan

I don't know about anyone else, but what I'm reading from it is that lower budget, lower risk casual titles are being used to provide the ready cash to develop more expensive titles (which, all being well, should make their dev budgets back), and offset the risk of making an expensive investment in a game that doesn't sell.

In other words, the cheap games provide money now so they can fund more expensive games that should make money in the future. If the more expensive games don't sell, they can rely on the cash-flow from the cheaper titles to ensure the company can afford to eat the loss.

mausmalone

Zephyr wrote: »

a thousand wii fanboys raise their fists in rage.

Why? I'm a Wii fanboy of sorts. As long as Wii games are funding all of Ubisoft's other projects, it's unlikely they'll stop making them.

I just hope that at some point Ubisoft realizes that they don't have to develop only money-generating-shovelware on the Wii and ambitious-epic-projects on the 360/PS3. Hopefully we'll see some of the ambitious stuff too. 5m-10m euros for an ambitious Wii project is still easier to swallow than 10m-20m euros for an ambitious 360 project, and it'd probably sell more copies anyway now that the Wii user base is eclipsing the 360 user base.

Wienke

I'm a little miffed mostly because what of Ubisoft is bringing to the table for the Wii.

This fall we can look forward to such classics as:

Cosmic Family: Learn through Play
My Word Coach
Nitrobike
Various Petz games
Raving Rabbids 2
CSI: Hard Evidence

Thank you Wii owners for funding all of our kickass titles like Assassins Creed, BIA: Hell's Highway, the entire Clancy series, etc. etc. Here, have some Petz games!

Granted, if it takes at least a year to make a decent game of some sort, maybe Ubisoft just was really expecting a flopping Wii. Still, is it so hard to announce a Rayman 4 or something like that?

slash000

tbloxham wrote: »

I mean, the only thing it does show is that Ubi (although they have huge faith in the Wiis ability to raise them some cash) don't actually believe motion control does anything fundamental to help games with more serious content or storylines.

A standpoint on which I wholy agree.

Well thank you, Captain Obvious. That's right, a different input style doesn't change how a developer decides to inject his game with serious content or help writers write more serious storylines.


But what you seem to be ignoring is that motion-based does not hinder serious content or storyline either.


Conversely, having more power in processing or video doesn't necessarily improve storytelling or serious content either. Or else we would not have games like Metal Gear Solid 3 on the weak and archaic Playstation 2 hardware. You cannot contend that because there is more power out now that it means that weaker hardware is no longer capable of providing the storylines or content.

Likewise, you cannot contend that the existence of an input interface necessarily makes the achievement of serious content or story hindered even if it does not inherently make it more possible.

chaossoldier

Wienke wrote: »

I'm a little miffed mostly because what of Ubisoft is bringing to the table for the Wii.

This fall we can look forward to such classics as:

Cosmic Family: Learn through Play
My Word Coach
Nitrobike
Various Petz games
Raving Rabbids 2
CSI: Hard Evidence

Thank you Wii owners for funding all of our kickass titles like Assassins Creed, BIA: Hell's Highway, the entire Clancy series, etc. etc. Here, have some Petz games!

Granted, if it takes at least a year to make a decent game of some sort, maybe Ubisoft just was really expecting a flopping Wii. Still, is it so hard to announce a Rayman 4 or something like that?

If I remember right, the original concept of Raving Rabbids 1 was to be Rayman 4, but then they went "Well, fuck that. Mini-games!"

Arde

There's hardly any casual games in the 360/PS3 at this point since only big, hyped, expensive full games sell in those systems and there's a risk of not getting a profit from each big project.

What the Wii has shown so far is both big games and casual games can sell well on the system, getting decent to nice profit from each project at a lower cost.

By using only B-tier or C-tier teams and a small budget on the Wii projects to gain profits to offset expensive big projects in X360/PS3, how exactly will the company be able to expand and increase their profit margin if profits from casual games are gobbled up by expensive 360/PS3 development which only bears enough profit to maintain the company?

good ol' titiklabingapat from Neogaf gave a summary of what happens to publishers deeply entrenched only in 360/PS3 development wrote:

Based on this article, only Nintendo and THQ gained marketshare last year and alot of the publishers that relied heavilly on the HD consoles actually lost them or remained stagnant. Activision was fine becasue of Guitar Hero 2. THQ is also fine with heavy 360 support.

EA lost -3% marketshare, Lucasarts lost marketshare by 1%, Take Two is expecting losses or breaking even despite Bioshock, Namco Bandai is expecting slower growth despite profits, Midway projected to incur losses despite heavy 360 support, Capcom incurred a -14% loss despite Dead Rising and Lost Planet. All publishers heavilly supported and supports the 360 during the fiscal period.

And all it takes is one $20M bomba.

Those that supported that didn't ignore the Wii like Ubisoft are quite healthy and those that supported the PS3 heavily are in for more pain.

shutz

japan wrote: »

shutz wrote: »

You can only sell so many Brain Age / Nintendogs / Wario Ware clones before the casuals lose interest (hardcores have already lost interest, mostly.)

I'm not convinced that's the case. Particularly when you look at the success of things like Popcap, who were doing the "casual gaming" a good few years before Nintendo released the DS.

Note that I mentioned clones of games that Nintendo themselves made. I haven't seen many casual-targeted games coming out for Wii or DS, by 3rd-party publishers, that don't seem like clones of successful casual games Nintendo put out (someone give me some counter-examples, please!)

Popcap, on the other hand, make casual games that have LOTS of depth and replay value. That's why they're still in business. For a while, last year, the game I was playing the most of was Insaniquarium.

japan

shutz wrote: »

japan wrote: »

shutz wrote: »

You can only sell so many Brain Age / Nintendogs / Wario Ware clones before the casuals lose interest (hardcores have already lost interest, mostly.)

I'm not convinced that's the case. Particularly when you look at the success of things like Popcap, who were doing the "casual gaming" a good few years before Nintendo released the DS.

Note that I mentioned clones of games that Nintendo themselves made. I haven't seen many casual-targeted games coming out for Wii or DS, by 3rd-party publishers, that don't seem like clones of successful casual games Nintendo put out (someone give me some counter-examples, please!)

Popcap, on the other hand, make casual games that have LOTS of depth and replay value. That's why they're still in business. For a while, last year, the game I was playing the most of was Insaniquarium.

Ah, I see what you're getting at now. Assuming Ubi realise this too, however, it doesn't really change anything from a financial point of view, provided they can come up with decent, original casual games.

mausmalone

shutz wrote: »

The thing is, so-called casual games only cost less RIGHT NOW because the developers and publishers are getting away with it. When they realize that these casual gamers don't buy games that often, and that they have to work harder to grab their attention, budgets (and gameplay depth) are gonna go up.

You can only sell so many Brain Age / Nintendogs / Wario Ware clones before the casuals lose interest (hardcores have already lost interest, mostly.) And innovation costs money.

Just one thing: Wii development is going to keep costing less than 360/PS3 development simply because the artwork doesn't need to be as detailed.

That's not entirely true, and the last statement of your post explains why.

A traditional game on the Wii takes less money because the art doesn't have to be so detailed (i.e. lower polygon count, lower res textures, less complicated rendering pipeline), and as a result, the development time and staff is abbreviated. If you pay less people over less time, the budget goes down. It's all very simple.

Many casual games are made in a puzzle game/board game mentality. Games like Brain Age, Planet Puzzle League, Picross DS, etc ... require almost nothing in the way of level design (in the sense of designing a physical world) and character art. Because of that, the staff is usually smaller, and the timeframe is usually shorter.

While it's true that if you pour time into your casual game to make it perfect, it'll not only reflect it in the quality but the costs will go up .... the very nature of most casual games prevent them from ever reaching the types of budgets you see in more traditional games.

slash000

Ubi does a lot of things. They put out lots of shovelware for the PC and cell phones, among them.

But the Wii isn't just getting 'Raving Rabbids 2.' It's also getting stuff like Red Steel 2 (online confirmed) and Brothers in Arms. Who knows what else.

I suspect that the shovelware of the PS2, Wii, GBA, DS, PSP, PC, and cell phones are paying the bill for just about everything else.

xgalaxy

This just in!
Company uses profits to pay for electricity!
People become enraged over this scandal!

How dare they spend their own money the way they see fit.

chaossoldier

xgalaxy wrote: »

This just in!
Company uses profits to pay for electricity!
People become enraged over this scandal!

How dare they spend their own money the way they see fit.

Why am I suddenly reminded about that one thread where the OP was outraged that Nintendo was making a profit on the Wii while Microsoft and Sony sold their new consoles at a loss.