At the recent Microsoft Gamefest where GarageGames announced the new XNA game engine, Torque X, to complement Game Studio Express, Josh Williams, newly appointed CEO of GG, and myself gave a talk about Casual Game Smarts to a packed out room of game developers. Our discussion was about how to bridge the huge technology gap between downloadable games on the XBox and the PC. I have been, and will continue, going over many of the points in that presentation here in the MBG blog. A quick out take, and a part of the Indie game business that people are most interested in is “how much can my game make?”. I wrote about this subject in another MBG post called How Much Money Can Indie Games Make, Part 1.
I have to be careful in writing about this subject not to break any NDA’s, but since I gave this presentation at a Microsoft conference with MS people all around, and I am still here, I am assuming I’m going to be OK. All of the information that I am giving is currently public or has been in the public in some form.
Cost of Development
Creating an XBLA game is taking most studios 6-12 months. Costs are currently ranging from $100,000 to $300,000. As my MBG article, XBox360 Live Arcade Opportunities Get Competitive In A Hurry! about how fast the bar is raising for XBLA development pointed out, this will inflate rapidly. The industry standard arms race will quickly make the top end $300,000 budget a cheap product. Right now, I wouldn’t consider attempting to make an XBLA game with a $100,000 budget. Development kits and Certification (QA testing) would eat up half of that, not leaving much for the actual game development.
While these budgets may seem high to Indies, these budgets wouldn’t buy coffee on a AAA console title for the retail box channel.
I can’t give the exact figure, but the Marble Blast Ultra budget was at the higher end of the current budget range. I am happy that we took the time to get the game right.
Marble Blast Ultra has been reported on many sites to be one of the highest grossing XBLA titles. I believe this to be true. While Geometry Wars has sold a lot more units, it sells at half the price of MBU (400 vs. 800 Gamer Points, i.e. $5 vs. $10). Some of the recent games on XBLA are selling through the roof (Street Fighter), they have not been on the market long enough to pass MBU in sales.
A public domain way of ascertaining an approximate number of units MBU has sold is to sign up for an account and get a very low score on the game. That will put your player on the leader boards in the lowest position. You will see that there are 100-120,000 accounts ahead of you. Sure, there can be duplicates, etc., but this is the closest you will come to finding out how many units a game has sold. For educational purposes, we will use the number 120,000 units sold, knowing that we are close. For a more in-depth read about using this method to determine XBLA game sales, check out Doug Walsh’s Randomly Geneterated Blog article The Numbers Behind Live Arcade. (NOTE- Please read the comments below his article because he got some of the methodology wrong, but readers corrected the mistake.) Until we got real numbers for XBLA sales, we were using this method internally at GarageGames, and it was nice to see somebody else come up with this method and put it out in public, so I didn’t have to worry about NDA’s for this article.
So, 120,000 units * $10 per unit = $1.2MM. That is a nice number for an Indie, but that is not the whole story. Remember, Microsoft should make something for making this cool distribution channel available, and they do take a cut. The publicly available information on this is that the distribution fees for bringing a game to XBLA is 35-70% depending upon participation by MS, i.e. the publisher gets 30-65% of the money collected for game sales. This is very much in line with what the casual portals are charging, so I think it is safe to say the numbers are probably close. Let’s say you are a publisher or a developer that is able to fund your own development, so, a $10 game (800 Gamer Points) would net you $6.50, or 120,000 units * $6.50 per unit = $780,000.
Again, if you are a starving Indie developer this sounds like an infinite amount of money. But, in the world of publishers, this is not considered a big hit. Back in the day, when I was in charge of an entire studio for a publicly traded company, we looked to make a 5X return on our investment, so a game with $300,000 in development would be targeted to make at least $1.5MM, or it would not be considered a success. Remember, as the head of a studio you need to take a “venture capital” approach, so not every title will make it’s 5X ROI, and some will do better.
But, I no longer have public shareholders to please. As the co-founder of a small independent game technology provider that makes a few games, I am extremely happy with our returns from XBLA360, and I also know that we are not done yet. Marble Blast Ultra continues to sell extremely well, the conversion rates are astronomical, and MS continues to sell XB360’s at an accelerating rate. We may yet hit the old 5X return that I used to be held to!
Like I explained in my earlier article about the bar raising in the XBLA360 arena, slot approvals are getting hard to get. In fact, I liken XBLA360 slots to the “Golden Ticket” in Willy Wonka. If you get one, you are set!