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J van E

Are we a rounding error?

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John Venema posted the following on his forum:

 

"The P3D team makes 99.9% of its income from internal LM customers who on-sell to end-users that can't be talked about publicly.

The money taken from Developer and Academic licenses is a rounding error in LM daily revenues."

 

Interesting statement. On one hand this should put the moaners back on their spot with two feet on the ground: we simmers aren't important to LM. They can do without us and we should be very grateful we are allowed to use the sim! Then again... LM does listen to us and does implement options we asked for. So we DO matter...

 

It's also interesting to look at this quote and the cost of the P3D license. If we aren't important, why not ask 25 bucks instead of 200 dollars? Is it to filter out the gamers who only are a burden and to attract only serious simmers that can deliver serious input to LM for improvement of the sim?

 

Just curious what you all think about this.  :wink: 

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I still can't understand how people believe that the company that built the sr-22 and the raptor is in some kind of financial distress because of their ineptitude.

 

Even their pricing was done very well.  If you teeter on the edge at first and you have that values debate in your head before you purchase the price is probably set right.

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Just curious what you all think about this.

 

I think that is a pretty accurate statement. I've said all along that we are not LM's target market. I think the flight sim community provides a valuable service in the feedback that is given and that we are a group of fairly knowledgeable beta testers. As a revenue stream for LM? We're not even a drop in the bucket. 

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I look on it this way: We are beta testers who pay for the privilege. Our feedback does invest in bug fixes, patches and enhancements. They sell on the basis of what the market will bear. Clearly they are happy with the business model. I know our desktop sim in the flying club gets more use now running P3D than it ever did in the past. But I'd hesitate to thank L-M for that!

 

The bigger question is: Just who does Venema think he is that he has access to L-M financials? Can he prove what he alleges is true, and that he speaks with their voice? Otherwise just another opinion. And possibly not a very educated one. Self-aggrandising statements from JV are common. Read with caution.

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I think Mr. Venema has a way with words.

No.  In this case he's absolutely right.

 

But think about this rounding error, if  you look up flight simulation software trying to figure out where it is at, and you find the people that know where it's at (everyone here), and those seriously dedicated people have a good relationship with a particular company developing simulation software, that kind of marketing is a seriously beneficial rounding error.  Not only that, this community no doubt keeps the work incredibly fun.  Secret projects are over-rated.  I'd rather have a fan base for my work and be out in the sunshine.

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In this case he's absolutely right.

Not disagreeing there, but that doesn't make what I wrote wrong. :smile:

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I look on it this way: We are beta testers who pay for the privilege. Our feedback does invest in bug fixes, patches and enhancements. They sell on the basis of what the market will bear. Clearly they are happy with the business model. I know our desktop sim in the flying club gets more use now running P3D than it ever did in the past. But I'd hesitate to thank L-M for that!

 

The bigger question is: Just who does Venema think he is that he has access to L-M financials? Can he prove what he alleges is true, and that he speaks with their voice? Otherwise just another opinion. And possibly not a very educated one. Self-aggrandising statements from JV are common. Read with caution.

The way I see it (as in how I interpret what has been spoken), John's statement touches on the financial relationship being formed (or evolving from that formation) for future marketing and development.  ORBX creates scenery for almost every mainstream flight simulator now and for John's company to stay profitable, financials have to be looked at often to see if markets are still viable.  Sure, he's going full bore with the relationship now with Dovetail games and is continuing support with LM for P3D.  For him to publicly make those statements is a little bold, in my opinion and quite honestly, we'd be none the wiser if he hadn't.

 

I take everything with a grain of salt these days, when it comes to announcements.  Proof is in the proverbial pudding.  I am a consumer, and last I checked, no one has held a gun to my head telling me I had to buy or not buy someone's product exclusively.  On the business end, it's politics and on the consumer end, it's economics.  An even bigger question would be: "Who makes out in the end?"

 

-Jim

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There is no science to what JV has said.  If you look at what is publicly available information on LM's website for Q4 2014 alone....you can easily extrapolate that even if 1 million of us paid $199 for a professional licence, the revenue of $200m for LM from us basement desk jockeys is peanuts.

 

  • Net sales of $12.5 billion for the fourth quarter and $45.6 billion for 2014.

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Still 2.2% of annual net sales, assuming the million sales of v3 are carried through in a year.

 

Plus nett caclulated value for the feedback and bug fixing that profits the corporate sales through improved closure rates - some of that $45.6 billion will be attributable to commercial sim sales, potentially utilising benefits accrued from the Prepar3d academic and professional user base.

 

So not 0.1% then, even if your sales figure was ten times off.

 

Venema, eh? 

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There is no science to what JV has said.  If you look at what is publicly available information on LM's website for Q4 2014 alone....you can easily extrapolate that even if 1 million of us paid $199 for a professional licence, the revenue of $200m for LM from us basement desk jockeys is peanuts.

 

  • Net sales of $12.5 billion for the fourth quarter and $45.6 billion for 2014.

 

 

Correction needed here: JV wasn't talking about LM's total income/sales/etc. but ONLY about the P3D team income...! Which obviously will make quite a difference with the numbers you are quoting. And which makes the statement even more interesting.

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Still 2.2% of annual net sales, assuming the million sales of v3 are carried through in a year.

 

Plus nett caclulated value for the feedback and bug fixing that profits the corporate sales through improved closure rates - some of that $45.6 billion will be attributable to commercial sim sales, potentially utilising benefits accrued from the Prepar3d academic and professional user base.

 

So not 0.1% then, even if your sales figure was ten times off.

 

Venema, eh? 

 

 

Completely agree, but we all know he is somewhat prone to hyperbole.

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Pay the admission and attend an I/ITSEC convention, and you'll quickly see that John Venema is pretty close to the mark.  I used to run the entire USAF budget for simulation and DMO at the Pentagon, and I can tell you there are enormous sums of money in play for institutional users of these kinds of products--more so today than ever before because simulation is so much cheaper than live training.

 

Regards

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I think Mr. Venema has a way with words.

He has his ways for sure. I find it strange that he has his "followers" in the light of how he thinks about them. But hey, if people what to hang on to his words thats great, each to there own.

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Correction needed here: JV wasn't talking about LM's total income/sales/etc. but ONLY about the P3D team income...! Which obviously will make quite a difference with the numbers you are quoting. And which makes the statement even more interesting.

 

Well that is true Jeroen - which does indeed make it more interesting.  

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Pay the admission and attend an I/ITSEC convention, and you'll quickly see that John Venema is pretty close to the mark.  I used to run the entire USAF budget for simulation and DMO at the Pentagon, and I can tell you there are enormous sums of money in play for institutional users of these kinds of products--more so today than ever before because simulation is so much cheaper than live training.

 

Regards

This hits the nail squarely on the head, and from someone who has actually walked the walk! 

 

It is not so much just the software itself, but everything that LM wraps around it: buildings, computers, monitors, chairs, everything, and at 250 bucks for a toilet seat we know how that can add up!

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I find it strange that he has his "followers" in the light of how he thinks about them. But hey, if people what to hang on to his words thats great, each to there own

 

To be fair, I have enormous respect for what he has done for flightsimming over the last few years.  There is no doubt that Orbx revolutionised our simming experience tenfold.   JV has a brash personality,  but I guess you must have a thick skin to do what he's doing.  With that comes controversial commentary and some drama...

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Just curious what you all think about this.   

 

What he said sounds like simple logic.

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