Jump to content

Sign in to follow this  
yanfeng12342000

How many copies must it be sold to match development cost?

Recommended Posts

Posted (edited)

120 people team with an average of $100,000 salary will be $12,000,000 a year for salary alone. I have the vague knowlege that salary occupies 50% of the development cost, so it's roughly $24,000,000 total?

Xbox game pass 12 month subscription is $60. So you need 400,000 subscriptions to match the development cost?

Now that does not sound too much like a difficult task, if it has both PC and Xbox version on a subscription basis.

Well, as long as it's also sold outside flight simmers.

Edit: Sorry I correct the math error. Thanks for pointing out!

Edited by yanfeng12342000

Share this post


Link to post
Share on other sites

You can probably add another 30% , as MS pays Asobo, and they pay the employees, Asobo's gotta make money too.

Share this post


Link to post
Share on other sites

120 * 100000 = 1,200,000? 😉

  • Like 1

100% VR flyer - Valve Index & RTX 2080 ti

Share this post


Link to post
Share on other sites
5 minutes ago, andyjohnston.net said:

I'd be really surprised if the devs make $100K.

More or less?

Share this post


Link to post
Share on other sites
Posted (edited)

Not all members of a project are programmers or even engineers. But apart from that, the actual salary is indeed only half the truth. In most countries the employer has to pay part of the taxes and social security, it pays for infrastructure, software licenses, management overhead and whatnot. Im my old company (which was a very large one) ,the cost of my work as programmer/architect/project manager was calculated with €100 per hour, that would be €170.000 per year. Unfurtunately my salary was only a fraction of that, and that was years ago.

It is very very hard to tell from the outside, but I would put the project budget at something between $30 and $50 million in total. That can be a total miss too. I always calculated that I needed about one million € per year to keep my in-house project with 10-15 people alive (in Germany).

But thinking of Microsoft, one has to always put that into perspective. $50 million are 0.3% of the rumored R&D budget for 2019 alone (if R&D even pays for this). Or 0,005% of the total annual company revenue, according to the Q4 report, which puts their year total at more than $100 billion. 120 people are 0,08% of the total headcount (of Microsoft itself, not counting the contractor). They could have 1200 people working on MSFS without breaking a sweat. 

Assuming the $50 mil of development cost, to make it worth their while, the sales would have to go at least beyond $62 mil in a reasonably short amount of time (25% is a common revenue target).

Best regards

Edited by Lorby_SI
math is hard
  • Upvote 2

Oliver Binder

LORBY-SI

Share this post


Link to post
Share on other sites

As a comparison, the cost of a game like Skyrim or Fall Out is said to be a little short of 100 MUSD.


Dominique

Simming since 1981 - Prepar3D v3 on a 4770 @ 4.4 GHz and a 1080 @ 2560*1440 - Warthog HOTAS - MFG pedals - My YouTube Channel

 

Share this post


Link to post
Share on other sites

Don't worry XBOX will take care of that gamers buy titles like PC simmerer's buy airports and then move on. 

  • Like 1

i7 7700K 4.8 \ MSI RTX 2080Ti GAMINGX TRIO \ M.2  Samsung 960 EVO \ 1TB Samsung 850 EVO \ 2TB BarraCuba \ 16GB G.SKILL DDR4 3000MHZ \ Windows 10 Home\ ASUS 28" 4K monitor\ P3Dv4.5

Raymond Fry.

PMDG_Banner_747_Enthusiast.jpg

Share this post


Link to post
Share on other sites
6 hours ago, yanfeng12342000 said:

120 people team with an average of $100,000 salary will be $12,000,000 a year for salary alone.

European developers earn quite a bit less than developers in the US. Outside of a major city, even less (they're in Bordeaux).
Game developers earn even less again due to supply and demand. Probably €35-60k  depending on experience.

Of those 120, maybe less than half will be developers. You'll have a lot of 3D modellers and artists who are paid less than developers.

So it's still a big yearly salary bill, but probably not that big.

Share this post


Link to post
Share on other sites

Don't forget, MSFS is the test-bed for new tech. Some businesses deliberately create proof of concept products, which can sometimes subsequently develop into something completely different.

While it would be great for MS to recoup all of these development costs, it could (and I stress this point strongly), could be the case that they are willing to take a loss on the project overall, if the mature end product, say Azure AI machine learning, or improved photogrammetry for use in Bing Maps for Enterprise or for licencing to other tech companies, is able to be used elsewhere in the business.

Plenty of potential new / extra revenue streams open up if the tech implementation is successful and it is scalable.
 

  • Upvote 2

Ryzen 3700X 4.4GHz(PBO) / Gigabyte AB350 Gaming 3 / ASUS GTX 1070 O8G / 32GB Corsair Vengeance 3200 MHz / triple monitor

WIN 10 Pro + P3Dv4 + PTA + EnvTex + FS Global Ultimate NG + ORBX + ASP4 + Rex SF 3D + ChasePlane

Share this post


Link to post
Share on other sites

Your developer salaries are low, $130,000 is the average see here.  (WA is almost as expensive as CA for cost of living) 

In addition, the complexity involved in developing flight simulators is typically more involved than doing business/web applications so they are often in more demand and hence have higher salary requirements.  Initial development costs to release day is only part of the cost.  You also didn't factor in that Microsoft started working on MSFS around 2016 so they've already been at it for 3 years and when released next year will be about 4 years.

There is ongoing server costs and ongoing development costs.  There are marketing costs also (very significant).  The employee costs are not doubled (health coverage, 401K benefits, etc. is about an additional 33% of base salary).  So base $130,000 +  $42,900 = $172,900 per year per employee ... so X 200 = $34,580,000/yr ... 4 years in the making - $138,320,000.

Development cost to release date: $138M

Marketing costs: $50M est.  

Server costs for 1 year: $20M est.

Total: $208M

... perspective GTA V cost just over $265M dev+marketing - game cost stats here.

Assume $60 base retail price for MSFS: $60

Assume 80% subscription rate for $60/yr  (so $48 + $60 = $108 revenue year 1)

They would need to sell about 1.9M copies to recover initial development cost + 1 year ... The objective would NOT be "to break even". 

BUT, and this is a big BUT ... the 200 person development team could consist of part time contractors and/or employees that might be working on multiple projects of which MSFS is just one of their projects so they might not bill out for a full year.

Like I suggested earlier, bringing on-board the XBOX user platform is critical to it's success and to 3rd party success as I don't think they will find 1.9M PC buyers exclusively.  BUT, if you look at the how many copies of GTA V sold, 110M over 6 years and still selling.  It would be very optimistic for Microsoft to expect 110M sales but why not set expectations high and Microsoft indicated they are in this for the long run so I certainly think it can eventually be a very profitable venture for them.

Cheers, Rob.

Share this post


Link to post
Share on other sites

Hmmmmmmm...... I once heard you could hire pretty capable Russian developers at very nice prices. And they have a history and reputation for flight simulation over there......


Orbx Beta Tester
Just Flight Beta Tester
 
We are all connected..... To each other, biologically...... To the Earth, chemically...... To the rest of the Universe atomically.
 
Devons rig
Intel Core i7 8700K @ 5.0GHz / 32.0GB G.SKILL TridentZ Series Dual-Channel Ram / ZOTAC GAMING GeForce® RTX 2080 Ti Triple Fan / Sound Blaster Z / Oculus Rift VR Headset / Klipsch® Promedia 2.1 Computer Speakers / ASUS ROG SWIFT PG279Q ‑ 27" IPS LED Monitor ‑ QHD / 2x Samsung SSD 850 EVO 500GB / Windows 10 Pro 64-bit / Gigabyte Z370 AORUS Gaming 5 Motherboard

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

×
×
  • Create New...