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

[yanfeng12342000 132]

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 October 8, 2019 by yanfeng12342000

[andyjohnston.net 617]

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

[Casualcas 830]

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

[Nedo68 533]

120 * 100000 = 1,200,000? 😉

[Casualcas 830]

2 minutes ago, Nedo68 said:

120 * 100000 = 1,200,000? 😉

I know 😉

[irrics 1,517]

5 minutes ago, andyjohnston.net said:

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

More or less?

[Casualcas 830]

Less.... I actually looked it up. Kinda made me cringe

[andyjohnston.net 617]

I doubt any of them make anywhere near $100,000.

[Lorby_SI 2,036]

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 October 8, 2019 by Lorby_SI
math is hard

[Dominique_K 10,132]

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

[G-RFRY 1,705]

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

[nickhod 425]

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.

[F737MAX 5,489]

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.
 

[HiFlyer 9,331]

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......

[nickhod 425]

5 hours ago, Rob_Ainscough said:

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

so they are often in more demand and hence have higher salary requirements

Server costs for 1 year: $20M est.

They're not in WA, US though, they're in Bordeaux, France where the average developer salary is around €35-60k depending on experience.

https://www.glassdoor.co.uk/Salaries/bordeaux-software-engineer-salary-SRCH_IL.0,8_IM1101_KO9,26.htm?countryRedirect=true

Game developers usually earn less than, say, full stack web developers because there are many people wanting to work in game development and relatively few jobs.

Cost of employment in France is far less than the US due to free universal healthcare.

Server costs will be effectively zero as they are wholly owned by Microsoft and using Azure.

Edited October 9, 2019 by nickhod