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

[Dominique_K 10,133]

36 minutes ago, nickhod said:

 

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

 

The wages may be optically low but the labor cost is horrendous in France for the employer one of the highest in Europe because of the  compulsory social insurance and welfare contribution system.  

Edited October 9, 2019 by domkle

[nickhod 425]

1 hour ago, domkle said:

The wages may be optically low but the labor cost is horrendous in France for the employer one of the highest in Europe because of the  compulsory social insurance and welfare contribution system.  

Yep, you're right, I take that back; healthcare is only part of the picture.

[Claviateur 789]

Dev here in Canada are in the range of what it was mentioned for Europe. The 100K is reserved for team leads and such...

But if the 60$ subscription for 12 month will be implemented for this new gen of MSFS then it should be a wonderful deal especially with the new business model they mentioned (evolving software).

But I am curious to see if additional fees will be applied to people like me who want to have access to the SDK for scenery developement and if they will give a different SDK for freeware developers compared to commercial ones (i.e: different development subscription fees)

Edited October 9, 2019 by Claviateur

[BlueStar 323]

12 hours ago, Rob_Ainscough said:

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.

Rob,

If folks really want to know what Microsoft is thinking about gaming all they have to do is read their Annual Report.

From the 2017 Microsoft Annual Report - 

" The $100 billion plus gaming industry is experiencing massive growth and transformation, and we have an expansive opportunity as we think about gaming end-to-end — from the way games are created and distributed to how they are played and viewed. We will build on our strong foundation of connected gaming assets across PC, console, mobile and work to grow and engage the 53 million strong Xbox Live member network more deeply and frequently — from great game experiences to streaming to social to mixed reality. We will be the company for gamers to play the games they want, with the people they want, on the devices they want. I’m excited about our opportunity to accelerate our growth opportunity, innovate boldly and earn new fans. "

Based on my limited experience with large multi-national corporations, I would venture to say that Microsoft and Lockheed-Martin spend more on sticky notes than they do on developing of their flight simulator video games for the general public.   🙂

 

[Dominique_K 10,133]

2 minutes ago, Claviateur said:

 

A good way for MS to antagonize the community would be to charge for the SDK which has been free so far in the FS family of sims (including P3D), if I am not mistaken. That would be different of course if they integrated in a toolset all the software similar to Sbuilder, ADE and all the nifty FSdeveloper tools. That is improbable.

[carbonbasedlifeform 179]

Doesn't seem to be appropriate to discuss the salaries of the devs we know are reading this.

Where does this idea of a subscription come from? 

[Claviateur 789]

1 hour ago, domkle said:

A good way for MS to antagonize the community would be to charge for the SDK which has been free so far in the FS family of sims (including P3D), if I am not mistaken. That would be different of course if they integrated in a toolset all the software similar to Sbuilder, ADE and all the nifty FSdeveloper tools. That is improbable.

It all depends on what an SDK means. We might get a kit of simple apps to help us convert from one format to another, 3D software export plugin and some command line tools like the ones we had for FSX. And then we will wait for 3rd party tools (based on the SDK commands) to be available...

Now I keep mentioning Unigine as a similar engine to the one MSFS is using in terms of technology. Unigine has some user friendly native editing interfaces for terrain and other components.

Although I think that MSFS engine could have these types of native editing interfaces, I do not believe we will have access to these because that would require a license for the engine for the purpose to create a whole sim/game with it and not add-ons for a specific title... 

Or, perhaps, there is a developement license or extra fees that make such in-engine editing tools available for those who pay for this type of license. Or a deal between MS and some commercial add-on developement groups to have access to advanced engine editing capability.

Just guessing of course..

This is an example of in-engine editing tools in Unigine:

https://www.youtube.com/watch?v=UT7duARx-TY

https://www.youtube.com/watch?v=L_Wb-oylt_Y

Edited October 9, 2019 by Claviateur

[Raymond.Groenendijk 255]

15 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) 

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.

Great estimate! Developers in France might not make that much money, but they will cost the company a lot more than what they actually earn.

Microsoft would probably also make quite some money by leveraging their internal marketplace, if all goes well this might even become the main revenue in the long run. Also don't underestimate how much of a billboard this title is for Azure (the main focus of Microsoft right now) and Bing, the exposure will undoubtedly bring in revenue indirectly but this is hard to measure.  

Another thing that should not be neglected is the statement that Microsoft makes towards its intentions for PC gaming. This title might help a lot of people decide to buy a new Windows PC along with a Windows 10 license which they otherwise might not have done or years later. It might attract people to their subscription service, they might not stick to MSFS, but they might stick to the XBOX subscription. 

So strategically this title could bring in way more money than visible at the surface (revenue from subscriptions and copies sold).  

[Dominique_K 10,133]

10 hours ago, Rob_Ainscough said:

 

Considering us content providers/developers are already paying $2500/yr for MSDN subscription that provides the development tools (like Visual Studio) to code add-ons.  And then we have $1200/yr for 3DSMax 3D modeling tool, then $52/mo for Adobe Suite (Photoshop is critical), then $20/mo for Substance (texture tools), and then (long list) .... we're already paying a substantial amount "as is" so I don't think Microsoft would dare attempt to charge for an SDK that is essentially a promotion of it's product and ensuring it's long term sustainability.

 

😃 

I make my doodles with the old Photoshop CS2 that Adobe handed over to the public free few years ago,  the free version of Sketchup, ADE, Sbuilder, ConverterX and the SDK modules.

Not mocking you, just putting things in perspective. I agree with your conclusion.

[fta2017 160]

There are 65 million XBOX Live accounts now, growing at 10m a year, so business is booming. XBOX used to be a sick joke within MS but it accounts for about 15-20% of the company's revenue now.

This is a AAA title, make no mistake about it. That usually means about US$200m+ in budget including marketing. The Microsoft booth at E3 alone would be a $20m investment across all platforms and titles.

This would never have gotten sign-off by Phil Spencer or his boss if the numbers did not stack up. What it also means that their target audience is certainly not the AVSIM crowd or regular simmers, but the general global gaming community (1.8 billion people). The fact they are engaged with AVSIM and the sim community is just clever on the part of their marketing team who sees us as fervent evangelists for the platform.

What it does mean is a resurgence of flight simulation as a more mainstream genre, which can only be good for us all.