96% of Video Games Are Failures

In an interview with Forbes, Geoffrey Zatkin, President of Electronic Entertainment Design and Research (EEDAR), said that only four percent of video games sell enough for the developers to make a profit. This means that the other 96% are failures, at least from a business perspective, as they fail to earn enough money to even cover the cost of development. A developer's safest bet is to "milk a franchise", making sequels and remakes of existing properties rather than developing new ones.

According to Zatkin:

• The middle 50% of video games sell between 75,000 and 250,000 copies, and a bit poorer on PS3.
  
• Adding a decent co-op mode can increase those sales by roughly 12,400 and a decent competitive multiplayer can boost those sales by an additional 25,000.
  
• The time a game is released effects sales, as launching around the Christmas shopping season means bigger sales. (Duh.)
  
• The developers making the game is a factor in sales, with respected studios seeing higher sales.
  
• Sadly, World War II shooters do well.

sources:
http://www.forbes.com/technology/ebusiness/2008/11/21/games-eedar-developers-tech-ebiz-cx_mji_1121eedar.html
http://secondstorygamer.com/2008/11/eedars-president-games-profit/

Wow, if those figures are accurate, it is no wonder we saw all those companies in the red back in that older thread about profits and losses. This is to be expected with games costing so much to build these days. I don't see how this business can continue like this for much longer.

It looks as though game devs are going to have to look in new directions in the years ahead.