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We all know that Blizzard fucked up with Starcraft 2 and that they continue to screw us with their customer support (really??? no clan support still? no tournament support?) It's retarded, and what we always get thrown back when we complain is "we'll get to it eventually." I'm calling bullshit on blizzard, they're just raking in the cash and sitting on their hands because no one is contesting their spot as "king of RTS creators." Recently I've been helping CecilSunkure playtest his game found here. This game was made with 4 people in about one business quarter, not working full hours and not being paid at all, and it's ready to be distributed on tablets... And these guys are still in school for programming! Blizzard has TONS of money from WoW, TONS of talent, and TONS of time! they're literally restricted by nothing that Cecil's team is restricted by, yet Cecil managed to pump out a fully functional game, so why hasn't anyone done this for the RTS genre?
SC2 won't last on the competitive scene like BW did, the game isn't enough to carry its shitty interface and features, not to mention Blizzard's dickishness in regards to dealing with KESPA. It's already dying (never really took off) in Korea, which means there's truly a market for an RTS king. While I was contemplating this today, I ran a couple of numbers through my head to see if it was just plain too expensive for startup companies to challenge blizzard. Here's the fruitions of my contemplations and analysis of the data.
I created a spreadsheet predicting the 6 year life cycle of a game using the net present value method (it would take a while to explain why, so if you're curious PM me or better yet go wikipedia it). I created a model that'll be able to calculate the cost of producing and sustaining a game, accounting for salaries and advertising. It also takes into account sales volume (accounting for decreases in sales over time) as well as money paid from kespa as licensing fees (accounting for viewership growth over the next 12 quarters) (from year 3 onward until year 6 where the model ends). The numbers I used to my model are shown below (they're fully changable if you don't think they're accurate, I'll upload the spreadsheet so that you can play with it), the Kespa licensing fees are the money Kespa pays my development firm per viewer. The growth is growth in Kespa's viewership over the quarters. Here is the following information for each year (assuming the base case of only $1 per viewer from Kespa).
Variables involvedYear 1Year 2Year 3Year 4Year 5Year 6Here's the cashflow/DCF calculations (required return of 14%)Here's a graph representing the total discounted profits of the firm for the initial 6 years at a $1 licensing feeHere's a graph representing the total discounted profits of the firm for the initial 6 years at a $5 licensing fee
As you can see it's drastically different depending on how much kespa would pay per viewer to broadcast our new game, it's also significantly different depending on how much you charge consumers for your title (both of these graphs only charge 5 dollars per copy! compared to Blizzard's 60 dollars..) They're definitely beatable, depending on a few things.
1. You have to actually have the support of the community and Korea.. communications with KESPA (or some broadcasting community) must actually go well.
2. You must LISTEN to your community or the title will flop just like SC2 has.
3. You need some way to sustain continuous customer support (a fee from the consumers, in my model kespa pays the firm for viewers but a pay to play model would be similar [although it removes the chance for eventually broadcasting to poor countries because no one there will buy/ p2p/ watch your game..]).
4. The game has to actually sell lol
Here's the link to the spread sheet on excel, I'll email/upload upon request.
TLDR: blizz should hire me, i could make them millions more than they are because i'm not an arrogant activision executive
updated all figures for salary decreases and advertising increases
  
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Cool numbers. Seeing stuff like this always impresses me because it shows just how greedy companies can get. As soon as you start making money, you have your fanbase, so take advantage of it imo. I am going to go play with some of the numbers later to see what happens.
On April 25 2012 08:12 Endymion wrote:
TLDR: blizz should hire me, i could make them millions more than they are because i'm not an arrogant activision executive
I support this.
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On April 25 2012 08:28 Rkie wrote:Cool numbers. Seeing stuff like this always impresses me because it shows just how greedy companies can get. As soon as you start making money, you have your fanbase, so take advantage of it imo. I am going to go play with some of the numbers later to see what happens. Show nested quote +On April 25 2012 08:12 Endymion wrote:
TLDR: blizz should hire me, i could make them millions more than they are because i'm not an arrogant activision executive I support this.
I support this too.
Anyways, nice to see numbers that destroy my faith in SC2. Or not.
It was at least eye opening.
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On April 25 2012 08:28 Rkie wrote:Cool numbers. Seeing stuff like this always impresses me because it shows just how greedy companies can get. As soon as you start making money, you have your fanbase, so take advantage of it imo. I am going to go play with some of the numbers later to see what happens. Show nested quote +On April 25 2012 08:12 Endymion wrote:
TLDR: blizz should hire me, i could make them millions more than they are because i'm not an arrogant activision executive I support this.
it's ridiculous because blizzard is demanding $15 per viewer from Kespa (per quarter) for the SC2 PL, so if 25% of the korean population watches it they'll gross 150,000,000 usd per quarter in licensing revenue...
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On April 25 2012 08:34 Endymion wrote:Show nested quote +On April 25 2012 08:28 Rkie wrote:Cool numbers. Seeing stuff like this always impresses me because it shows just how greedy companies can get. As soon as you start making money, you have your fanbase, so take advantage of it imo. I am going to go play with some of the numbers later to see what happens. On April 25 2012 08:12 Endymion wrote:
TLDR: blizz should hire me, i could make them millions more than they are because i'm not an arrogant activision executive I support this. it's ridiculous because blizzard is demanding $15 per viewer from Kespa (per quarter) for the SC2 PL, so if 25% of the korean population watches it they'll gross 150,000,000 usd per quarter in licensing revenue...
Is PL even profitable for KESPA now??
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Is this just sustaining a game after release?
Because 20 programmers (and I suspect you'd need more...) is nowhere the main cost of development for a game like Starcraft. You'd need a whole bunch of artists, game designers, voice actors, sound effects people etc... to have anything near competitive.
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On April 25 2012 08:37 netherh wrote:
Is this just sustaining a game after release?
Because 20 programmers (and I suspect you'd need more...) is nowhere the main cost of development for a game like Starcraft. You'd need a whole bunch of artists, game designers, voice actors, sound effects people etc... to have anything near competitive.
naw man these numbers i pulled out of my ass are all pure profit and surely a large corporation has the same costs as a startup with 4 programmers
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GRAND OLD AMERICA16375 Posts
On April 25 2012 08:34 Endymion wrote:Show nested quote +On April 25 2012 08:28 Rkie wrote:Cool numbers. Seeing stuff like this always impresses me because it shows just how greedy companies can get. As soon as you start making money, you have your fanbase, so take advantage of it imo. I am going to go play with some of the numbers later to see what happens. On April 25 2012 08:12 Endymion wrote:
TLDR: blizz should hire me, i could make them millions more than they are because i'm not an arrogant activision executive I support this. it's ridiculous because blizzard is demanding $15 per viewer from Kespa (per quarter) for the SC2 PL, so if 25% of the korean population watches it they'll gross 150,000,000 usd per quarter in licensing revenue...
It really goes to show who's doing the business. And its Activision, I'm afraid.
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On April 25 2012 08:37 netherh wrote:
Is this just sustaining a game after release?
Because 20 programmers (and I suspect you'd need more...) is nowhere the main cost of development for a game like Starcraft. You'd need a whole bunch of artists, game designers, voice actors, sound effects people etc... to have anything near competitive.
the first 3 years are pre release and the later 3 are post (listed in variables). I don't know the exact number of programmers that would be needed, but even if you raised it up to 40 programmers you would still have a positive NPV at $5 retail with $2 licensing from kespa (all else the same)
On April 25 2012 08:37 AnachronisticAnarchy wrote:Show nested quote +On April 25 2012 08:34 Endymion wrote:On April 25 2012 08:28 Rkie wrote:Cool numbers. Seeing stuff like this always impresses me because it shows just how greedy companies can get. As soon as you start making money, you have your fanbase, so take advantage of it imo. I am going to go play with some of the numbers later to see what happens. On April 25 2012 08:12 Endymion wrote:
TLDR: blizz should hire me, i could make them millions more than they are because i'm not an arrogant activision executive I support this. it's ridiculous because blizzard is demanding $15 per viewer from Kespa (per quarter) for the SC2 PL, so if 25% of the korean population watches it they'll gross 150,000,000 usd per quarter in licensing revenue... Is PL even profitable for KESPA now??
yeah, they make quite a bit on advertising (assuming it's similar to the US)
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Read it all. Nicely done, but why no advertising costs? And exactly how many copies have to be sold for a profit?
edit: Also, I like how blizz charges $15 for BW.
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are you seriously putting programmer pay at $200,000 per year?
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On April 25 2012 08:41 3FFA wrote:
Read it all. Nicely done, but why no advertising costs? And exactly how many copies have to be sold for a profit?
edit: Also, I like how blizz charges $15 for BW.
Even if you raise advertising to 3mil per quarter post release, you still get a positive NPV at $2 per viewer from KESPA. i dunno the break even quantity, I would have to retool the model because it's based off of profits coming from kespa not really from sales volume.
On April 25 2012 08:46 d3_crescentia wrote:
are you seriously putting programmer pay at $200,000 per year?
oh shit you're right lol, i guess it should be 12,500 per quarter, my mistake!
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you have 4 quarters x $50,000 pay per programmer = $200,000 a year per programmer...? that seems pretty inflated, even for blizzard
EDIT: ok good you caught it T_T
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There might be something wrong with how Blizzard is being run internally, because they have been ridiculously incompetent.
Consider that the D3 producer left just a month or two ago, before launch! And of course how long D3 has been delayed.
And of course how poor SC2 has been so far.
I think part of the issue is Blizzard is no longer king. They used to be able to put out a game, get great sales, and keep mindshare. But there is easily 10times if not more competition these days for attention. There's a lot of free to play games, games on different non-pc devices etc etc. So Blizzard can still rake in sales, but their same old tricks won't keep people's attention anymore. No one needs UMS maps. There's Steam games, DOTA, LOL, and tons of other stuff to play. It's not 1998 where outside of BNET and CS there were no other multiplayer games. War3 was the last of that period.
2012 is different from 1998 and different from 2004. I don't think they understand that.
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updated the figures and quoted myself by accident...
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If it was really this simple there would be a quality RTS released in the past decade. I can't think of a franchise that hasn't gone to shit in the past years ^_^
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On April 25 2012 09:17 Blitzkrieg0 wrote:
If it was really this simple there would be a quality RTS released in the past decade. I can't think of a franchise that hasn't gone to shit in the past years ^_^
Idk, valve continues to make sense. I wonder if they will ever release their own RTS...
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On April 25 2012 09:17 Blitzkrieg0 wrote:
If it was really this simple there would be a quality RTS released in the past decade. I can't think of a franchise that hasn't gone to shit in the past years ^_^
I don't think it's simple, it's just financially feasible assuming you can get some P2P (even if it's just .33 cents/month like my model) to release a free to play game that actually supports the community instead of the BS that is sc2
(i have no idea how to make a game, i just ran through the prospect of doing it)
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These numbers are all over the place.
A couple small examples.
Kespa is going to give you 1,000,000 your first quarter when you've sold 250,000 copies. Someone there is getting fired for signing that contract.
Your sales go from 250,000 to 180,000 in the second quarter. You would be very optimistic to say your sales will go from 250,000 to 125,000.
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What's with the downsizing in Y4? You'll also need support staff to provide that great customer service you mention. Also, you'll have a hard time retaining good devs for $60k a year unless you're also giving equity. I also think your sales figures and licensing fees are overly optimistic.
There's room for startups in the game industry -- I don't think anyone's doubting that -- but it's a lot harder than your numbers would imply.
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EPT![[image loading]](/staff/Endymion/Bliz_Blog/variables_edit.png)
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