Big-Budget Game Profits Are "Almost Impossible," Says 1C Boss

Big-Budget Game Profits Are "Almost Impossible," Says 1C Boss

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The head of Russian videogame giant 1C Company says it's almost impossible to make money on big-budget games because they cost so much to make but nobody wants to pay a decent price for them.

1C Company may not be immediately recognizable to most Western gamers but over in Mother Russia, it's a big deal. It's a huge player in both the business and entertainment software markets, developing and publishing games as well as localizing major Western releases for Russian audiences. But in spite of its size, the head of 1C's gaming division says the company hasn't made a push to become a major, big-budget publisher because it's just too difficult to make money that way.

"I think the industry is in such state now that it's almost impossible to make money even on a good game," Nikolay Baryshnikov told GamesIndustry. "Because marketing budgets are tens of millions [of] dollars, consumers are expecting that they're going to pay $40 or $60 and get amazing things. Hundred hours of gameplay, tens of thousands of hours of DVD footage, super multiplayer..."

"If we did this it would be, I don't know, $200 million... If we produce something of great quality but it lacks this component or that component, then the press says, 'Oh, 85 per cent. I played the game, it's kind of nice, but it has no video or any of this'," he continued. "And the consumer says, 'It doesn't have multiplayer, I'm not going to buy it.' So it's Catch-22."

1C Company is probably best-known outside of Russia for the well-respected but long-in-the-tooth flight sim IL-2 Sturmovik and its numerous sequels, but its bread and butter comes from less mainstream titles like Theater of War, King's Bounty and Achtung Panzer. The focus on niche titles has served 1C Company well and Baryshnikov predicted it would continue to stick with that strategy.

"We've been successful in niches, and I think that's a good way for us to go. Try to find a niche like we did with IL2 or Rig'n'Roll or Men Of War, and try to get to the top three in the niche," he said. "Not compete with hundred million dollar development, with Call of Duty 7 - but make the best game and target it at much smaller groups of fans."

Baryshnikov's comments provide an interesting contrast to those of Ubisoft's European Managing Director Alain Corre, who said in August that the only way to make money in the videogame business is to focus on a small number of popular, big-budget titles. "The games that are not triple-A are not profitable anymore," Corre claimed. "When you have a triple-A blockbuster it costs more money to develop, but at the end of the day there's also the chance of a good return on it because there's a concentration at the top of the charts."

Baryshnikov admitted that 1C Company feels the squeeze of that "concentration" on chart-toppers, which makes it increasingly difficult to attract gamers with new, untried properties. "It's very sad that [the] current market isn't only about games - almost any consumer product, it's about marketing money. The quality of product is not the main decision for the consumer. 'It's in all the channels, my friends brought it, I have to buy it'," he said. "That's crazy, how we have to compete not against great ideas, great graphics, great storyline but against spent money."

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Obvious statement is pretty obvious, although I do have some respect for 1C. Their localization jobs are painfully bad yet the games themselves are good.

Still, thanks for Il-2, Cryostasis, Men Of War etc.

However, the statement I've heard multiple times.

Andy Chalk:

Baryshnikov admitted that 1C Company feels the squeeze of that "concentration" on chart-toppers, which makes it increasingly difficult to attract gamers with new, untried properties. "It's very sad that [the] current market isn't only about games - almost any consumer product, it's about marketing money. The quality of product is not the main decision for the consumer. 'It's in all the channels, my friends brought it, I have to buy it'," he said. "That's crazy, how we have to compete not against great ideas, great graphics, great storyline but against spent money."

So much truth in this.
Keep doing what you do, 1C.

JourneyThroughHell:
Obvious statement is pretty obvious, although I do have some respect for 1C. Their localization jobs are painfully bad yet the games themselves are good.

Still, thanks for Il-2, Cryostasis, Men Of War etc.

However, the statement I've heard multiple times.

Gotta agree with the man there!

That's what we call an unsustainable business model, kids. :)

Its saying what everyoen already knows - If you go all the way up, it seems only francisese are the only ones who can break tghat market...new titles dont stand much of a chance if they go full hog

They make King's Bounty? Neat, apparently I have a bunch of their games without realizing it. Now that I think about it, I'm pretty much their target audience - I don't approach the medium of video games with that spent money mentality, as I don't actually have any friends (that influence my video game purchases), and I don't give a crap about things like multiplayer - make interesting games and I'll purchase them.

In Soviet Russia, game plays you!

OT: If game developers didn't incorporate tons of cutscenes, would anyone really care?

I understand where they are coming from, but the attitude seems a bit defeatist to me. Also it seemed a bit of a veiled threat that they need to make games more expensive to the consumer as margins are too tight.

I also don't understand the comments about marketing. Marketing has never got me to buy a game. Only good reviews and a good demo, get me to part with my money. The only effect marketing has is to make me aware of a game and to check the reviews on it. But if a game I have never heard of from a franchise I have never heard of, gets good reviews and has a good demo, then I will buy it. In fact rubbish games are the ones that get a load of marketing to cover up how bad they are. So a good game is a good game no matter how much is spent on making it. But that does not mean you should scrimp either.

More the problem the industry has with big budget games, is the same as summer blockbuster movies. So much is riding on them, they are made by committee and are rubbish because of it, then no-one goes to see them and the studios loss a load of money. There have been so many bid budget games flops recently just cause they were rubbish.

I think it's a fallacy brought on by the ubiquity of multi-platform (read: console ported) games that games must be "finished" at launch. Some (most) of the all time best games have development cycles that have run for years after they launch.

WoW is the obvious one that comes to mind, but how about Everquest 1 & 2 in the same genre (or nearly any successful MMO really). Go back further, and you have text MUDs that have been in active development for 20 years (see play.net), and are incredibly detailed and rich. Ok, but these all have subscription fees you say? Well, you could point to Minecraft or TF2 as no-sub small launches with very successful post launch development happening. Or even (shudder) Zynga games.

The point is, there are numerous game business models that still work. Well, that still work on the PC. If you are B budget console developer, it might be time to either sell out to EA like everyone else, or change platforms. It's the console business model that's broken, not the gaming business model.

I'm Russian and speaking of 1C - one shouldn't believe anything they say. They're like clones of Bobby Kotick, only small and stupid.

Anyway, this particular statement explains why they publish that much shovelware in Russia. Still, judging by posts in this topic so far they kept their reputation ok in western Europe and US. I mean, they doesn't publish all their crap outside of Russia, only some best games.

P.S. King's Bounty is made by Katauri Interactive. 1C themselves make only uber-cheap trash games that are never released outside of Russia.

Double post.

Yeeeeah...I've done enough modelling and such now to know that there are -always- ways to save time/effort and still produce decent quality work. If your "triple A" (what ARE those 'A's" for anyways?) project is costing too much money, its time to rethink your approach.
I think a lot of the time, studios end up too big, with so many employees disassociated from the actual product both philosophically and economically that the work being done takes a long time and is almost never to spec the first time.
I mean, when your a front line grunt, why work hard for you 14.95 an hour when your work is worth many, many times that.
In short, I think the game industry is bumping against the problem of over-monetizing a creative enterprise.

What's that? You've just noticed that your once-niche market has expanded to the point where consumers pressures are strong enough to demand quality and not just take what they're given and it's eroded your profit margins?

Mainstream/volume production rule number 1 - If you want to make megabucks in a big marketplace, you better make sure you're producing acceptable quality and you ship a -hell- of a lot.

Otherwise enjoy cents for shovelware.

Boo.

Lord_Gremlin:
I'm Russian and speaking of 1C - one shouldn't believe anything they say. They're like clones of Bobby Kotick, only small and stupid.

Anyway, this particular statement explains why they publish that much shovelware in Russia. Still, judging by posts in this topic so far they kept their reputation ok in western Europe and US. I mean, they doesn't publish all their crap outside of Russia, only some best games.

P.S. King's Bounty is made by Katauri Interactive. 1C themselves make only uber-cheap trash games that are never released outside of Russia.

Thanks for that information. I figured 1C was a publisher. I love Katauri!

The big problem with the industry today is the marketing. I know that any publisher and developer want to get their game known, but the problem is it's very common these days for more than half the game's budget to go towards marketing. That's insane!

oranger:
Yeeeeah...I've done enough modelling and such now to know that there are -always- ways to save time/effort and still produce decent quality work. If your "triple A" (what ARE those 'A's" for anyways?) project is costing too much money, its time to rethink your approach.
I think a lot of the time, studios end up too big, with so many employees disassociated from the actual product both philosophically and economically that the work being done takes a long time and is almost never to spec the first time.
I mean, when your a front line grunt, why work hard for you 14.95 an hour when your work is worth many, many times that.
In short, I think the game industry is bumping against the problem of over-monetizing a creative enterprise.

I'm a programmer and I can't believe the amount of people they need to do stuff at big development houses.

This does not mean I completely agree with you. It's a question of scale. When you have more people working on the same project you'll have more costs with communication, standardization of processes, etc. It seems easy on the small but gets increasingly harder as it gets big, mostly because of process costs.

I do agree companies could be more lean and spend less when creating games, but to really do this in practice is quite harder than write some words on a forum like we're doing here.

1C is a reasonable publisher, a bad translator and a horrible developer. The reason they can't achieve mainstream success is because their games absolutely suck compared to what's developed independently.

 

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