Harmonix to lose staff following sale

[Drakonis]

Bit sad really

Harmonix, the developer of the Rock Band series of games, will reportedly be losing between 12 and 15% of their 240 full-time staff in a restructuring move. According to website Joystiq a spokesperson for Harmonix has confirmed that the company is “restructuring our organization to bring it into alignment with our current product development plans. Unfortunately, this means reducing the number of full-time staff.”

[StarBound]

The game makes a profit, but doesnt sell well, and the studio closes down. Weirdest logic in the world.

[GreyWolf]

No mystery here, Guitar / Band / DJ Hero was more popular.

[wizardofid]

The game makes a profit, but doesnt sell well, and the studio closes down. Weirdest logic in the world.

Actually lets paint you a little picture.

The publishers gets all the money and the studio a percentage.The amount they get is based on how many units sell.

So if get fronted 50 million to make the game, and use 40 million to make the game, and the profit sharing only kicks in after 50 thousand units, at say 20 % of the profit.

They sell an additional 100 thousand units @ R300 of which the profit is say R180 with a 20% cut 3600000 + 10 million compared to the studio (90 - 50) = 4000000 + 14400000.

Weirdest logic in the world, so you say

[StarBound]

The publishers gets all the money and the studio a percentage.The amount they get is based on how many units sell.

So if get fronted 50 million to make the game, and use 40 million to make the game, and the profit sharing only kicks in after 50 thousand units, at say 20 % of the profit.

They sell an additional 100 thousand units @ R300 of which the profit is say R180 with a 20% cut 3600000 + 10 million compared to the studio (90 - 50) = 4000000 + 14400000.

I cant make sense of that figures. Cant identify the base costs, selling price or break even points.

[wizardofid]

The publishers gets all the money and the studio a percentage.The amount they get is based on how many units sell.

So if get fronted 50 million to make the game, and use 40 million to make the game, and the profit sharing only kicks in after 50 thousand units, at say 20 % of the profit.

They sell an additional 100 thousand units @ R300 of which the profit is say R180 with a 20% cut 3600000 + 10 million compared to the studio (90 - 50) = 4000000 + 14400000.

I cant make sense of that figures. Cant identify the base costs, selling price or break even points.

Sigh, well okay

The publisher front the game company 50 mil.
The game company uses only 40 mil so there is 10 mil left.
The publisher and the game company will sign an agreement on product price as well as how many units it will take to both get back the 50 mil and the advertising costs.So the units will range on expenditure by the publisher before the game company gets a dime.

Their signed agreement is 50 thousand units that needs to be sold to both get back the money they fronted the game company as well as advertising cost ect. The agreement is for 20% take on the profit. Which if the game costs 300 and profit is 180 the game company gets 36 for every unit sold after 50 thousand units.Some thing to note is the profit sharing works on a inclining block a would start as low as 7% more or less.

The product sells an additional 100 thousand units.The profit for that is 36 mil + 10 mil that was fronted to the game company.

The Publishers walks away with their 50 mil plus expenditure and a healthy profit of 144 mil.

The game company made a lousy 46 mil out of the deal and the publisher got all the money.

Is that clear enough, every one thinking that game companies make all the money is in for a shocker they don't, because the publishers has more risk involved with fronting money to game companies, take bigger profits shares to cover loses of game companies.

Self publishing may help, but you will never get the amount of sales you would via publishers.

“restructuring our organization to bring it into alignment with our current product development plans. Unfortunately, this means reducing the number of full-time staff.”

In a politically correct way they are saying sorry guys our publishers screwed us again....

[StarBound]

Ok but from my view this way of working is flawed.

First establish a target figure for your game sales. Eg 1-3 million. I believe developing for the ps3/xbox 360 has a cost of $12 royalty, which means its X + $12 = end price. So lets remove the console aspect and say a pc games target is 3million and the price tag is $50. That bring a income target of $150,000,000. If the publisher gives $50,000,000 for developement then the game is making pure profit from after its 1 millionth sale. Include something like a royalty of 20% in that price you need to sell 1.25mil units. If the retails has a 20% price tag then you need to sell 1.5mil units. So at the end of the day after your 1.5th million sale anything extra produces a profit.

With that said the target is very low. Then again the prime example from the www.gametrailers.com is blur which only sold 300,000 units. Then you get something like Black Ops that did 25,000,000 units.

So with this logic it shouldnt be possible for any developer to close its door if it has a $50 mil budget and sells more than 1.5mil units.

[wizardofid]

@StarBound
I just gave an example of how it works

Perhaps, however 240 staff members =$$$
If you take into account that the numbers change a lot


240 staff members at an average of $4000 each = 9.6 mil a month for just salaries and 4000 average is still a modest amount

[StarBound]

Actually 240 x 4000 = $960,000. If its a $50 mil budget they have 5 months to complete it and thats excluding software and hardware to program on. But it makes you wonder how ID software and blizzard ever made it as far as they did.

[wizardofid]

Actually 240 x 4000 = $960,000. If its a $50 mil budget they have 5 months to complete it and thats excluding software and hardware to program on. But it makes you wonder how ID software and blizzard ever made it as far as they did.

oh an oops on the error
http://www.animationarena.com/video-game-salary.html