Homefront hits store shelves in just a few days. The game faces a first person shooter market already saturated with a plethora of competition seeking to claim dominance. It seems, however, that Homefront is going to have to be more than just marginally successful in order to ensure its own future.
Paul Pucino, Executive Vice President and Cheif Financial Officer at THQ, recently revealed that most new IPs at THQ need to hit two million units sold to turn a profit:
“When you just think in terms or profitability, the owned IP, there’s a threshold of break-even of about 2 million units per game, so you have to sell somewhere in the area of 2 million copies of a game like Homefront to break even. Once you get past that you’re generating incremental operating margins as high as 60 per cent.”
Homefront is already off to a good start. It is the most pre-ordered game in publisher THQ’s history, claiming 200,000 copies pre-ordered in the US alone. This may pale in comparison to the success of reigning champion Call of Duty: Black Ops, recently dubbed the best selling game of all time by NPD Group, but it’s a solid start for the new IP.
If Homefront manages to live up to the hype it’s created for itself, Kaos Studios and THQ’s plans to develop the game into a series can be realized. With Kaos Studios General Manager David Votypka hinting at a new gameplay-centric layer he wants to include in Homefront 2 (if it gets made), we can’t help but hope that Homefront sells well, so that we might see more innovation driving this generation of first person shooters.
What do you think about THQ’s revelation that just about any new IP would need to sell two million copies to be successful? Is this hindering new and interesting ideas in the video games industry?
Homefont will be released for PC, PS3, Xbox 360, and OnLive March 15, 2011. If its launch trailer doesn’t get you in the mood to defend your homeland, we don’t know what will.
Source: Industry Gamers, Eurogamer
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this isn’t really news. Companies take years to develop and employ hundreds of staff. Watch the credits for a game roll by. 100 peopl at 50,000 a year is 5 mil in labor. If development takes 2 years, it’s 10 million. Kick in marketing hype, advertising, etc (those web-ads, glossy magazine spreads and in-store displays cost real $$$) and you need another big chunk of change. Then there is the licensing fees to Microsoft (for XBOX 360) and Sony (for PS3). Also licensing for game engines or technologies (like the Unreal Engine that runs many games). Those cost hundreds of thousands of dollars to use. Manufacturing might be minimal in cost per unit, but another 2 or 3 bucks per unit. Another “hidden” cost is the old TIME-VALUE of MONEY, where the company spends $$$ today in hopes of recouping it in the future. That capital might have been better used somewhere else (invested in a different game for example).
These are just WAG’s (wild-a$$ guesses) but the number doesn’t sound unreasonable. There have been a couple articles in the past that breakdown where the $50-$60 per game goes to and it is pretty reasonable.
Agreed, it sounds like the numbers are right around what a AAA game takes to make these days. That’s pretty scary, how many games really sell 2 million or more a year?
I’ve also heard through the grapevine that Homefront cost around twice as much as most of the other THQ IPs to make. That’s one of the reasons Kaos is probably getting shut down. Now whether that means most other THQ games need to sell 1 million to be profitable, or if Homefront actually needs to sell FOUR million is anyone’s guess. It wouldn’t be the first time a big corporation played it loose with the numbers!
How is this a realistic business model? Episodic seems to make sense, with taking investments, then building a first release, with each profit used to build the next episode. I would have expected full console releases to have a better plan than spending all the money they have and then crossing their fingers.
THQ seems to be making some serious strides, so I hope one bomb doesn’t ruin them. Although, now I can understand why they want smaller releases with more DLC at a later date: less risk.
I can guarantee you that Homefront wont sell 2 million units. Vanquish has only sold 228,389 units. That was a great game and Homefront is mediocre. Homefront wont sell anywhere near 2 million units….