Yamaha DTXpress/DTXplorer/DTXtreme

The best way to make a small fortune in software development is to start out
with a large fortune.

-----Original Message-----
From: emf [mailto:liberatusvirus@...]
Sent: Monday, January 12, 2004 9:34 AM
To: DTXpress@yahoogroups.com
Subject: [DTXpress] Re: (VERY OT) Software Development costs...


--- In DTXpress@yahoogroups.com, "jjcorley0000" <jjc@s...> wrote:
>
>     (Hi!, first time poster and all that...)
>
>     I thought I'd chime in here as a software engineer with about
10
> years experience who has worked developing video games and been
> involved in numerous start-ups...
>
>     "a popular game software costs $1 million to produce and market"
>
>     Actually the costs are much higher than that.  Just for
> development it can easily take a team of 20 people two years; with
> all the over head that can easily get into or over the $5 million
> range.  This is exclusive of packaging, advertising, any licensing,
> etc.
>
>     "The projected number of sales is in the 500,000+ area..."
>
>     500,000 sales would be a BIG hit.  If you are in the lucky top
> 15% or so.  Most games are miserable sales failures, usually
because
> they aren't very good, developing a "fun" game is very hard.  This
is
> why you see so many copy-cat games.  It is very tough to break new
> ground and have it turn out to be "fun" and keep up with the
> technology curve (remember that technology is advancing AS you are
> building the game) and not completely blow over your budget or
> timeline, keep the team from killing each other due to overwork,
hit
> the magic Christmas sales cycle, convince your stakeholders not to
> cancel the project, etc. etc. etc.
>
> "...and the selling price is set at $50..."
>
>     Yes, but remember that between retail and distributor mark up
the
> production company would be lucky to see half of that.
>
>     The numbers still work out that if you get lucky you can invest
> between $2-10 million or so and have a low percentage change of
> making a multiple of your money.  That said, the odds are you are
> going to lose it.  If you do make it, you turn around and try to
> churn out some "me too" games to squeeze every drop out of the
brand
> you built with your big title while you try like heck to get lucky
on
> your next big original.
>
>     Most of the start-up softare business is some variation of that
> basic formula.
>
>     You want to know who gets to drive the Ferrari's?  Two people:
>         a)  The people who are key to making that tough shot
actually
> happen get rewarded (usually as incentive to stick around and do it
> again).
>         b)  The people who plopped down their $X million on a long
> shot.
>
>      I've met lots of people who were real (or paper) millionaires
> who have won and lost in this game...there are many more losers.
> Frankly, if I ever build a small multimillion dollar nest egg there
> is NO WAY I'd take the chance these people do.
>
>      There a lots of ways someone can attempt to justify piracy,
but
> the argument of "$XXX is so over priced" doesn't hold water.  Any
> commercial software project is extremely expensive and for a lot of
> software products out there, there is some guy rolling the dice
with
> his life savings.

This has been a very enlightening exchange--especially to someone
with the business sense of a pack animal--and polite, too.  Thanks to
all participants for turning potential conflicts into learning
opportunities. We do feel blessed to have some of the more
intelligent congenial contributors on the web (and drummers yet!).

Ed


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