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Costs/profit of top mobile game

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Garfed   Malta. Jan 19 2015 18:24. Posts 4818

Very interesting article, Monument Valley team (game voted the best game of 2014, doesn't mean it was the most profitable though), revelaed their full financial costs and profits made from the game.

I wasn't really shocked that the game made over $5mln, considering Flappy Bird was making over $50k per day at its peak, but I was shocked by the costs. Holy shit. Also, the difference in income based on market is insane.





Full article:
http://techcrunch.com/2015/01/15/monu...-and-reward-of-making-a-hit-ios-game/

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 Last edit: 19/01/2015 18:30

Spitfiree   Bulgaria. Jan 19 2015 18:47. Posts 9634

Moral of the story - hire eastern european people to do the same job for 10% of the costs

Anyways If some of the team had a contract in which his salary would drastically go up in case XXX sales were made there s no wonder the costs are so high. No way the development itself was that much

 Last edit: 19/01/2015 18:50

Baalim   Mexico. Jan 19 2015 23:04. Posts 34246

if you are spending 800k developing a shitty mobile game you are doing something wrong

Ex-PokerStars Team Pro Online 

Romm3l   Germany. Jan 20 2015 08:07. Posts 285


  On January 19 2015 22:04 Baalim wrote:
if you are spending 800k developing a shitty mobile game you are doing something wrong


yeah who wants to spend 800k to generate revenues of $5.8mil at a 76% profit margin when you could make a shitty game cheaply while living in your parents' house like the other 3289423875 wannabe rich app makers and generate a revenue that values your time lower than people who gather recyclable material off the streets in China.


Romm3l   Germany. Jan 20 2015 08:10. Posts 285


  On January 19 2015 17:47 Spitfiree wrote:
Moral of the story - hire eastern european people to do the same job for 10% of the costs

Anyways If some of the team had a contract in which his salary would drastically go up in case XXX sales were made there s no wonder the costs are so high. No way the development itself was that much


it's pretty likely at least some developers were paid in equity since it seems a pretty large business risk to hire eight people for a year paying $100k p.a. to develop a game that may or may not even sell in a winner-take-all marketplace.

but if anything the actual 'moral of the story' is most app makers will lose, only a few run great (and have a great game) will win big. But the people who won big last year were very well resourced, so even in the mobile space barriers to competition are going up

 Last edit: 20/01/2015 08:15

mnj   United States. Jan 20 2015 10:20. Posts 3848


  On January 19 2015 17:47 Spitfiree wrote:
Moral of the story - hire eastern european people to do the same job for 10% of the costs

Anyways If some of the team had a contract in which his salary would drastically go up in case XXX sales were made there s no wonder the costs are so high. No way the development itself was that much



LOL


NMcNasty    United States. Jan 20 2015 13:45. Posts 2039

Not sure if its analogous to gaming or not, but I remember reading about how with American TV right now how networks lose money on basically every show. It doesn't matter too much, because when a show does become a hit, like the Simpsons or Family Guy it can literally be worth billions. So networks are basically gambling it up searching for the one big cash, and that's why we see new crappy shows basically every week.


Spitfiree   Bulgaria. Jan 20 2015 17:15. Posts 9634


  On January 20 2015 07:10 Romm3l wrote:
Show nested quote +


it's pretty likely at least some developers were paid in equity since it seems a pretty large business risk to hire eight people for a year paying $100k p.a. to develop a game that may or may not even sell in a winner-take-all marketplace.

but if anything the actual 'moral of the story' is most app makers will lose, only a few run great (and have a great game) will win big. But the people who won big last year were very well resourced, so even in the mobile space barriers to competition are going up


I was wondering if they would be paid in equity, but equity wouldnt be added to costs in this scenario. Would make no sense :/ Only makes sense if they got a huge salaray raise since salary is costs. Its not necessary that their contract are 100k/year, they might be 1k/year and have a clause to sky rocket to 100k when 2mil sales are done or smtng ilke that
Stocks are a part of the company either way

 Last edit: 20/01/2015 17:19

Silver_nz   New Zealand. Jan 20 2015 19:56. Posts 5647

True, it is as Nassim Taleb says, to gauge actual EV of the decision to make a game such as this, you have to look at the graveyard. How many similar mobile games tried and died? we don't see them. We only see the winners. This biases our sample so that we can't make a good decision about dropping everything to start a game company.

But I think the $800,000 development cost is legit, to make a decent game, you need skilled people. Skilled people have options, they can demand high pay. 100k per year sounds about right for a good developer. And making a decent game is much more involved than it seems. A friend of mine used to work for a company making crappy flashgames to put up on newgrounds etc. Even they had a budget of $50k per game. Infinte art, sound, design, programming, music.


Baalim   Mexico. Jan 20 2015 21:05. Posts 34246


  On January 20 2015 07:07 Romm3l wrote:
Show nested quote +


yeah who wants to spend 800k to generate revenues of $5.8mil at a 76% profit margin when you could make a shitty game cheaply while living in your parents' house like the other 3289423875 wannabe rich app makers and generate a revenue that values your time lower than people who gather recyclable material off the streets in China.


Because the EV of a 800k mobile game is obviously 5.8M... this post coming from a poker player is just baffling.

What Im obviously trying to say is that 800k isnt needed to develop that game... advertizing and other things like that you can go much higher but that isnt development

Ex-PokerStars Team Pro OnlineLast edit: 21/01/2015 01:06

devon06atX   Canada. Jan 21 2015 18:53. Posts 5458

Clash of Clans - produced by Supercell

Revenue of $892 million (USD) in 2013. EBITDA of $464 million. Staff of 138 people.

http://www.forbes.com/sites/ewanspenc...ire-to-support-the-finnish-community/


FrinkX   United States. Jan 21 2015 21:21. Posts 7561

clash of clans got like $1200 from me lol

i uninstalled, fml

i was #9 in US at one point tho. lol

bitch on a pension suck my dong 

passiveace   United States. Jan 21 2015 21:37. Posts 46

^lmao


Baalim   Mexico. Jan 21 2015 22:13. Posts 34246


  On January 21 2015 20:21 FrinkX wrote:
clash of clans got like $1200 from me lol

i uninstalled, fml

i was #9 in US at one point tho. lol




wtf

Ex-PokerStars Team Pro Online 

Spitfiree   Bulgaria. Jan 22 2015 05:08. Posts 9634


  On January 21 2015 20:21 FrinkX wrote:
clash of clans got like $1200 from me lol

i uninstalled, fml

i was #9 in US at one point tho. lol



ahhahahahaahahahah cmon how could you :D


Romm3l   Germany. Jan 22 2015 10:53. Posts 285


  On January 20 2015 20:05 Baalim wrote:
Show nested quote +



Because the EV of a 800k mobile game is obviously 5.8M... this post coming from a poker player is just baffling.

What Im obviously trying to say is that 800k isnt needed to develop that game... advertizing and other things like that you can go much higher but that isnt development


and im saying it is idiotically arrogant to claim you know better than the developers of this game how to distribute costs in order to maximise expected roi. you are in effect claiming to have a knowledge edge in the mobile game business on specialists in that business who won big, even if there is a lot of rungood in their win


Nazgul    Netherlands. Jan 22 2015 11:30. Posts 7080

Baal how do you know what it costs to develop games?

You almost twin-caracked his AK - JonnyCosmo 

Spitfiree   Bulgaria. Jan 22 2015 12:23. Posts 9634

852k$ in 55 weeks if developed by a western/usa team would probably be slightly above average for a team of 5-6 HIGHLY qualified people ( talking about 7-8+ years of experience ) including the needed hardware to support their start up, im guessing the support was out-sourced though, and the developers are like 2-3 people so they can distribute costs towards marketing
- thats a pretty rough estimate though

thats why most of the companies that develop such stuff are based in eastern europe or south & east asia where the salaries are literally 10x less for the same qualification

 Last edit: 22/01/2015 12:25

MadeInPolanD   Poland. Jan 22 2015 14:52. Posts 1383

Oh c'mon, the guy has 29262 posts, he knows everything, he saw everything, in every topic, on every planet, in all universes.

Make it rain$$$Last edit: 22/01/2015 14:55

capaneo   Canada. Jan 22 2015 15:21. Posts 8465

You guys are all looking at the wrong things and talking about the wrong things. In start-up it is not about the money that the firm makes. It is just about their users base and the company potential to grow. The startup investment scene, specially in silicon valley, is INSANE. But that is what it is.

First of all almost all these apps and teams are financed by investors. Who make money from the equity in the firm when they flip it to the next investors, so they dont give a shit about the profit/loss and neither should you! They only care about things like brand or active user base. or churn etc etc. So you are looking at all the wrong things when you look at the revenue and cost and profit and sales etc etc. It is ONLY about the users.

The founders and employers and the developers of the app are not spending their own money. They are spending their time and risking their time while working on reduced salaries in exchange of equity. The investors just spend money and get equity hoping they hit a jackpot. The hope is to hit a "hockey stick" graph for users and get millions of users and then turn around and sell their shares. So THE ONLY important graph in the article is this one that shows how fast the app gets users:






All that being said this is a GREAT investment. If you have a heartbeat and a team behind you in silicon valley your "company" worth around $2-$10million dollar at the idea stage depending on who you know. If you have millions of active users like this game. I would say the valuation of this company would be MINIMUM around $100 million. So based on a VERY conservative valuation you are making 10x returns on your investment when you give this team the money they needed to make the game in 55 weeks.

In US everyone is happy as long as all the prices are rising. Unless its crude oil - Marc Faber 

 
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