Hardcore Gaming's Salvation?
Quarter to Three talks to three developers about the profits and
perils of bypassing the traditional retail market
Qt3: What kind of volume do you need to turn a profit
if you sell direct?
Wardell: It depends on the game obviously. For The Corporate
Machine, our budget was pretty low. If we sell 20,000 units in its
effective life time, that would be great. Entrepreneur sold 75,000
units but because of the costs of retail, we basically broke even
on it. We'd make a profit at 20,000 units on The Corporate Machine.
Dunham: I'm not really sure how much we would have had to
spend to keep King of Dragon Pass on the shelves, so I can't give
you a very exact number. Obviously we sell to retail at a significant
discount (and pay for shipping), so it takes more units. Since we'd
always planned to have some retail (through the adventure/hobby
trade), I don't have any direct-only projections, but some quick
checking suggests that 30K units might break even (depending on
how long it took to get there). Retail would take at least twice
that number of units.
Moylan: We did a rough calculation that combined profit
per unit, risk, shelf life, and the long-term advantages of setting
up a direct link to our customers, and we determined that we would
be better with a direct sales model if direct sales were even just
a small fraction of expected retail sales. When you consider that
the cost of selling direct is so low, and the cost of being in retail
is so ridiculously high, the numbers add up undeniably.
We've been selling our game Combat Mission: Beyond Overlord online
for just six months now and I couldn't be happier with the results.
We're selling about five times the numbers we expected to sell,
and I can safely say that I don't think Big Time Software will ever
do business with a traditional publisher or a retail chain ever
again. As an independent we have more freedom, we're not subject
to stupid decisions made on a whim by clueless Dilbert-esque executives
who don't understand games, we're not at the mercy of retail chains
who want huge payments for shelf space, we don't get forced to sign
horrible contracts, and on top of all that... being independent
is more profitable.