Saw an article in my news feed early this morning talking about a series of tweets from Tim Sweeney, the CEO of Epic Games, talking about some of the nuts and bolts of their revenue split and how it works out for them.
It really helps put some context on something I talked about the other week, which is the cost of exclusives and what has to happen to make back that money. I’ve seen reports for the cost of the Pheonix Point exclusive ranging between 2 and 3 million USD. People doing the math are coming up with a figure around 2.25M. It has a pre-order price of $40/unit.
We’ll say, for the sake of argument, that PP has sales in the same range as XCOM 2, around 1M units in the first year. That’s 40M in gross sales so 4.8M gross split. If I take Tim at his word here that means their net profit for this game would be around 2M USD. The break-even point should be right around 1,125,000 units. Any less than that and it’s taking a loss to provide this product and the only sensible reason to do that would be to drive traffic. I honestly don’t think this is the right title for that, but that’s just me.
Still, one has to assume they are confident that they can eat the loss, if it comes to that, or they would not have done it.
On the other hand, it’s great for the developer, who’s reporting a 191% ROI. The break even point for the game was around $588K and this deal more than covers that. A good break for a new studio. Of course, since I last spoke about this I’ve also learned I was wrong about this being the first title of a brand new studio. It’s actually their second title and the company has been around for six years. Their previous game was Chaos Reborn, also listed as a Tactical RPG. It has an estimated 50-100K owners on Steam. I’ll have to check that out when I get home.