Re: EA Boss Not Happy With Madden Sales....
C'mon, Roadman...That article does not say that EA needs to sell 1.1 million copies of Madden to break even. Here's what it says:
"EA now typically spends two or three times as much on marketing and advertising as it does on developing a game. That’s because advertising is critical to getting a game in the top ten rankings. If you have a $10 million game, don’t be surprised if the the TV advertising costs drive the ad budget to $30 million. If a $60 game yields revenue of $35 for EA, then (according to my math) the company has to sell 1.1 million copies just to break even.
I don't have the numbers for what EA paid for the exclusive NFL and ESPN licenses, but I'm confident that it costs EA FAR MORE than $10 million to make Madden, as opposed to a typical game that may cost $10 million to develop. In fact, I'd venture to guess that EA pays FAR MORE than $10 million just for the cost of the exclusive license alone. I'd also venture to guess that EA pays FAR MORE than average for the marketing cost for Madden as well.
If I'm right, then using this guy's numbers, it takes FAR MORE than 1.1 million copies of Madden sold for EA to make a profit.
And if I had to guess...I'd say Madden is more of a loss leader than a money maker for EA, given it's declining sales over the last 5 years. EA overpaid for the exclusives to put their competition out of business. They thought their sales would go up but they've actually declined for 5 straight years now. When they used to sell 5 million copies across all of the consoles 5 years ago, and don't come close to that now, there is no one who can convince me that Madden is some huge profit maker for EA these days.
Also, as it was pointed out to me yesterday, even though Madden might be declining in sales on a yearly basis, Madden still is a profit for EA.
This article states that EA games need 1.1 million in sales to break even.
This article states that EA games need 1.1 million in sales to break even.
"EA now typically spends two or three times as much on marketing and advertising as it does on developing a game. That’s because advertising is critical to getting a game in the top ten rankings. If you have a $10 million game, don’t be surprised if the the TV advertising costs drive the ad budget to $30 million. If a $60 game yields revenue of $35 for EA, then (according to my math) the company has to sell 1.1 million copies just to break even.
I don't have the numbers for what EA paid for the exclusive NFL and ESPN licenses, but I'm confident that it costs EA FAR MORE than $10 million to make Madden, as opposed to a typical game that may cost $10 million to develop. In fact, I'd venture to guess that EA pays FAR MORE than $10 million just for the cost of the exclusive license alone. I'd also venture to guess that EA pays FAR MORE than average for the marketing cost for Madden as well.
If I'm right, then using this guy's numbers, it takes FAR MORE than 1.1 million copies of Madden sold for EA to make a profit.
And if I had to guess...I'd say Madden is more of a loss leader than a money maker for EA, given it's declining sales over the last 5 years. EA overpaid for the exclusives to put their competition out of business. They thought their sales would go up but they've actually declined for 5 straight years now. When they used to sell 5 million copies across all of the consoles 5 years ago, and don't come close to that now, there is no one who can convince me that Madden is some huge profit maker for EA these days.
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