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EA Spends 3x More On Marketing Than Development

CmdrTaco posted more than 4 years ago | from the hey-i-know-one-of-their-marketroids dept.

442

G3ckoG33k writes "According to Electronic Arts officer Rich Hilleman, 'the price of producing console games has rocketed, with marketing costing up to three times more than the development of a title.'" Sounds pretty insane, but does anyone know how this compares to the film industry?

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442 comments

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Third post ! (-1, Offtopic)

Anonymous Coward | more than 4 years ago | (#29259779)

Comes three times later than first post.

Re:Third post ! (0, Offtopic)

xyph0r (1153429) | more than 4 years ago | (#29259823)

Does that make third post equivalent to the marketing or the development?

TJ (4, Insightful)

Anonymous Coward | more than 4 years ago | (#29259803)

Well maybe if they spent more money on the development they wouldn't need so much money into marketing... *sigh*

Re:TJ (2, Funny)

rehtonAesoohC (954490) | more than 4 years ago | (#29260253)

Have you heard of EA?

From their perspective, mission accomplished and money well spent.

Why is this a surprise? (5, Insightful)

synthesizerpatel (1210598) | more than 4 years ago | (#29259809)

Software development is a lot like a having a baby. 1 woman, 9 months = 1 baby. You can't add 8 more women to the equation and get a baby in one month. And as projects get larger, the success is dependent on cohesive management, not necessarily additional resources.

However, with marketing -- you can send any number of suit-monkeys out to cut deals with drink manufacturers, t-shirt companies, magazines.. etc. All without detracting from the potential quality of your final product.

If it's in the game, it's likely because one of these marketing people said it needed to be in the game. Thank them for in-game advertising and in-game shops that accept real world money.

Re:Why is this a surprise? (0)

Anonymous Coward | more than 4 years ago | (#29259881)

Software development is a lot like a having a baby. 1 woman, 9 months = 1 baby. You can't add 8 more women to the equation and get a baby in one month. And as projects get larger, the success is dependent on cohesive management, not necessarily additional resources.

Ever heard of the rolling development cycle? :)

Re:Why is this a surprise? (1)

Kjella (173770) | more than 4 years ago | (#29260311)

For everything except WoW that model sucks. Most every game has one release - EAs recurring yearly games are even an exception from that and it's what's there that counts. It's about making the biggest possible splash, getting the most attention, scoring the rave reviews. It doesn't matter if you tag on cool features and plenty bugfixes later, what will be over the net are a thousand bad reviews and comments. Nobody re-reviews games to see if they actually got better. So it all adds up to this gigantic waterfall model where everything is supposed to be finished at the same time. Or so one would hope, and then the mythical man month sets in...

Re:Why is this a surprise? (5, Informative)

MarkPNeyer (729607) | more than 4 years ago | (#29259915)

Fred Brooks put it best in 'The Mythical Man Month:'

"...when schedule slippage is recognized, the natural (and traditional) response is to add manpower. Like dousing a fire with gasoline, this makes matters worse, much worse. More fire requires more gasoline, and thus begins a regenerative cycle which ends in disaster."

Re:Why is this a surprise? (5, Informative)

synthesizerpatel (1210598) | more than 4 years ago | (#29259927)

If I remember correctly, this is also the source of the pregnancy analogy. Good book.

Re:Why is this a surprise? (5, Interesting)

thisnamestoolong (1584383) | more than 4 years ago | (#29259985)

While this is true -- it seems that a lot of the problems with games today is that they are given excessively tight deadlines to get them out, say, by Christmas. To follow the woman/baby analogy -- it takes more resources for a woman to have a baby gestating in her for 9 months than for 5 months. If you can just get that baby out in 5 months, you could save some resources, but the quality of the product (crappy video game vs. good video game/dead fetus vs. live baby) will differ greatly.

Re:Why is this a surprise? (5, Funny)

Deltaspectre (796409) | more than 4 years ago | (#29260091)

Request for car analogy here, I don't get this woman thing.

Re:Why is this a surprise? (5, Funny)

Evil Shabazz (937088) | more than 4 years ago | (#29260307)

Request for car analogy here, I don't get this woman thing.

Software development is a lot like a having a baby in a car. 1 woman, 9 glasses of wine, 1 romantic overlook = 1 baby.

Hmm.. my anology seems to fall apart. When I add more women to that, I get more babies.. sorry...

Re:Why is this a surprise? (1)

Talderas (1212466) | more than 4 years ago | (#29260329)

You can pull the car off the assembly line to get it out faster, but it will be missing parts and may not be drivable.

Re:Why is this a surprise? (2, Insightful)

Grr (15821) | more than 4 years ago | (#29260337)

A car drives from A to B. At its top speed this takes one hour. The driver decides to get out after 40 minutes without pulling over. How much time does it take him to arrive at his destination?

Re:Why is this a surprise? (2, Funny)

mrraven (129238) | more than 4 years ago | (#29260375)

"I don't get this woman thing."

Don't worry dude that just makes you one of the crowd on /.

Re:Why is this a surprise? (0)

Anonymous Coward | more than 4 years ago | (#29260391)

If you take a car off of the production line when it's halfway through or only attach half the components, don't cry when the wheels and doors fall off or complain that there's no paint, windows or nuts and bolts.

You have to run it all the way through, AND put it through crash tests.

Re:Why is this a surprise? (0)

Anonymous Coward | more than 4 years ago | (#29260463)

Yes, it is prime.

Re:Why is this a surprise? (4, Funny)

antoinjapan (450229) | more than 4 years ago | (#29260485)

You drive one car 9 miles in 9 minutes, but if you drive nine cars you'll drive 9 miles in one minute....simple

Re:Why is this a surprise? (3, Funny)

should_be_linear (779431) | more than 4 years ago | (#29260525)

From what I understand, If you drive around with dead fetuses inside your car, marketing department will spend a lot but overall gameplay would suck.

Re:Why is this a surprise? (2, Funny)

Ukab the Great (87152) | more than 4 years ago | (#29259991)

Using well-tested, modular women who can easily make extensible and interchangeable baby parts, you might be able to add a several women and grow a baby up to 40% faster. Of course, you'd have diminishing returns due to communication overhead once you get past four women.

Re:Why is this a surprise? (1)

PainKilleR-CE (597083) | more than 4 years ago | (#29260163)

You may also run into greater post-release costs due to incompatibilities between the various parts of the baby, or even outright rejection of the implanted parts.

Additionally, this would require specialized developer knowledge in assembling the parts properly to avoid these types of reactions. Therefore, you may have to pay the women more to do the same job in less time if you ever want the baby to come out right in the time constraints. As it goes: we can develop it quickly, we can make it good, and we can make it cheap, but you can only pick two, and you might still only get one.

Re:Why is this a surprise? (4, Insightful)

click2005 (921437) | more than 4 years ago | (#29260063)

Software development is a lot like a having a baby. 1 woman, 9 months = 1 baby. You can't add 8 more women to the equation and get a baby in one month. And as projects get larger, the success is dependent on cohesive management, not necessarily additional resources.

In keeping with your baby analogy, you also cant do it alone. Without competent writing, testing and a lot of other people its like trying to give birth all by yourself, your baby will probably be still-born and you end up relying on 'marketing' to con the public into believing it isn'r dead. Spending that much on marketing is like hoping giving the baby a good name makes a difference to how healthy it is.

However, with marketing -- you can send any number of suit-monkeys out to cut deals with drink manufacturers, t-shirt companies, magazines.. etc. All without detracting from the potential quality of your final product.

With enough marketing, you can almost bury bad reviews and lack of plot/gameplay/entertainment under a mountain of bullshit & biased reviews.
Its all about risk. Why spend $4 million on development of a risky game that might be a massive hit when you can spend $1 million on the game, $3 million on marketing and be fairly sure that it'll make a million or two profit. If the marketing approach fails, its because of piracy obviously.

If it's in the game, it's likely because one of these marketing people said it needed to be in the game. Thank them for in-game advertising and in-game shops that accept real world money.

Sad but true.

Re:Why is this a surprise? (2, Interesting)

Thaelon (250687) | more than 4 years ago | (#29260333)

Its all about risk. Why spend $4 million on development of a risky game that might be a massive hit when you can spend $1 million on the game, $3 million on marketing and be fairly sure that it'll make a million or two profit. If the marketing approach fails, its because of piracy obviously.

This is true, and works for quarterly gains.

Just don't expect long term (5+ year) success out of it.

Re:Why is this a surprise? (1)

Hojima (1228978) | more than 4 years ago | (#29260493)

Also, there's this thing called content you may have heard of. More people does equal more results, and I think it is one of the most important aspects in the game (in fact a lot of games would have been better with it, like Fable 2, which was practically 6 hours long). Content is also an extremely important aspect of storyline, as a longer story is typically more interesting (obviously, that's not always the case).

Re:Why is this a surprise? (4, Interesting)

SailorSpork (1080153) | more than 4 years ago | (#29260099)

While I agree with your point on "suit monkeys" ruining games by adding in-game marketing to skim off the top, you seem to have entirely missed the point of the post. "Marketing" in it's basic form is simply building awareness for a product so that, if people like it, they can go buy it. Believe it or not, people who are unaware of products may not buy them, and while a few people may follow the likes of /. or IGN and already know everything, that small handful of people isn't going to support a game release. For this reason, marketing activity is very important to let people know that mass-appeal games are out.

One example where this worked well is the new Batman game. Batman has huge appeal, cost a fortune to make. If you just put it on shelves, only a few people will walk by and pick it up. Millions more non-hardcore-gamer people would love to play a Batman game, but don't always walk by game shelves. With $x million in marketing to drive awareness, they can make $2x-10x million selling that game.

Game developing is cheap compared to what it costs to buy enough TV airtime to make everyone aware of your product.

Re:Why is this a surprise? (2, Insightful)

CopaceticOpus (965603) | more than 4 years ago | (#29260117)

Software development is a lot like a having a baby.

But without all the sex, of course.

Corn Flakes (1)

Shivetya (243324) | more than 4 years ago | (#29260195)

I remember the stories about Corn Flakes, as in less than 10% of the cost of a box of corn flakes was for the corn.

In regards to EA and their like, I wonder if its related to accounting similar to Hollywood accounting. Get in lots of subs to spread out expenses which only pad select people's paychecks

Re:Why is this a surprise? (3, Insightful)

Ephemeriis (315124) | more than 4 years ago | (#29260325)

Software development is a lot like a having a baby. 1 woman, 9 months = 1 baby. You can't add 8 more women to the equation and get a baby in one month. And as projects get larger, the success is dependent on cohesive management, not necessarily additional resources.

However, with marketing -- you can send any number of suit-monkeys out to cut deals with drink manufacturers, t-shirt companies, magazines.. etc. All without detracting from the potential quality of your final product.

If it's in the game, it's likely because one of these marketing people said it needed to be in the game. Thank them for in-game advertising and in-game shops that accept real world money.

Makes sense, I suppose... But it is still galling to me as a customer.

That means that if I spend $40 on a video game only $10 of it actually went to manufacturing the game - the remaining $30 went to marketing.

Of course... That $10 didn't actually go to manufacturing the game either, because part of it went into DRM and packaging and whatever else...

So we're looking at maybe $5 or so of my money actually making it back to the folks who genuinely worked on producing my video game.

Yes, I understand there's lots of expense involved in producing a video game. You need development kits and office space and beta testers and all that good stuff. You can't very well turn out a modern video game in your garage. I get it.

But it seems kind of self-defeating to me... You aren't making enough money, so you throw in some DRM to stop piracy and do a bunch of marketing to draw in more cash. But you have to pay for the DRM and marketing... So you aren't making enough money to cover your new expenses... So you throw in some more marketing to draw in more cash...

Somewhere along the line it stops being about producing a game that people enjoy playing and want to buy. Somewhere along the line it starts being about micropayments and subscription fees and sequels and product placement and toys and tie-ins...

And then the publishers wonder why sales are down.

Re:Why is this a surprise? (1)

Attila Dimedici (1036002) | more than 4 years ago | (#29260335)

You make a very good point. However, I suspect that many companies fail to realize that over-hyping a product costs you in sales in the long run. Here's how it works:
Company A has a product that they really want to sell well, they spend massive amounts of money developing a marketing plan with lots of glitzy ads that show all the best features of the product and leave the consumer with the impression that there are lots of other features just as cool that they didn't have time to include (movie and game trailers do this a lot, ads for other products do other things that have similar effect). Consumer A buys the product and discovers that while the product isn't bad, all the really neat stuff was in the ads and is therefore disappointed. For the first product this often works fairly well, however, when Company A does this time after time, the Consumer has less interest in each successive product, so Company A feels compelled to increase its marketing to get the consumer excited about the next product. Sometimes a better strategy would be to scale back the hype and let the quality of the product create the buzz.

Re:Why is this a surprise? (1)

YeeHaW_Jelte (451855) | more than 4 years ago | (#29260407)

Your software-marketing juxtaposition fails IMO: you need to coordinate marketing just like you have to coordinate programming. Your overly simplistic view of marketing is hindering your reasoning.

If all of your 'number of suit-monkeys' decide to go to the same magazine, all carrying their own design for the ad, ideas about the target-audience, numbers of the part of the advertising budget that goes to this magazine, you're going have a very ineffective marketing campaign. Just like when you release a can of programmers uncoordinated and they all decide to work on the game-play logics e.g.

I know marketing folks aren't very popular with techies, but they fullfill a necessary role, like it or not.

Re:Why is this a surprise? (0)

Anonymous Coward | more than 4 years ago | (#29260435)

Software development is a lot like a having a baby. 1 woman, 9 months = 1 baby. You can't add 8 more women to the equation and get a baby in one month.

Well, sure you can.

On the average.

Well, that explains a lot (3, Insightful)

blankinthefill (665181) | more than 4 years ago | (#29259817)

That would certainly be a very good reason that EA doesn't seem to be able to turn out decent games, or turns out games that have little to no polish on them. It also puts into perspective the "rising cost of game production." Probably they are over-marketing it, or marketing it the wrong way and to the wrong people. I've always thought that their TV adds for a lot of games were really wide of the mark, and probably a poor investment.

Re:Well, that explains a lot (3, Informative)

codeguy007 (179016) | more than 4 years ago | (#29259905)

Umm, no decent games. Their sports titles are often the best. They get the best reviews and most sales. You can't say that games like NHL, Madden, MLB The Show aren't quality games. Also EA develops and sells the top selling video game series of all time, the SIMS.

Monopoly (4, Insightful)

tepples (727027) | more than 4 years ago | (#29259959)

Umm, no decent games. Their sports titles are often the best. They get the best reviews and most sales.

That's because EA has signed exclusive agreements with so many relevant leagues (NCAA, NFL, NHL, FIFA). By definition, the only player in a market will get the best reviews because it gets the only reviews.

Re:Monopoly (1)

codeguy007 (179016) | more than 4 years ago | (#29260105)

Monopoly? Hardly what about 2K Sports.

http://2ksports.com/ [2ksports.com]

2K football? (1)

tepples (727027) | more than 4 years ago | (#29260229)

Does 2K Sports have a recent soccer or American football game? I couldn't find one on the site you linked.

Re:Monopoly (1)

Ascagnel (826800) | more than 4 years ago | (#29260131)

AFAIK, this isn't quite true. They make the NCAA football games because nobody else wants to (and theirs doesn't sell particularly well anyway). 2K is still making the NHL2k series, but has lost the mark and hasn't done a good job since the X360 launched. Konami is still working on the Pro Evo series for soccer, and has the FIFA license.

Re:Monopoly (1)

The Moof (859402) | more than 4 years ago | (#29260149)

AFAIK, the only exclusive deals EA has is with the NFL and NCAA.

Re:Monopoly (0)

Anonymous Coward | more than 4 years ago | (#29260443)

Well, that certainly negates the point, what with the mass appeal of their competitors' WNBA, Pro Rugby, and Greco-Roman Wrestling franchises.

Re:Well, that explains a lot (1)

hansamurai (907719) | more than 4 years ago | (#29259983)

Well, they did buy out the NFL football market, so there's no competition there. When 2KSports was still working on their football series, it was definitely rivaling Madden. I'm not sure if that counts as marketing dollars though.

But honestly, you should know better: quality != best selling. There's some correlation, but when there's no competition in some markets because you've bought the exclusive license, your argument is difficult to swallow.

Re:Well, that explains a lot (1)

blankinthefill (665181) | more than 4 years ago | (#29260103)

I knew someone was going to fire back with the sports games. I will admit that their sports games are the best out there... but that's for two reasons. 1. Lack of competition. There just aren't other developers out there that are making the effort to turn out a first rate sports game any more. Every now and again someone will pop up, turn something out for a year or two, and then they're done. 2. Their sports games are very static. What I mean is that each release (especially in the last few years, when all of their competition has REALLY dried up) is basically just a slight touch up graphically, with new names, and sometimes new tracks of courses or whatever. This can be good, cause it means that the player base has a firm foundation to return to with every game, where everything is the same and they don't get scared away by change. On the other hand, it also shows an unwillingness on EA's part to take risks and innovate. On a whole though, the sports games have acquired a high level of polish because they've been able to act like this. My comment though was mainly focused only at games that EA develops in house, as opposed to just publishing. The Sims falls into this category: It's developed by Maxis, and published by EA. The 'artical' is crap, but I was assuming that they were talking about games developed in house. Maybe thats a big step to assume? Anyways, while it is EA's job to market these games... given the huge size of modern game's budgets for development, I stand by my comment that I think most of the marketing dollars are probably not aimed the right way, and most of them are probably going down the tube rather than effectively getting the word out about the game. That may just be my personal interaction with their advertising machine, though.

Re:Well, that explains a lot (1)

codeguy007 (179016) | more than 4 years ago | (#29260215)

Umm, The Sims is most certainly an EA game. EA bought Maxis in 1997 and the sims wasn't released until 2000. Maybe Maxis was developing the game before the purchase but that really doesn't change much.

Re:Well, that explains a lot (4, Informative)

spyrochaete (707033) | more than 4 years ago | (#29260417)

There is no longer any company named Maxis. EA published their games for many years but has completely absorbed the company now. Will Wright, the founder of Maxis, doesn't even work there anymore. The Sims 3 is now a first-party EA game by all definitions and, for the record, it is a really fantastic game.

Re:Well, that explains a lot (1)

ojustgiveitup (869923) | more than 4 years ago | (#29260483)

You can't say that games like NHL, Madden, MLB The Show aren't quality games.

Watch this - Games like NHL, Madden, and MLB The Show aren't quality games. I did it! You said I couldn't and yet I did! It wasn't even that hard. Furthermore, I didn't even have to lie - those games suck, they are derivative, mindless, and boring. Plus, making the same game every year with slightly better graphics and an updated roster is brutally unimpressive. Why do the graphics even matter in sports games? You could see plenty enough detail to know what was going on in Tecmo Bowl for NES, let alone Madden around 98. All these enhancements are just icing, except even less filling.

Re:Well, that explains a lot (0, Troll)

Bashae (1250564) | more than 4 years ago | (#29259909)

And then there are games that are unanimously considered awesome, such as Psychonauts, but that most people never heard of. Marketing is also important...

Re:Well, that explains a lot (2, Insightful)

mcatrage (1274730) | more than 4 years ago | (#29260003)

That was true about EA but lately (not including sports) they've been making some good games and taking some chances. Mirrors Edge and skate are two great games which I think were risks that the EA of old never would have taken.

Excessive Marketing (1)

codeguy007 (179016) | more than 4 years ago | (#29259821)

While marketing is definitely important, is it really necessary to spend 3 times your development costs? Do they spend that kind of money on annual titles like Madden, MLB, NHL, etc? Or just when they are new like TOR, Sims 3, Spore?

Re:Excessive Marketing (2, Insightful)

Anonymous Coward | more than 4 years ago | (#29259929)

In this thread we get to read over and over how Slashdotters would run a gaming company, if they ran a gaming company.

Putting a headline like this on a web site like this is a guaranteed flamebait page impression generator. With a readership composed of mostly help desk employees who program in their spare time and aspire to be engineers the natural jealosy of more socially adept types, like marketing people, can be easily manipulated. Point out that the most comercially successful game company in the world budgets 3x more for marketing, where geeks don't work, than development, where they do, and you are sure to get comment after comment saying this is the wrong thing to do. Comments from people who couldn't manage the business end of a Snoopy snow cone pushcart.

So yeah, sure, everyone is waiting with bated breath to see what Slashdotters think of EA's business decisions. EA makes a mint. EA is sure to keep turning out games. EA isn't closing shop or laying off or in danger of never getting a game to stores. EA knows that staying in business takes more than making great games and hoping people show up to buy them.

Cue more out of depth stupidity.

Re:Excessive Marketing (2, Funny)

Gizzmonic (412910) | more than 4 years ago | (#29260167)

I managed the business end of a Snoopy snow cone push cart once, and let me tell you...it was like Hell on Earth. I'd never wish that upon anyone. Never.

Re:Excessive Marketing (4, Insightful)

SerpentMage (13390) | more than 4 years ago | (#29260251)

The problem with this scenario is that marketing helps in the initial, but it does not help in the long term...

Marketing can make caviar from crap. Seriously they can. BUT if EA keeps producing crap people will realize it is not caviar, but crap. Then to make it caviar again you need more marketing. It is a never ending race.

Had they not made crap in the first place then they would not have to spend that much on marketing.

While marketing is needed, the best marketing is when people tell other people that they should buy the product.

Here is an example; Heinz Ketchup. I have lived throughout Europe, and North America, and there is no way I will buy anything but Heinz Ketchup. Yes they have a marketing campaign, but Heinz does do a pretty good job making ketchup. They don't take their clientel for granted. With marketing Heinz could expand. Another example; nutella, Coke, Pepsi, etc...

Re:Excessive Marketing (5, Informative)

PainKilleR-CE (597083) | more than 4 years ago | (#29260301)

EA has been closing up shops left and right, just like most other large publishers (though really there aren't many large publishers these days, it's basically EA and Blizzard/Activision for PC games).

I think the main issue is that EA specifically, and the industry in general, has spent a lot of time in the last decade complaining about the rising costs of producing games, especially in the console and PC realms, yet EA is willing to spend 3x their development budget on marketing, the cost of which is pretty well within their control.

Of course, EA is also one of the companies that does pretty well controlling their development costs for their biggest selling games. They have a very limited time frame for development of their sports titles, and they do a fair job of deciding what improvements they can make year-to-year to still meet the time constraints and still keep most of their user base happy. They also figured out that it was worth more money to them to buy exclusive contracts with the leagues and player unions than to attempt to continue competing with other publishers and developers to make a better game in those time constraints.

Re:Excessive Marketing (1)

dontmakemethink (1186169) | more than 4 years ago | (#29260517)

Cue more out of depth stupidity.

Physician heal thyself. Just because blog posts are ineffectual doesn't make them unentertaining. I at least am here just to shoot the shit, not some CEO. That's my stockbroker's job.

Re:Excessive Marketing (0)

Anonymous Coward | more than 4 years ago | (#29260537)

It could be that every comment on this page, and even the article itself, is an expression of the natural jealousy of every geek for every socially adept marketing person. Or it could be that Slashdot attracts not just geeks but gamers, and the people who play--and pay for--video games don't necessarily appreciate the fact that most of their money goes not toward the part they can enjoy (the game itself) but toward the advertising process.

Re:Excessive Marketing (1)

hansamurai (907719) | more than 4 years ago | (#29260009)

I'd imagine the marketing dollars for Madden is probably about 10x the development costs, if not more, but the money spent on The Old Republic will be less or even the aggregated development costs over its life.

English? (-1, Troll)

jginspace (678908) | more than 4 years ago | (#29259831)

Could *somebody* pay for some English lessons for CmdrTaco?

Re:English? (-1, Offtopic)

Anonymous Coward | more than 4 years ago | (#29259875)

Wow, another slashdot grammar nigger-nazi.

Who cares.

Re:English? (-1, Offtopic)

Anonymous Coward | more than 4 years ago | (#29259973)

Don't you mean Engrish?

The same for drug industry (4, Interesting)

Framboise (521772) | more than 4 years ago | (#29259839)

Often one heards that research costs drive the price of drugs high, but in fact a similar ratio between marketting and research costs exists in the drug industry.

Re:The same for drug industry (2, Insightful)

Ma8thew (861741) | more than 4 years ago | (#29260033)

Source please? I think you would be astonished [healthaffairs.org] by the cost of developing a new drug. Also bear in mind that drugs are only marketed strongly in the US. Most countries do not allow prescription drugs to be advertised to consumers.

Re:The same for drug industry (4, Informative)

perrin (891) | more than 4 years ago | (#29260259)

That number for drug R&D costs is described by some commentators as "9-digit fairy tale" (source article http://www.cmaj.ca/cgi/content/full/180/3/279 [www.cmaj.ca] ). It is true that you cannot market directly to consumers in many countries, the industry can and do market to doctors. Although the doctors are relatively few in numbers, the pandering they receive is far more expensive.

Re:The same for drug industry (1)

Chonnawonga (1025364) | more than 4 years ago | (#29260347)

Source please?

Here you go: http://www.cbc.ca/consumer/story/2008/01/03/drugs.htm [www.cbc.ca]

It's actually a ratio of twice as much spent on research than development, rather than three times, but I would still say the original poster is correct in principal. But then again, as you point out, this about the US. YCRMV (Your Country's Results May Vary).

Re:The same for drug industry (1)

je ne sais quoi (987177) | more than 4 years ago | (#29260373)

Here's a source. [mckinsey.com] You have to log in to see the full report, but if you click on the interactive graphic there's a section on drugs. Bottom line is that drugs in the U.S. cost 50-70% more than in other nations of similar wealth. Now why is that? We're certainly not subsidizing the drugs for those other wealthy countries like we do for for the third world.

It's a similar thing with health care in general, insurance companies are paying more and more administrative costs which are going to finding excuses why they shouldn't be paying your medical bills and it's driving the costs up. A single-payer, public plan is the only way to avoid this. For some situations like health care, unfettered capitalism just doesn't work.

As for games, well I suspect it's a lot like the movie industry, by making mediocre games that are extremely well-marketed, they are making more money than spending tons on games that have less marketing. Or at least, the mindless automatons on Wall Street with the MBAs seem to think that, you see it over and over again in U.S. companies when they hire these people who specialize in management rather than actually knowing anything about what the company does (see HP and Carli Fiorina).

Re:The same for drug industry (2, Insightful)

limaxray (1292094) | more than 4 years ago | (#29260411)

But you're ignoring the costs of gaining approval to actually sell a drug in a given country. In the US, gaining FDA approval on a new drug easily costs an order of magnitude more than research and marketing combined. The level of regulation and oversight of every tiny detail of the whole process is incredible and this adds significant cost. Your safety is the main reason why drugs are so expensive, not research or marketing.

Wrong? (1)

Garbad Ropedink (1542973) | more than 4 years ago | (#29259855)

The article linked is about handheld consoles outnumbering the regular sort, nothing about marketing.
I assume it's just a mislink. I'll just sit here and wait for a correction.

dum de dumm dum dum

Re:Who's Wrong? (3, Informative)

codeguy007 (179016) | more than 4 years ago | (#29259981)

Noting the success of the DS, PSP and iPhone, Hilleman slammed the price of producing console games has rocketed, with marketing costing up to three times more than the development of a title.

While the article is about handheld sales now being double that of consoles, it most certainly talks about the marketing costs. Read the whole article Sparky.

Madden 2056, now with realistic tackling! (1)

not already in use (972294) | more than 4 years ago | (#29259869)

All it takes is marketing to sell the same game repackaged with a new player on the cover every year.

Probably on par with other entertainment ... (1)

MartinSchou (1360093) | more than 4 years ago | (#29259891)

I believe Kevin Smith said in one of his Evening talks that to many movies the cinema more or less functions as advertisement for DVD sales.

Re:Probably on par with other entertainment ... (3, Insightful)

sanosuke001 (640243) | more than 4 years ago | (#29259977)

He also said that a lot of his movies tank in the theaters and then do really well on DVD. People see the movie in theaters and then tell their friends to grab the DVD. That's why the Weinsteins let him make "his" movies without a lot of oversight. He makes enough money so nobody loses anything which keeps them happy.

However, it could go the other way. Everyone sees your movie/game/etc and they tell their friends it sucked. Nobody buys the DVD. I feel about the same with marketing. If your commercial looks like shit and I see it over and over, I am less inclined to buy your game/movie/etc. Even if I were thinking about it (fan of IP or whatnot) but am spammed with ads, I'll not buy it out of spite. Which is to say, too much marketing can hurt in my opinion.

Re:Probably on par with other entertainment ... (1)

MickyTheIdiot (1032226) | more than 4 years ago | (#29260021)

But then they sell to various overseas markets (TV and theatrical), to airlines who don't care what they are showing, to online markets, etc etc etc. Even sucky movies make their money back most of the time.

Re:Probably on par with other entertainment ... (2, Insightful)

ThisIsForReal (897233) | more than 4 years ago | (#29260147)

While there are a lot of not so obvious revenue streams for smaller movies, it is not necessarily true that they turn in the black. Hollywood execs are businesspeople looking for profit and so they naturally want the blockbusters, but most of their human capital likes to consider themselves artists. Many of the good movies we see from major studios (I'm not talking about the arthouse movies) - those sleepers that fall under the radar but are very good (e.g. Shawshank Redemption, L.A. Confidential, etc.) are sometimes made as a business expense to keep the talent happy so that they can churn out the tentpole memorial day spectacular filled with explosions and such. If they turn a profit, all the better, but their intent is to keep the high end stuff in production. Put another way, the art fanfare is a business expense to keep the team assembled to produce the schluck that makes the big bucks.

Re:Probably on par with other entertainment ... (1)

codeguy007 (179016) | more than 4 years ago | (#29260409)

I think you will find that will most movies, it isn't if the movie will make money but how quickly. (I am sure some big budget blunders for example may never make a profit.) Most Movie success is measured on the domestic numbers. If you don't turn a profit before counting the overseas and dvd sales, you're a failure.

Re:Probably on par with other entertainment ... (1)

MonsterTrimble (1205334) | more than 4 years ago | (#29260219)

I believe reading his blog (Which is excellent BTW: http://silentbobspeaks.com/ [silentbobspeaks.com] ) he said Clerks II cost $5 million to make and made $20 million in the opening weekend. I'm pretty sure the Weinsteins let him make his movies because they're low risk - $5 mil is nothing in movies nowadays and anytime you make 300 points on a something like that you'll make the bosses happy.

Explains why... (1)

blahplusplus (757119) | more than 4 years ago | (#29259893)

... many modern games are mediocre Sometimes I wish they need to lay off the marketing and pour that money into the game and giving devs more time to work on it.

Suspicious (1)

mobby_6kl (668092) | more than 4 years ago | (#29259901)

I'm not surprised that marketing is a very large percentage of their total expenses, but three times higher sounds suspicious. Maybe their marketing expenses grew three times faster than development costs? Or maybe they look at not just a single title... It's really impossible to tell only by that joke of an article.

Re:Suspicious (0)

Anonymous Coward | more than 4 years ago | (#29260273)

Maybe their marketing expenses grew three times faster than development costs?

Management to Developers: "We want that game out by Christmas. You'll all be pulling 120 hours all the time, and by the way we're letting 1/4rd of you go".
Developers: "No way can we do that"
Management: "OK, 1/3rd of you and by Thanksgiving"
Developers: "Yes boss"

Management to Marketing: "We want this game promoted so it makes TEN BILLION DOLLARS"
Marketing: "Sure thing, boss, by the way, I could use a new Ferrari"
Management: "OK, here's a million for the Ferrari"
Marketing (a couple of weeks later): "We've got Gamestop on board, but Best Buy seems lukewarm. I'm going to need another 10 subordinates to hit all their regional managers at once. Also I need new tires for the Ferrari"
Management: "Great job, you've got your subordinates, here's and $5,000 for the tires.
Marketing (later): "Best Buy in the Southeast region is still holding out; we're also going to need a viral marketing campaign, I found just the consulting firm for it; they did work for Sony. Also the Ferrari needs a tuneup"
Management: "Great, great, where do I sign?"

Developers to Management: "Wait, we've heard that marketing says the game has 5 different skill levels and 150 game levels, and the real numbers are 3 and 100 respectively. Also contrary to what they've been saying, we only have a Playstation version, not an XBOX 360 version"
Management: "Guess you better get cracking then. BTW, the whiner who brought this to me is fired"
Developers: "Yes boss".

Hmm... (5, Insightful)

Volda (1113105) | more than 4 years ago | (#29259907)

Maybe if they would make better games they wouldnt have to spend so much on advertising.

Re:Hmm... (1)

clickety6 (141178) | more than 4 years ago | (#29260053)

Well, obviously it takes a lot more work to make a turd look shiny and polished than it does to produce a turd...

Re:Hmm... (2, Insightful)

Minwee (522556) | more than 4 years ago | (#29260319)

Maybe if they would make better games they wouldnt have to spend so much on advertising.

Good thinking. Just like how Amiga put their effort into making a better computer than Apple, so today nobody has ever heard of a 'Macintosh'.

Add classification (1)

Avatar8 (748465) | more than 4 years ago | (#29259931)

I think the "duh" classification needs to be added to this.

As if we couldn't tell where the money was being spent; definitely not in development.

Why do you think the games are so disappointing after seeing those shiny, 3D, live action commercials? "Actual game play may vary."
Let me guess. Their second largest expenditure is for the legal team: assimilating new development talent, buying out competition, defending against false advertising.

How is that rolled up? (1)

sunking2 (521698) | more than 4 years ago | (#29259961)

I can't get to the article, but what do those numbers mean? Is that a yearly average across all games, or for certain games? The words 'up to' always raise a flag with me as it often applies the worst case across a broad range. For example, it wouldn't surprise me if Madden 09 (is that ea, if not its equivalent?) fits this case. Much of the development is carry over from previous years, however its major bucks to advertise for your target audience during NFL games. This pretty much applies to all their sports games, which is a major part of their profits. I think the sports games will always be more marketing simply because they have a larger audience that can be easily reached by paying big bucks at the right time. And these games are pretty consistent cash cows.

What if they did the opposite? (2, Insightful)

rotide (1015173) | more than 4 years ago | (#29259971)

And if they reversed their expenses and spent that huge gob of marketing money on the actual game development, they could have games that are awesome and would potentially sell themselves.

Seems to me, the best products don't need advertising. The ones that don't sell themselves need others to run around selling them instead.

Re:What if they did the opposite? (4, Insightful)

yuna49 (905461) | more than 4 years ago | (#29260247)

I take it you've never actually run a business yourself? Believe me, in the modern world you can make the best product but if you can't grab "mind-share" it won't sell. Marketing is always a large proportion of the cost of a product whether it's a videogame, a movie, or a dishwashing liquid.

I'm shocked... (0)

Anonymous Coward | more than 4 years ago | (#29259979)

You're telling me EA actually spends money on development? Last time I touched anything EA made was 2003, Command & Conquer Zero Hour. A game full of pathing bugs, multiplayer sync problems and random crashes. They never fixed it.

Makes sense (1)

Opportunist (166417) | more than 4 years ago | (#29260007)

To sell a turd, you need a lot of gold plating or people will smell and see that it's a turd. And gold plating ain't cheap.

Cute (0)

Anonymous Coward | more than 4 years ago | (#29260027)

The fact that a new console game costs 100-110$ (my local currency converted to $) does not help them. I don't really buy new games anymore.

3x more? (0)

Anonymous Coward | more than 4 years ago | (#29260061)

Isn't it obvious, it's not the marketing costs that are high, it's the development costs that are low. Title should read EA spends 3x less on development than marketing.

Poor developers, scraping together just in order to eat. Can't even afford to buy the console to play the games they develop.

Not a problem (1)

Monkeedude1212 (1560403) | more than 4 years ago | (#29260107)

Otherwise they wouldn't be -THE- largest game developer out there in North America. If you haven't heard of EA, you either never left Nintendo, or live without video games.

If they were doing things wrong, they wouldn't be doing so well.

In my eyes, its not that they should cut back from marketting, but spend more on developing! I'd be more inclined to jump into game development commercially if they got paid more decently.

How about Microsoft? (0, Troll)

trust_jmh (651322) | more than 4 years ago | (#29260123)

w7 is just a repackaged version of Vista with minor tweaking. (ie not much development time to make.) The marketing on the other-hand has everyone praising it. Seems a bit too much free PR.

Film industry? Try drugs! (1)

linuxwrangler (582055) | more than 4 years ago | (#29260135)

Take a look at the annual reports of some big drug companies and you'll find they spend more on marketing (we need to keep the prices high to support R&D...) than they do on actual R&D.

Re:Film industry? Try drugs! (1)

Scrameustache (459504) | more than 4 years ago | (#29260515)

I'm pretty sure the film industry has tried drugs :p

Like in the movie (1)

RenHoek (101570) | more than 4 years ago | (#29260153)

If you make a good game, they will come..

3X on marketing rather than on development... (0)

Anonymous Coward | more than 4 years ago | (#29260203)

Such a pity.

EA's games aren't that bad by any means, but imagine if they spent that money on real R&D and actually making awesome games.

Question the need for game ads... (0)

Anonymous Coward | more than 4 years ago | (#29260223)

I'm going to buy NHL10 not because of any ad I saw on the tv, news, or heard on radio, but because they put a simple producers video up and a game demo.

I'd question the need for a lot of marketing hype, specially since most consoles are well connected nowadays.

BTW, could they fire the marketing teams and maybe stop putting in-game ads in?

Doesn't compare to the film industry at all (2, Informative)

Anonymous Coward | more than 4 years ago | (#29260275)

In 2006, the average studio movie cost $65.8M to produce:

http://www.cinematical.com/2007/03/08/mpaa-in-2006-an-average-movie-cost-65-8m-to-produce/

In 2007, the average studio movie spent $36M on marketing:

http://articles.latimes.com/2009/apr/20/business/fi-ct-movies20?pg=1

I always knew EA wasted money, but this is nuts! (2, Insightful)

DragonTHC (208439) | more than 4 years ago | (#29260281)

Imagine if they spent that cash on development instead?

gamers don't need TV commercials.

Madden and other crap franchises are the bulk of the ad budget.

Out of control costs (1)

CopaceticOpus (965603) | more than 4 years ago | (#29260289)

Is this the reason that new games cost $60 or more? Without the marketing costs, new games could cost a more reasonable $15-20. This would encourage people like me to buy new games rather than waiting to buy them used.

Perhaps the trouble is that there is nothing to keep marketing expenses in check. A large bag of store-brand, non-advertised charcoal might cost $15. Kingston brand charcoal might cost $20, with much of that extra cost due to advertising. If Kingston decided to spend another $40 per bag on advertising and sell their charcoal for $60, they'd sell almost nothing and go out of business. They would be crazy - but this sort of crazy marketing seems to be standard in the games industry.

Sums. (1)

ledow (319597) | more than 4 years ago | (#29260295)

Let's do the maths (Yes, there's IS an 's' in it)

makes $35 on a $60 video game
needs to sell 1.1 million copes to break even
new games have just six weeks to sell.

So you make $38.5m in order to break even for ONE game, and you do that in six weeks. But marketing costs "up to three times more than the development" so that would mean that, say, development *definitely* costs less than $9.6m and marketing, say, $28.8m roughly (if you were to assume they were the only expenses).

So after investing let's say $5m over several years in development, you make $38.5m with that in SIX WEEKS and you think that's *all* to do with the marketing (especially as it DIES within six weeks - good marketing would stop the game dying I would think, not provide a one-off boost purchase)? I would think it was more to do with being a good game. Can't remember the last time I picked up a game because of a review in a magazine or online. I play demos (no demo? Aw, shame... not buying it then), I view videos on Youtube, I buy things because they appear as a new item on Steam, or I spot them in the shops.

Gaming is a demand industry, hence the only one that really solved the "on-demand buying/playing" with things like Steam, etc., hence the high piracy, pre-release leaks, etc. People want the new games. I don't think the marketing has anything to do with this because games that don't even get advertised get leaked/stolen before the marketing really drives up. How much is valve spending on HL2:Ep3 marketing? It'll spend next to nothing, I'm sure.

If you were to scrap that $20m-ish on marketing and just, say, make it equal to game development, you could instantaneously half the price of the game. That would BE your marketing right there - you'd barely need to do anything else, you'd be cheaper than all your rivals but the same quality. Or, say, just scrap the marketing entirely, release it on Steam (so it gets a lot of exposure on pre-release download, demo, release, etc. with little-to-no effort. Then you'd be raking in a slightly reduced amount much much quicker and over a much longer term and probably still at a much-reduced price.

The indie-games are going to win over the big titles sooner or later because this is exactly how they work. If I do have £50 I want to spend on games, then I'd much rather get 500 hours of gameplay for the same price than 20. I can even get a mix of genres, a mix of play-types (long, high-investment, or short, casual games), a mix that ensures I get at least one good game, etc.

The sums don't add up - imaging convincing an investor: we want $38.5m, we intend to spend three-quarters of that on the marketing for a six-week window in which we'll claw back the $38.5 if it takes off, and then the game is dead after that. We'll be spending a tiny proportion on development of the game.

If it tells you nothing else, it tells you that games are ALL hype these days. Give me Crayon Physics any day - saw it on a Youtube vid (not even an official one), wanted it, played demo, wanted it more, bought it, played it, still replay it. Not once did I see any marketing for it except it's official website. Did the same for Left4Dead, believe it or not - played a free weekend on Steam having only ever heard the name and never seen it played - ended up playing it to death and buying it. Where did the marketing work there?

Stop faffing about, making FIVE blockbuster games for the same money by just paying the development side, release them on something like Steam whenever you feel they are ready, when you make you development budget back, start another game project. I bet you'd make a lot more, and a steadier and sustainable, income.

Why are games so expensive? (5, Funny)

H4x0r Jim Duggan (757476) | more than 4 years ago | (#29260323)

Q: Why are games so expensive?

A: Because it costs us that much to convince you you want to buy it.

Not that surprising (1)

lysergic.acid (845423) | more than 4 years ago | (#29260371)

As a consumer society, we've evolved to be more responsive to advertising/marketing than actually good products/services. That's why our society has become so (over)saturated with advertising. You may design the best product in the world, but if you don't market it correctly, and no one knows about, then it doesn't really exist. Though the internet has begun changing that through the proliferation of viral marketing—and I don't mean the marketing gimmicks created by hipster "new media" advertising agencies, but rather true word of mouth.

And while I don't have any idea about the cost of marketing versus production in the movie industry, I do have some idea of the figures for the music industry. You can record a professional quality album for as little as $6000 these days. In fact, if you're a DIY kinda person, you can do it for a lot less than that. Heck, even a lot of major label artists are opting to record outside of a professional recording studio, and instead just renting out a house or warehouse and setting up their recording equipment there (and you can actually get some pretty interesting effects this way just by trying out different speaker/mic placements throughout the building). Mastering an album may cost another $3000-4000, but this can be offset sometimes by hiring a producer who does the mastering. I won't include the cost of album design and artwork since that's very variable and could be considered part of marketing. So in total, you're looking at only about $9~10k to produce the album itself.

Now, with most indie labels, you'd hire a publicist to do the majority of the marketing for you (i.e. get your music onto radio stations, get magazine reviews, get magazine/radio interviews, etc.). You might also do in-house marketing, which mainly just involves retail relations, sending out promo CDs, perhaps calling some radio stations to promote your music, submitting one-sheets, paying for magazine ads (this can run pretty high, but is more a function of the size of the label and what you can afford), etc. If you've got distribution through one of the majors (i.e. through a label group like Megaforce) then you also have other marketing/promotion options available to you, like co-op audio booths, co-op ads, etc.

Those are the usual variables/options a mid-sized indie label typically has for promoting a new album. A publicist these days seems to cost about $3000-4000 or more per month per album. A ballpark figure for ad space might be around $3000-4000 a month for a mid-sized indie, though that usually is spread amongst multiple album. And the co-op promotion campaigns through major distributors might run as low as a couple hundred dollars each, and again depends on how much or how little you want to invest in it. Our label probably spends ~$2000 a month on the options offered by our distributor, but, again, these are very rough ball-park figures as each label has their our marketing strategies. The smaller your budget, the more efficiently you're forced to use your resources, and so you might rely primarily on in-house or free marketing (like posting torrents, posting youtube videos, myspace, etc.).

For some of the larger mid-level indies, I'd be willing to bet they spend much more on marketing than on actually producing the album. And for the majors, I have no doubt that they spend far more than 3x as much on marketing as for producing the music. Of course, this doesn't include the cost of the record contract, nor does it take into account touring support in aid of promoting an album.

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