• Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.

OK - ESPN is a HUGE success, but is Sega making any money?

S

sonycowboy

Member
$20 game.

$5 retailers markup.
$3 manufacturing cost.
$3 royalty on MSRP $20.00
----------------------------------

That leaves $9 left. The rest is speculation:

TTWO's cut?
NFL's license cut?
Players Union cut?
ESPN's cut?


And those are simply the per-unit costs. It's well-known that Madden & Tony Hawk get several $ per unit on the sales of thier games. Then you add in signing Terrell Owens and Visual Concepts development costs.

Surely, this will raise the visibility and fan base, but I have a very hard time that Sega will be any more profitable as a result of this. And if they raise the price next year, I have to believe that there sales will fall back down to their previous lows.

So, in the end, what's the real upside, besides of course, the gamers getting an awesome game for $15-$20 bones? ($15 using the BB gamers card).
 
R

Raise Havok

Banned
What the 19.99 price tag did was get people like myself (maddenites) to try their game. Unfortunately the game turned me away, as I still much prefer Madden. If the price is raised next season, we will see how many people actually liked the game better, or atleast enough to buy both.
 
C

Cloudy

Banned
I don't think they are going for the huge profit this year. They just want people to give the game a chance instead of buying ONLY Madden...

PS:


GA Quick Poll
Sorry, you've voted already

Madden or ESPN NFL?

ESPN NFL for me! - 69.5%
· (278 votes)

Madden all the way! - 12%
· (48 votes)

I like them both - 11%
· (44 votes)

I hate football - 7.5%
· (30 votes)

400 votes submitted
 
M

Mrbob

Member
Well, to answer your question, Sega is going to make up for it through sheer volume.

ESPN2k4 for Xbox and PS2 sold, about what, 400K between the two? The listing price is 50 dollars. So they generated 20 million dollars worth of revenue through these games. Well, obviously a little less since the average selling price wouldn't be 50 bucks, but lower. Just do this to make it a bit easier. Now, ESPN is only 20 dollars, but it'll probably sell between 2-3 million copies. Lets take the middle ground and say 2.5 million. At a 20 dollar pricepoint they generated 50 million dollars of revenue. So somewhere in that extra 30 million must be some extra profit.

We don't know the details, but perhaps they pay X amount of dollars to ESPN, TO, NFL, etc instead of a percentage. Take that out of the expenses and whatever extra you have left will be profit.
 
S

sonycowboy

Member
Mrbob said:
Well, to answer your question, Sega is going to make up for it through sheer volume.

ESPN2k4 for Xbox and PS2 sold, about what, 400K between the two? The listing price is 50 dollars. So they generated 20 million dollars worth of revenue through these games. Well, obviously a little less since the average selling price wouldn't be 50 bucks, but lower. Just do this to make it a bit easier. Now, ESPN is only 20 dollars, but it'll probably sell between 2-3 million copies. Lets take the middle ground and say 2.5 million. At a 20 dollar pricepoint they generated 50 million dollars of revenue. So somewhere in that extra 30 million must be some extra profit.

We don't know the details, but perhaps they pay X amount of dollars to ESPN, TO, NFL, etc instead of a percentage. Take that out of the expenses and whatever extra you have left will be profit.
Click to expand...

Almost all of those expenses are on a per-unit charge (royalty, production, ESPN license, NFL License, etc) as I stated above. So the left-overs per unit don't seem to be enough to make up for what they've lost. At least, not significantly.
 
M

Mrbob

Member
Either way, sheer volume is how you make up for thin profit margins. Hell, that is how Wal-Mart conducts business. I don't agree with it, but I'm sure this is something Sega has to be banking on. I mean, who is to say Take Two isn't absorbing some of the financial blow to paying the NFL, TO, ESPN, etc....
 
L

Link316

Banned
sonycowboy said:
Almost all of those expenses are on a per-unit charge (royalty, production, ESPN license, NFL License, etc) as I stated above.
Click to expand...

er that doesn't sound right, cause when I use to invest in THQI they only paid X amount for a license and that's it, the licensee didn't get any additional percentage from each unit produce, they just get whatever the agreed amount was whether the game is a success or a bomb
 
R

rastex

Banned
Each liscensing agreement, just like every contract in existence, is different. Some are dependent on the number of units, some are a fixed fee, and some are a combination of the 2. All this speculation is useless.
 
S

sonycowboy

Member
Mrbob said:
Either way, sheer volume is how you make up for thin profit margins. Hell, that is how Wal-Mart conducts business. I don't agree with it, but I'm sure this is something Sega has to be banking on. I mean, who is to say Take Two isn't absorbing some of the financial blow to paying the NFL, TO, ESPN, etc....
Click to expand...

Why would they jump on board unless there was something in it for them? I mean they know ESPN got raped last year and sales are better than they could possible have hoped for.

My only point isn't that Sega is losing money, but given the fixed costs, what is the real upside unless they charge more next year.
 
G

GhaleonEB

Member
sonycowboy said:
Why would they jump on board unless there was something in it for them? I mean they know ESPN got raped last year and sales are better than they could possible have hoped for.

My only point isn't that Sega is losing money, but given the fixed costs, what is the real upside unless they charge more next year.
Click to expand...


I suspect the plan is to hold the new sports games at $20, and then come out at a full $50 in the next generation of hardware, when the value-add of the higher price will be much more apparent.
 
Z

ZILLION

Member
The upside is that they can go into next gen with mainstream retailers(Walmart and others) having confidence about the strength of the brand,something the ESPN/2K series has never had.

From the Gamespot interview..

GS: What are you looking for from the Take-Two organization?

SR(Sega): The most obvious point to me is the breadth and depth of their sales force. They have the ability to be in every viable account with great relationships, great real estate.


GS: What happens when the next-gen consoles appear? Does pricing remain the same or do you bump it back?

PE(Take Two): Once the average sports fan, or even the casual sports fan, has the great gaming experience--and has played this game for many hours, and talks about it, and realizes the whole gaming experience--I think we will have the ability to move the pricing up.
 
mashoutposse

mashoutposse

Ante Up
Next year, the game will likely be $39.

The game sold through about 800k, yet Madden still blew it out by a wide margin... in about one week. Don't know how many gamers this title's converting with that type of performance.
 
P

pilonv1

Member
DjangoReinhardt said:
The real value of the move is if people switch from Madden to ESPN next year.
Click to expand...

Exactly. One year as a loss leader is worth it if you can get your target market to buy your product. I doubt they will move back to $50, but I think $30-35 would be fine (gradual increase of course).
 
C

Cloudy

Banned
mashoutposse said:
Next year, the game will likely be $39.

The game sold through about 800k, yet Madden still blew it out by a wide margin... in about one week. Don't know how many gamers this title's converting with that type of performance.
Click to expand...

It only sold 400k all of last year :p

I don't think they want to convert (at least not right away). They'll be happy if people buy BOTH instead of JUST Madden.....

PS: Thanks, Zillion...
 
J

jarrod

Banned
I think $19.99 is here to stay for PS2/XBox, but next year's Xenon release (and PS3/Revolution the following year) will be bumped up to $39.99 territory.
 
U

UbiSoftologist

Member
According to Gigex.com:

''You really want to know what is behind the Sega, Take-Two Interactive deal, and I have all of the details for you.

This year Take-Two Interactive is distributing NFL 2K5, and in year two of the deal they are co-funding the development of the game with Sega. In 2006, the third year of the deal, Take-Two has the option to buy Visual Concepts. Sega doesn't want to be in the sports business and they haven't kept that a secret... they want to make entertainment titles.''

http://www.gigex.com/general/feature/general.asp?id=333&source=00001

If the ESPN franchise becomes modestly profitable, Take-Two will probably acquire VC.
 
M

Mrbob

Member
So Sega is going to help Take Two build up the ESPN brand the next two years and then pawn them off when it is a success. Genious.
 
S

sonycowboy

Member
UbiSoftologist said:
According to Gigex.com:

''You really want to know what is behind the Sega, Take-Two Interactive deal, and I have all of the details for you.

This year Take-Two Interactive is distributing NFL 2K5, and in year two of the deal they are co-funding the development of the game with Sega. In 2006, the third year of the deal, Take-Two has the option to buy Visual Concepts. Sega doesn't want to be in the sports business and they haven't kept that a secret... they want to make entertainment titles.''

http://www.gigex.com/general/feature/general.asp?id=333&source=00001

If the ESPN franchise becomes modestly profitable, Take-Two will probably acquire VC.
Click to expand...

This makes the most sense of anything I've seen. Take-Two wants to sit at the big boy table.
 
C

Cloudy

Banned
Mrbob said:
So Sega is going to help Take Two build up the ESPN brand the next two years and then pawn them off when it is a success. Genious.
Click to expand...

Sounds great. Just don't let VC go out like the XSN guys!!! >_<
 
M

Meier

Member
ZILLION said:
The upside is that they can go into next gen with mainstream retailers(Walmart and others) having confidence about the strength of the brand,something the ESPN/2K series has never had.
Click to expand...

I keep hearing this but it's utterly insane. The series has been wildly successful since its inception -- it ONLY had a poor year in 2004. The 2k3 series of games sold but mostly at a lower price due to an excess of orders from retailers -- which is the exact opposite of what you're claiming it never had. Basically, they dropped the ball in 2004 and are trying to salvage any brand recognition they once had at any cost.
 
B

border

Member
Tripling revenue isn't very helpful if the profit margins get slashed by 80-90%.

The TakeTwo acquisition makes sense. I wonder how many diehard Sega lovers are going to yank support once it's a competition between two super-corporate craphouses rather than the fanboy-inspiring "hardcore" underdog against consuming behemoth battle.
 
L

Lazy8s

The ghost of Dreamcast past
SEGA and Take-Two are more likely trying out plans to grow closer in operations than to trade a dev house.
 
Z

ZILLION

Member
The series has been wildly successful since its inception -- it ONLY had a poor year in 2004. The 2k3 series of games sold but mostly at a lower price due to an excess of orders from retailers -- which is the exact opposite of what you're claiming it never had. Basically, they dropped the ball in 2004 and are trying to salvage any brand recognition they once had at any cost.
Click to expand...

We have different definitions for wildly successful. If declining sales 3 years in a row is wildly succesful,then so be it.

So Sega is going to help Take Two build up the ESPN brand the next two years and then pawn them off when it is a success. Genious.
Click to expand...

Yes. VC are also hiring next gen engine programmers for a non-sports game to be published by Sega 1 year after they sell VC to Take Two. That's the listing they had on Monster. It's clearly a front to cover the eventual sale of VC to Take Two. ;)
 
B

border

Member
The series has been wildly successful since its inception
Click to expand...
Errr, it was only really successful when it was on Dreamcast and there was no EA to compete with. Since then sales have gone downhill....
 
C

Celicar

Banned
Sega is trying to get their ESPN lineup better known, and pricing it at more than 50% of the competitor's sports games is a good start. They'll probably jack the price up next year since ESPN football has done well and it probably won't get killed as badly as it did last year by Madden.

Go Sega!
 
You must log in or register to reply here.

Similar threads

Interview with Shuji Utsumi (SEGA Co-COO) by Japanese media outlet Seizo-Trend
Business Game Dev
1
2K
Unknown? replied
  • Poll
Why Xbox Abandoning The Traditional Console Business Model, Makes Business Sense
Business Analysis Platform 2
72
6K
WitchHunter replied
A record of Segas reactions, mistakes, missteps, poor or misguided decisions, JUST in 1996.
2 3
138
17K
kvltus lvlzvs replied
Did anyone else think that the Nintendo Wii was going to be the best selling console ever back then?
39
4K
Eddie-Griffin replied
[IGN] Seriously, Nintendo, It’s Time to Release a Switch Pro
2 3 4 5 6
296
22K
Knightime_X replied
Top Bottom