Infogrames stock plummets 27% today...

[faded glory]

Ya but as I said, what if they didnt? Wouldnt that delay the release?

It costs more to ship and license the stuff wholesale then it does to actually produce it.

GP, how much does a place like apolyton make

[faded glory]

Originally posted by Moral Hazard

The costs are in the development

They're actually in marketing if the financial statements are to be believed. Civ3 will be fine, but what about Civ3MP.

MH, the MP decison would be based more on Sales...If the game doesnt sell good to the level of expectations. Forget it, Firaxis will pull the plug within 4 weeks like Activision did.

[Swissy]

Researching Infogrames, it appears that investors are reacting to two events in the US. First, the US tax rebate, of which not many have gone to purchasing PlayStation2 consoles. In fact, the US government was also disapointed in the number of those rebate checks that went to paying down personal debt, instead of going for purchases. The second, the WTC attack, which has many wondering how strong 4Q(Christmas) retail sales will be. Many believe this will be a down year, but their is hope of a late year recovery. Infograme may get a bounce with the XBox launch, since they will have two games released at the launch and a third before Thanksgiving.

As for the effects in Civ3, none as PC games are a small part of Infogrames biz. But as game console become more advanced, Infogrames may get out of the PC game biz. The main reason for Infogrames big buying spree of PC game companies was to get title rights to expand their console game biz, especially with the new consoles being launched in 2001/2002.

[TCO]

Originally posted by Moral Hazard

The costs are in the development

They're actually in marketing if the financial statements are to be believed. Civ3 will be fine, but what about Civ3MP.

If I'm a publisher, than do I report revenue based on prices charged to customers? Or to the channel? What kind of relationship is there with the channel?

[Moral Hazard]

So Swissy you saying it's a buy?

PC titles don't transfer well to the console, they may fair better on the Xbox but I'm not holding my breath. In 2000 Pc revenue represented 72% of thier total revenues; so they were strongly PC. Haven't looked at thier direction recently; so if they are pushing toward Console and away from PC; It could be quite a buy.

However thier quick is .55 while ATVI and ERTS sport quicks above 1.

[DanS]

Swissy: the numbers for Civ3 are actually high, as these things go. Some math, given some assumptions.

1m copies over the next two quarters x $30/copy = $30m revenue (Infogrames' quarterly revs are about $125m for Xmas, $60m Q1)
.5 x $30m = $15m Firaxis share, less cash advances already given (I'm guessing that Firaxis gets a good chunk on delivery of the game)

Assumes retailers get a ~66% markup.

[Moral Hazard]

Revenues are reported to sales to the channel. (Best Buy, EB in this case.) But it takes alot of money to get them to give you prominent placing. EB doesn't want your crap sitting on the shelf.

[Urban Ranger]

faded glory,

Hm, their ability to ship is affected mainly by the amount of cash they have on hand instead of share price.

[KrazyHorse]

Economics invading Civ3 Forum...

Must...destroy...capitalism...

[Urban Ranger]

Don't you get Adam Smith's Trading Company from Economics?

[CapTVK]

Originally posted by GP




If I'm a publisher, than do I report revenue based on prices charged to customers? Or to the channel? What kind of relationship is there with the channel?

GP,

It's comparable to the distribution of foodstuffs in the supermarket. You have the regional distributors and the stores who take about 60-70% of the sales price into account. A problem with games is that they are perishable goods, just like fruit. Meaning they only sell for a couple of weeks and for the rest just waste shelfspace. The larger software chains know this and can force the company to pay for shelfspace just like manufacturers have to pay the supermarkets to reserve shelf space for new products.
An additional problem for most companies is that there are provisions for unsold stock. If this would happen with Civ3 Infogrames would be forced to refund the distributor or software chain for those copies. These copies eventually find their way back to the public in the bargain bins.

[crmeyer]

Reputation, Quality, Craftsmanship, & Existing Customer Base

Yes ... capital position, market position, channel distribution, etc., are all important broadly to the software industry and specifically to the computer gaming industry.

The important BRAND here is not Infogrames, but rather Firaxis. Infogrames motto in the Civ3 relationship--Don't screw anything up! Leave Firaxis largely to their own devices, press the CDs, figure the logistics, and keep the books.

Most companies live and die by their "brand." The interesting thing here is that the publisher/distributor--which is focus of these threads--is the "least" important variable in the reputation of the product. Infogrames is little more than a VAR--traditional roles of publisher are largely handled by the Firaxis team itself (with a little help from folks like those that participate in Apolyton).

Firaxis has demonstrated a great ability to conduct strong launch campaigns--I remember the fanaticism and anticipation that surrounded SMAC--the most deftly conducted pre-launch campaign I've witnessed for computer gaming. Hell, probably for any product.

Pre-launch press, I suspect, is not an issue...Mr. Meier (no relation) can likely set up an interview with any industry press group at any place at any time.

The Civ franchise has a huge ... and though the participants here at the Apolyton site don't always demonstrate this ... stable customer base. The interesting thing is that those of us who were first mesmorized by Civ1 are "OLD" now. There is at least one, if not two waves of new gamers queueing up behind us geizers to broaden the base.

I submit, that Infogrames has a great opportunity to demonstrate it's business acumen. Their challenge is to maximize the profit potential with their new franchise player. Note, however, having a great product (see history of Xerox, the mouse, GUI, etc.) does not ensure returns.

[DanS]

crmeyer: it's not so simple as that for Infogrames. They had to acquire the rights for the Civilization brand, pay out advances to Firaxis, and then pay for all of the advertising. Now they have to pay Firaxis on delivery and pay all of the packaging and delivery costs. They'll definitely earn their 40-60% cut of the publisher/designer action, if they can fulfill their end of the bargain. The risks are large--even for an established brand (Civilization, not Firaxis).

[Swissy]

The pay-off comes when they translate the game to X-Box and Cube. All the design is done just need to export, and with a stable platform it is very easy. Console games have a longer shelflife than PC games. MP players should look for a Civ3 multiplayer system that will easily translate to consoles. Online game play will shift to consoles as the under30 game player significantly outnumber the over30 gamer. Under30 are predominately(70%+) console players, over30 play on PC more(barely over 50%). That is where the money is and will be in the future, console gaming.

[faded glory]

I dispute the notion that Civ3 is in Marketing mode and not in devolopment. It is obvoius the game has not been shipped out yet. Considering they are still tweaking with it..They have not produced it yet for ship out. Im sure license has been granted and contracts with wholesale dealers +Retailers have been made. Atleast Ide hope so