Economics of Hitman games in the modern day

Hitman: World of Assassination
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You know that isn’t the sentiment, there’s releasing a quality DLC and then there’s this. Hence why value comes into play. Yes we all have our own concepts of what is value but we can also weigh up with hard figures to what’s going on here.

As I mentioned, people are happily paying 33% of a AAA game for a skin bundle. That’s value to them, but reality maths it’s not value in comparison to what else you can get for the same price.

That is true however we can make educated guesses from the current confirmed. If IO announced a DLC for £29.99, I would have guessed mini campaign or new locations because history tells us, that IO value that amount of money to those types of content. And escalations at £0.00. As @Spods said, it’s very unlikely that each pack will be different since you can buy them for the same. It’s not like one DLC at £4.99 is an escalation and the other is a whole new mission at the same value.

This is even worse because they haven’t even disclosed anything you get in the next packs but would like all the money up front. Even the H2016 flip flop roadmaps and Hitman 2 Roadmaps told what you’re getting at a later date. Here is a lucky dip, and you bet they aren’t going to add much than it’s worth - they’re a business.

Nobody is demanding their DLCs to be free. But when you’ve placed a price tag on content that they valued at £0.00 for the past 5 years, people are going to say something. Paying for new locations, campaigns or bonus missions is totally fine and noone is querying the fact to paying, but the content versus the value.

Not sure why you mentioned this. The main game - I paid for and got mostly decent experience. Now this is in a separate transaction - this not so good.

You can do what you like with your money. Nobody should tell you otherwise. Although this monetary scheme is a group effort. Because the price inflation versus product, if the seller gets enough people to pay, they win and could cement future schemes by that company.

If I sold 100,000 cheesburgers at $1, I’d make $100,000.
If I sold 1000 cheesburgers at $1000, I’d make a million.

If you can find enough select people to accept that price point. It’s a win. Hence why all the games do it these days.

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23

I agree. I would hope this is funding bonus missions for EVERYONE but it’s very likely IO can just take the money, make the 7 sins and run without any more updates. I’d like IO not to do that but keep in mind they did this before. You’re getting new bonus missions!* Buy the full experience and get everything!**

.*special assignments **until we release a new campaign and escalations

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24

Yeah but I just can’t see it honestly. The irony is that if it is funding bonus missions, they are equally paywalling other gameplay content to do so lol

I’m totally happy to dump £30 quid on a sufficient amount of content that actually expanded the game. This totally feels like a cash grab - we don’t even know what the other 6 content packs are, yet wants all the money upfront :joy: Not even a roadmap to guarantee us the value. lol

Yeah thanks, It’s insane IMO.

Also good to see you’re around :slight_smile:

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25

Using the analogy of cheeseburgers, the problem is that the number of cheeseburgers you need to sell in order to recoup the cost to make a standard AAA video game these days is enormous, and so there is a lot video game companies going bankrupt and being bought up by bigger players like Microsoft. The making of video games is generally a money loser because there are too many companies in the market.

The retail price of $69 USD does not cover the multi-million dollar price tag for a normal video game these days.

Hence video game companies have to choose a model:

Free to play, micro-transactions built into the game, paid DLC expansions.

Choose your poison (emetic, sedative or lethal). I will leave you to prepare.

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The cheeseburgers was just a product I chose. It’s about the inflation versus cost. Nobody is arguing to make a profit - that’s fair. It’s about making price gouging inflation and how the margin is created through not sales but price inflation. And adding in systems out of greed rather to be in the green.

Referencing my analogy - 100,000 people could buy a $1 cheeseburger because they see value in it, not a big lost if the product is bad, a fan of the cheeseburger or anything in between. That is still 100,000 individual minds choosing to pay for that product. A lot of people to get onboard with that decision. Now if you price that burger at $1000, you only need to find just 100 people with the same mentality as the text in italic.

That’s not true. Games that use these schemes are earning billions in NET profit. If they weren’t making so much money, they would be an argument for using these methods but because people are happy to pay upwards of 120x the amount, companies are getting billions in net profits.

GTAV gets anything between 150 - 250 million Net from digital MTXs. 1 billion a year. This game sells you a T20 supercar for £30. 8 years prior, that same £30 gave you 2 full expansions for GTA IV consisting of tons of vehicles, a full additional campaign, weapons, the lot. Now it gets you a single unmodded car. GTA V cost 500 million to make and earned 1 billion in 3 days alone in sales too - already a massive profit.

CoD are approx 1.4 billion net on Q4 (Acti investors docs were quite hazy so this I can’t fully confirm until end of Q1) in MTX on Cold War. The whole game had gained 3 billion net as of end of 2020. Cold War cost anything between 20 to 30 million to make, and earned 678 million in 6 weeks from just sales - already a massive profit just in sales.

Pick any game you want with the same scheme. MTXs are pure profit, nothing to do with getting afloat.

The cost to make an escalation is X. We know it’s more than nothing but IO themselves valued that cost at nothing for 5 years. Now they are valuing it at something clearly a ton are not agreeing with but here’s the part - the inflation caters for the quantity of sales. If just 1 person pays for this (which is entirely their freedom to do so) IO have made a bigger ROI % YoY. Sounds good in terms of us fans IO getting more money but they have the right to do what they like with that money so they are under no obligation to invest that back into the product and the playerbase. Which is what every other game is doing. Making a shell platform and adding content packs for minimum effort maximum profit, at inflated prices, put a tiny bit into the mix for the next content pack, take the rest, rinse repeat.

This means if this is highly successful, it can open doorways into more predatory practices as we have seen in the past.

Yet now we have full paid AAA games using F2P systems, Macrotransactions and paid DLC expansions despite being in the very green Day 1. These schemes purposely inflate the pricing of content when they believe there is enough people who will pay in at that price - everyone else are acceptable losses because it’s a lot more than before.

The same reason CoD got rid of their Season Passes at $50. If they charge you in one sum, you’re locked into the purchase - you get everything no if or buts, they can’t milk more money out of you. By cutting it up into pieces, it forces you to having to buy each individual item separately at higher prices. It’s like taking away a multipack of drinks and only selling single cans that end up costing more than when you bought them as a pack.

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27

Well it all comes down to supply and demand, and like any business it is about profit, and so far IOI hasn’t been that profitable or they wouldn’t have been sold by Square Enix in 2017.

The video game model is not any different than the grocery and hospitality industry.

In North America, Costco sells chickens at a severe discount, and sell them at a loss, because it is to pull in customers to their grocery store where you fill up on bulk goods, like 5 gallon tubs of mayonnaise which you don’t need.

Restaurants like the Olive Garden give you endless refills of free fresh bread rolls and soup and salad and soft drinks to pull you in to their restaurant so you buy their entrees at a profit.

McDonalds sells that soft serve stuff that comes super cheap in a big bag of milky sugary powder, costing them nearly nothing, and they sell it at cost so you buy their more expensive stuff, like burgers for their profit.

They design airplanes to be cramped. You ride coach but see the lure of business class, and some, willing to pay the extra for a little legroom.

You play a free-to-play game, but it is designed to hook you in so you end up paying for micro-transactions and other extra content.

IOI has created a platform which they will update with monthly free content.

IOI will also entice you with excellent paid DLC at a premium. And while you will have access to a lot of free content within their platform, the lure of the new premium content behind a paywall will keep you paying for the new stuff behind the paywall.

IOI has spent a lot of time in money on slick advertising for their premium content, and they are deliberately keep the reveal of the content vague, so it creates a big media splash on the day of the release of each of the episode rollouts.

Whether you like it or not, IOI is in a business to make profits – and what they are doing is no different than any other company marketing their product.

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I think the point is we don’t like it, and so people are going to complain when they feel like they’re getting a raw deal even if it doesn’t make any material difference to IOI’s behaviour. If we have to accept that that’s what they’re going to do, I think you could be more accepting that people may grouse about IOI as a result.

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29

Of course, people complain about paying for content, and applaud free content.

In the long run, if IOI make profits, then they have the money to produce better content.

IOI said in many interviews that the Hitman trilogy was actually conceived to be much bigger in scope, but everything was scaled down in time and money because of budgetary issues. Now if they have more money, they can also afford better talent to make a better product too. And there could be less crunch and happy employees.

In the end, paid DLC is actually a good thing for both the video game company and consumers who want a high quality product.

If the quality of the product is worth the asking price, then consumers will continue to pay for it.

If the product is not worth the asking price, then it will not sell.

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30

Not if the content is worth the money, but 7 contracts (all I know so far) is not worth 300,- NOK, when I payed 548,- NOK for the base game.

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31

Defenetly an agree with the budget part but I don’t think it’s good to live by if it’s trash it won’t sale bc in this context IOI is testing more of how much can we sell extra what would have been main game or 10$ a few years ago

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32

I don’t think people necessarily complain about paid DLC content, they complain when they feel the value of that content is less than they’ve had for a comparable price from the same company in the past - that’s what’s happening here, IMO.

Not convinced about this. People often buy things, especially when motivated by the kind of FOMO that is associated with DLC add-ons for games, and then regret their purchase after the event. That buyer’s regret doesn’t detract from the sales numbers though, at least for that cycle of content… but if people feel that they’ve been burned in the past by a company selling its products for too much money, they may hesitate to buy the next product, and that hurts both IOI and its playerbase in the long term.

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33

Or they’re going to realize that it’s easier to sell six Escalations as package for 30 $ and instead of a Bonus Episode, a Patient Zero Campaign or even a Special Assignment we get three more Escalation packs instead. :roll_eyes:

I mean did we get better content when companies suddenly decided to add Loot Boxes to their games? In 95% of the case the answer is no. Nobody can tell me Shadow of Wars was a better game because you could gain orcs from loot boxes. Or that Star Wars Battlefront 2 would’ve been a better game by forcing you to either grind for hours to obtain iconic characters or spend money on loot boxes and hope that lucks on your side.

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34

That’s what I fear, so people should really think this through before buying into it, we gamers don’t have many options to tell developers that we are happy or not, only with out wallets, so I don’t like the, “I don’t like it, but I will buy it anyway” mentality, because that will tell the developers in sales figures that this is a okay thing to do.

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35

Honestly, I agree with you – but I just want to point out that it doesn’t tell the devs anything about what you do want, only that you didn’t buy what they decided to make. They only have the positive sales figures, not the numbers on who would have bought it if the format had agreed with them better.

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36

Yeah true, but I for one will try to be more selective with my money when it comes to videogames pre-order DLC’s and whatnot, especially after the disastrous launch of Cyberpunk 2077 on PS4, still haven’t played the game even I pre-ordered it in december :grimacing:, so if I feel it isn’t right, they don’t get money from at least on person :laughing:, I know, just a drop in the ocean, but I feel better with myself at least.

37

Yeah man, I completely understand. All we can do is be true to ourselves, right? :smiley:

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IOI run a business and if they don’t profit from their business, they go bankrupt, like every business. It is not a crime to make profits. Bioware’s Anthem, Fallout 76 and Cyberpunk 2077 were a huge success in pre-order sales before their release. It really burns the trust of gamers when AAA developers screw their fanbase.

IOI has run a business that has not been profitable. If it was profitable enough, Square Enix wouldn’t have let IOI go in 2017. It was Square Enix who paid for the development of Hitman Absolution (which was a money loser according to Square Enix. Hitman2016 was also a failure too in terms of sales, until after being sold by Square Enix.

Predictably IOI knows that there would be a chorus of many who would cry foul in IOI coming out with premium DLC expansion of Hitman III for money.

And so, absolutely guaranteed, the quality of the DLC will be worth the money for the majority who buy it. It is only in the trust of their fan base that video game developers can run a sustainable business.

So all those that talk about paid DLC as a ripoff, you just wait and see about that…

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39

Lloyd159

David_Spafford

1m

saying like you already knew it would worth the $30 they ask for and what would be included when in reality you know nothing.

I know that IOI is a 20 yr company who has struggled and been close to bankruptcy many times, on the basis that they are dealing with a fickle consumer, who starts from the point of mis-trust of game developers.

IOI has done everything to listen and please their community of fans.

And they will continue to build upon that trust for their community.

Bet on it.

40

With respect, my friend, you’re wrong. IOI have been profitable in every one of their financial years since 2012/13 (which is the earliest data I could find) according to their own financial statements:

DKK '000s 2019/20 2018/19 2017/18 2016/17 2015/16 2014/15 2013/14 2012/13
Revenue 212,814 154,103 120,823 210,634 213,526 146,027 178,177 209,943
Net Profit / (Loss) 11,591 16,416 40,926 3,925 1,310 4,941 876 2,767

(Source: data from 2019/20 and 2015/16 financial statements for IOI at https://datacvr.virk.dk/data/visenhed?enhedstype=virksomhed&id=24216209&soeg=io%20interactive&type=undefined&language=en-gb to produce this combined table)

Now it’s true that under Squeenix’s ownership, maybe they weren’t as profitable as their corporate overlords demanded (though it’s well documented that Square Enix placed unrealistic financial expectations on many of their properties, not just Hitman, with a good number of their titles that sold millions of copies being deemed to have ‘underperformed’), but IOI were categorically not a loss-making business.

And now they are independent and only have to answer to themselves, the need to make Super-Duper Profits™ rather than just Standard Consumer-Friendly Profits™ should not necessarily be top of their priority list, especially as we know that since the 2019/20 financial year (ending 31st March 2020), 2020/21 will also certainly be profitable for them too with the widely reported information that early H3 sales in Jan 2021 already made back all H3 production costs.

IOI are not - repeat NOT - a poor, struggling business, and while they do deserve credit for producing a fantastic series of games in the last 5 years against a backdrop of major financial and logistical disruption (which they have done brilliantly to overcome), they are not a charity case and we shouldn’t treat them like one when their value offering dips below par, as seems to be the case with the Seven Deadly Sins DLC.

Corporations are not your friends, David, don’t be fooled into thinking they are.

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Something that should not remain unmentioned is that the price for some of these numbers were a massive lay off of staff. Please don’t forget numbers don’t represent the human factor behind making games and growing as a team or going through tough times.

Not by principle, just as they aren’t your enemies in the same manner.

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