So it's safe to say this thing was going beyond even SWTOR on what to not spend money on in developing an mmo ? Where exactly was all this money spent if there's so little in actual gameplay assets ?
38 studios Auction Nov 14th and 15th.
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Denaut
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So, in the interest of honesty and practicing what I preach I had a chat with the guy that handles server stuff about what it would cost to host a WoW clone. Quaid was actually quite a bit closer than I was. In the past 4-5 years or so the cost of hosting games has dropped by a ludicrous amount, by like a factor of 5, mostly due to the staggeringly larger number of server based games (Facebook and iOS primarily) created a competitive market where data centers no longer have game companies by the balls.
Today, to host a WoW clone AAA MMORPG, would only cost about $1 per person per month instead of the 5 or 6 it used to only a couple of years ago.
I wanted to redo the calculations using updated numbers that were more accurate, so I decided to look up 38 studios specific information. What I discovered was that 38 actually only operated in RI for 13 months, not 2 years: April 8, 2011 - May 13th, 2012. In that period they went through the $43 million dollars they received. Also, without income they must have been making their $1.12M/month loan payments out of that loan. What is interesting is that this puts their monthly burn rate at $3.3M, which is a third higher. Pulling out the loan I get a cost per employee of 11k per person per month, so the numbers look very accurate, much more than my other estimates.
So, after 13 months, they only had $32M left of their total loan, and at their actual burn rate that means they only had 10 months of operating cash left if the state gave them everything. Even according to them this wasn't enough and they would have needed more money beyond that to finish the game in an unrealistically optimistic time frame.
Once again, the state made a very wise choice with their money. If the state uses the reserve to pay down the loan they are on the hook for whatever fraction of the $43M that is left on the principle instead of a decent chance of a larger % of the $75M (or more?) when 38 inevitably collapsed 2 or 3 years later. With compound interest that is a serious chunk of change.
Today, to host a WoW clone AAA MMORPG, would only cost about $1 per person per month instead of the 5 or 6 it used to only a couple of years ago.
I wanted to redo the calculations using updated numbers that were more accurate, so I decided to look up 38 studios specific information. What I discovered was that 38 actually only operated in RI for 13 months, not 2 years: April 8, 2011 - May 13th, 2012. In that period they went through the $43 million dollars they received. Also, without income they must have been making their $1.12M/month loan payments out of that loan. What is interesting is that this puts their monthly burn rate at $3.3M, which is a third higher. Pulling out the loan I get a cost per employee of 11k per person per month, so the numbers look very accurate, much more than my other estimates.
So, after 13 months, they only had $32M left of their total loan, and at their actual burn rate that means they only had 10 months of operating cash left if the state gave them everything. Even according to them this wasn't enough and they would have needed more money beyond that to finish the game in an unrealistically optimistic time frame.
Once again, the state made a very wise choice with their money. If the state uses the reserve to pay down the loan they are on the hook for whatever fraction of the $43M that is left on the principle instead of a decent chance of a larger % of the $75M (or more?) when 38 inevitably collapsed 2 or 3 years later. With compound interest that is a serious chunk of change.
Denaut
Trump's Staff
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Believe it or not I actually looked for the loan terms online to see how much the state was actually on the hook for. I could find neither an amortization schedule nor whether the terms allowed for the state to pay down the principle in a lump sum. So yea, take that part with a grain of salt.
Edited: Bah, I see what I did. The state is on the hook for a large fraction of the 43 million, not 11. Got my debits and credits mixed. Fixed.
Ukerric
Bearded Ape
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Anyway, we had that discussion back in the old forums when 38S went down in flames.
When people go "but devs only make 85k a year", they seem to assume that devs require 0 square meters of rented office space, their equipment is free, and they don't need utilities like electricity, heating and water to work. Oh, and I guess since that guy discovered that his healthcare was cancelled, they also don't have non-salaried perks.
The average salary is usually about half of what your employee actually costs you.
Hosting costs have dropped dramatically, because, believe it or not, Moore's Law has been on our side for almost 15 years of MMO, grinding costs in computer equipment down year after year. Same for network costs; a bit less for energy costs. And progress in system automation also means less system administrators per server than it used to be (notably if you use Windows, like most MMO did and still do). This is why F2P is now a viable model; it would have been almost completely impossible in 2000, when the 6$/player cost was true.
When people go "but devs only make 85k a year", they seem to assume that devs require 0 square meters of rented office space, their equipment is free, and they don't need utilities like electricity, heating and water to work. Oh, and I guess since that guy discovered that his healthcare was cancelled, they also don't have non-salaried perks.
The average salary is usually about half of what your employee actually costs you.
Hosting costs have dropped dramatically, because, believe it or not, Moore's Law has been on our side for almost 15 years of MMO, grinding costs in computer equipment down year after year. Same for network costs; a bit less for energy costs. And progress in system automation also means less system administrators per server than it used to be (notably if you use Windows, like most MMO did and still do). This is why F2P is now a viable model; it would have been almost completely impossible in 2000, when the 6$/player cost was true.
Quaid
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As someone who employs people, I am very aware that employees cost much more than their salaries.
Also, as someone who employs people, I would never include costs like equipment, rent, and utilities in labour cost, or any kind of bizarre 'cost to run a business per employee' calculation. Perhaps that's a game development industry thing.
Also, as someone who employs people, I would never include costs like equipment, rent, and utilities in labour cost, or any kind of bizarre 'cost to run a business per employee' calculation. Perhaps that's a game development industry thing.
Eomer
Trakanon Raider
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How fucking dense are you trying to be? The discussion was about overall development costs, which include things like equipment, rent and utilities. It wasn't a discussion specifically about labor costs, it was a discussion about the generalized costs of 38 studios and how quickly they were burning through money. Ignoring equipment, rent and utilities in that discussion is asinine.
Khane
Got something right about marriage
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And... who wouldn't consider equipment, rent and utilities as a cost to run a business per employee calculation? Employees usually need things like chairs, desks, computers, office supplies, phones. The more employees you have the bigger the space you need to rent to house them and the higher the utilities would be as well.
Quaid
Trump's Staff
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Oh no I get that, but I don't think it's really correct to calculate those costs on a per employee basis. Similarly to the hosting discussion we had earlier, those costs do not go up linearly, and calculating it that way is extremely inaccurate IMO.
Eomer
Trakanon Raider
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Again, whether the numbers were off by 10-20% is irrelevant. The fact is that the game would have cost something like 30-50 million to complete, if it indeed could even be completed within a year, which is in itself questionable as fuck. Which would still have it pegged as having cost somewhere around 100-120 million (don't forget about Schilling's original 30 million, give or take), not counting ongoing support, hosting, development and so on. Which means their debt service alone would have been somewhere around 8-10 million a year (pulling 8-10% out of thin air, but I can't see how they'd be getting much better than that), before they even started to chip away at the principal.
The numbers just don't fucking work, not unless the game was going to sell 5 million copies in short order and maintain subscriptions at a ridiculous rate. Which is why no investor in their right mind would fucking touch 38 Studios or Schilling. The guy was a horrible business man, and too pompous to realize it or listen to anyone trying to tell him otherwise.
Ambiturner
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So basically to answer his original question, they would have to sell roughly 6-8 million copies in order to break even on box sales alone. That's assuming it would be released on time, which it definitely wouldn't. More realistically they would have to sell 10-12 mil which is 3x what Guild Wars 2 sold.
Basically, if this game wasn't the next WoW then RI was going to be massively fucked.
Basically, if this game wasn't the next WoW then RI was going to be massively fucked.
As someone who employs people- This is called your fully loaded labor rate and should be used to determine if producing a good or service is worth your time. If you're not factoring in fully loaded labor rates into your business, you're doing it wrong.
Ukerric
Bearded Ape
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This thread turned out more interesting than expected, minus Quaid who has now dug himself too deep into this argument to admit he was wrong.
Health insurance, 401k matching and other benefits make up a significant amount of the cost per employee. I'd say each employee costs at least 130% of their salary. Not to mention I don't think they were hiring "average" developers. Generally for game development you seek the best and generally they get paid a bit higher. Although the stress/skill/hours involved in game development don't justify the smaller increase in salary.
