Sellers Sellers
Thu Dec 13 13:52:27 New Zealand Daylight Time 2001

Derek wrote:

> MMORPGs take between 5 and 10 million dollars to produce.  I know
> because I just finished our financials for our next project.

I'd add that those numbers are on the conservative end.

> ... Anyone else is not in the MMORPG business and views your model
> as SIGNIFICANTLY more risky than something targeted at the masses
> where statistically you have a better chance at getting the
> requisite number of subscribers to turn a profit. You must
> remember that the stock market drives investing in many ways.
> Long term is a foreign word to most investors.  Most can't seem to
> think beyond "How fast can I recoup my investment and start making
> a profit.".

Actually it's not so much about long-term or not (though that is a
factor), but about simple mathematics: I can take my chunk o' money
and invest it with little risk and get about a 10% return.  With a
little more risk, I can pump that to 15%.  With a fair amount of
risk, I can get 20-25% annualized return.

So to make sense to investors (in terms of ROI), a game developer
has to be able to beat the investment they could get elsewhere.  You
need to be able to say, if you give me $10,000,000 to make my game,
in five years I will return to you over *$30,000,000* (that's just
about a 25% return).  Now, that's possible to do *IF* you can
maintain a gross margin of about 50% and keep sales in the
100,000-200,000 every year for five years (I'm not sure if EverQuest
has done that yet).

Mike Sellers
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