And, of course, he backed down: "“We’re not spending a lot of time thinking about it. It’s not something that’s a reality for us in the near future.” But, sure, you got me. Getting it from an actual executive and not just a designer without the subsequent backtracking would be a little more shocking.
Don G, you are correct, and that's a fine methodology - if you were totally unfamiliar with the games business, AB itself, and the various projects involved.
My choice of method probably slightly overestimates the overhead costs for WoW
Well, it's a good attempt at it... sort of. How can you account for amortization etc of something that began development a dozen years and three corporate entities ago? The blogger's original point was that this kind of ham-fisted methodology makes it easy to disguise the fact that almost all of the profits in AB come from WoW, and that those profits aren't growing.
Strip out WoW as a title, and I would bet that the original eye-popping margin is closer to the reality than the not unimpressive 30% you came up with. I would also bet that the subscription nature of it is a huge part of that.
But in any case, just applying the same methodology across a wide variety of projects and departments means you're ready to be a professional accountant! :thumbsup: The key is having a good shredder.
Obviously, payroll on the WoW team is probably more than half that for a quarter, and marketing alone is probably near that (or would be much higher when annualized across quarters, 4Q will obviously see a push for Cat).
But it is sad to see you just attack instead of actually spending five minutes to read the report and come to your own guess of what WoW's margins would be. Of course, just disparaging something is easier than actually using your brain to parse data for a few seconds, right?
And I would understand why someone wouldn't want to ponder just how profitable WoW is compared to a measly one-time $240 million box sale, especially when the total development and marketing cost starts to also reach nine digits - the truth is depressing.
nWell if he had any real info on how revenues/profits work he'd realize that that kind of large discrepancy in revenues and profits is pretty common.
It's an earnings statement. Of course he has "real info". And the margins made by WoW are anything but common - however, games like the Tony Hawk series, the fading Guitar Hero franchise, and Blur are exactly that, common shovelware that drains almost all of those epic profits.