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It cannot be over stated how expensive it is to run a company like Paradox. And at the end of the day they not only need to break even, they have to make a profit that can be spent on further development. That is economics 101. CK3 has to support itself, devs need feedback and they need to pump out resources to fund support and further updates.
We could go into the market implications and consumerism but I'll only say, that they will keep making ♥♥♥♥ that people buy.
Paradox is not only a development studio but also a quite big publisher. This means they don't rely on their own developed games but have different income too. So they won't get bankrupt just because they don't release games regularly.
Also the PDX dev stuio's 150 employee are not all developers but do have various jobs with different salaries levels. Not to forget that PDX is developing several games in parallel.
After CK2 several other games and numerous DLC for games have been released.
Even games in the same series are not developed one after another but often the production of the sequel starts while the current game still gets DLC or patches. What do you think would PDX dev do in your hypothetical time between CK2 release (2018) and CK3 dev start (2023)? 150 people waiting for some bug report to drop in?
Those 150 people are organized in 5 development teams working in parallel on different titles.
https://en.wikipedia.org/wiki/Paradox_Development_Studio#Studios
Development of CK3 started in 2015 and released in 2020. In the meantime PDX released Stellaris (2016), HoI IV (2016), Imperator Rome (2019)
https://en.wikipedia.org/wiki/Paradox_Development_Studio#Clausewitz_Engine
The last DLC for CK2 was released in 2018, so even one dev team didn't have a problem to work on two titles at the same time.
Also, when looking at CK3 release date (Steam store September 2020) it only took players two months to learn modding and add not only cosmetics but also first (minor) gameplay changes until November 2020 (Nexusmods). So adding new stories/events does not take a lot of time to be created. So stating CKx development would take up to 9 years with a dedicated team (let aside as big as 150 people lol) is ridiculous.
I am pretty sure devs not permanently assigned to one dev team at PDX but switch teams as needed. Currently CK dev team will be reduced and are now working at eg Victory 3 to quickly fix bugs after release and react to player response.
... so there is constant money inflow and a dedicated team would be developing the game and all DLC in much less time than 9 years.
It is not unusual to change game design or mechanics during development so your assumption CK2 would look dated doesn't make sense at all.
I don't know the price for CK3 at release date but let's assume it was 50,- With 2mio sales and assuming 50% of the revenue goes to someone else (like Steam share or whatever) although it would be more like 30% of the revenue, Paradox earned about 50mio with CK3 in two years (i assume 2020/21 only)
So those 150 people are actually in 5 teams, let's say evenly distributed with 30 people each. But actually there are also lots of people busy with doing generic things, like accounts, marketing, sales, legal, ... so actually it will be more like 25 developers doing programming and designing and such. Anyways, lets count them too and continue with 30 people and let's take the higher salary of your example: 127k each
30 ppl, 127k pa, 5 years ... 19 mio costs in salary.
Now compare this with 50 mio sales profit (base game not including DLC)
(additional costs should be included though, like rent, HW/SW, company events, marketing, ...)
PDX is by far not endangered of going bankrupt.
I could not find the latest sales number for CK3 for 2022 but according to official publication CK3 (and its DLC) is still selling well.
From 2022 annual PDX report about revenue:
'Turnover amounted to MSEK 1,972.9 (MSEK 1,447.5), an increase of 36 % compared to the previous year. The revenue for the year is mainly attributable to Cities: Skylines, Crusader Kings III, Hearts of Iron IV, Stellaris and Victoria 3' (1,447.5MSEK ~ USD 137.5 mio)
Profit for 2022: KSEK 708,709 =~ USD 67mio ... profit not evenue
https://www.paradoxinteractive.com/media/press-releases/press-release/paradox-interactive-ab-publ-publishes-annual-report-for-2022
There you can also find all types of details in revenue and expenses but I didn't bother to separate and add all sorts of numbers of a several pages of text.
I am not saying all DLC should have been included in the base game at the date of release but I don't like the pricing strategy.
After releasing a game like CK3 they release a DLC at half the price of the base game plus a couple of flavor packs for >10,- each year.
PDX is basically trying to keep CK3 revenue stable over the years and won't have a typical cost/revenue curve like most games have. Often games studios develop for years without income and then release a game in hope to earn enough to stay in business during their next development cycle.
So they actually do exactly the opposite of what you described. Something in the middle would be perfect imho.
The logic of there is only one game and there is no other source of income.
eg
Skyrim was released 2011 and all 3 DLC were released in 2012 (they didn't need one year of development like it seems is necessary for CK3 DLC) since then no other Elder Scroll game was released until maybe 2026. So Bethesda managed to survive for 14 years without constant overpriced yearly DLC releases.
Even this over simplified view like OP described doesn't make sense.
Or as the community of statistical analysis calls it, "estimation". I am, however, always open to being corrected. Please run the numbers properly and show me my error, if you've the time.
The logic isn't that there's only one game and no other source of income. The logic is that all DLC content should be put into the game before it launches. These are case studies to show what that would mean for budget (a deficit). If every game was released thus, most every game would yield a deficit.
The number of games being sold doesn't matter if none of them are making money. That's the point being made here. Indeed, the argument you present is my argument for DLC: A core game can be released within budget, in a reasonable frame of time, and can be making a profit while DLC is developed. Each DLC title, likewise, is making a profit while the next is in development.
There is a reason DLC content is cut from the planning phase and relegated to DLC, is all I'm saying, and it's not merely to nickle and dime for no other reason than corporate laughter.
Now this is how it's done! Thanks for the in-depth critique.
Your take on PDS vs. PDX is sound, but I felt it didn't matter because I was only looking at the cost-to-revenue ratio of game development, which when applying Occam's razor can be summed up as, "Is this studio worth keeping open?" In other words, if PDS stopped bringing in more money than it cost Paradox to run it, they'd shut its doors.
However you do make an excellent point with regards to the team being split five ways, and it's not one I factored in. That would (very roughly) mean about $17 million in costs over nine years of development, but the issue I have is with your $50 million figure.
Again I get why you went there. But the fact is that a company with several subsidiaries doesn't just pool everything as a net gain/loss situation. The value of each subsidiary (each studio, in this case) is measured independently. "How much money did we spend on THIS STUDIO, and how much money did THIS STUDIO earn us?"
Thus we would need to evaluate solely by the income this studio made Paradox - and again, we can extrapolate this to all games made by the studio, because the assumption in this hypothetical is that every game crams ALL the DLC content in before releasing at MSRP. At $50 US (I went by $30 before for some reason, most likely because I remember that being where everyone wanted it to be at launch), it takes a year to recoup costs.
It's not as bleak as my OP suggests, but it's still fairly bleak when competitors are pumping out games in 3-5 years' time and living off the DLC thereafter.
As to this...
Graphics are rarely changed wholesale during development. If they are, it adds a great deal of time into development, which means the potential for deficit expands. When I said it would "look dated", I meant it quite literally, haha.
Although I will add that CK3 has had engine upgrades over CK2, and upgrading an entire engine mid-development is often a recipe for disaster.
At any rate, we agree on this front:
And the fact that they do exactly the opposite of what I described is why I say it's a sound business model. I get your point that it could be dialed back as well, of course, but as long as people are buying the games it's working.
The unfortunate fact that many fail to accept (not accusing you here) is that "the people" aren't a hivemind. Although many vocal and passionate voices find DLC and certain pricing models to be unnecessarily predatory, the fact is that the vast majority of the market disagrees, and thus the people have spoken. In a democratic society, if 65% of people choose a leader and 45% are displeased with that person, we say the people want that person.
The people, by and large, want DLC.
Of course do other games being sold matter. If none of them sells and 4 of the 5 dev teams are employed for nothing, the studio gets into trouble. If one of the games turns out to be the new power horse, dev plans may completely change, eg:
- hire more devs for other titles to improve quality and content
- being more flexible in release dates since there is less possible financial pressure (especially true sind Paradox is studio and publisher)
- or even stop or delay development of other titles to focus on the new best seller and milk the new money cow
There have been cases when game studios had to close while in development of a new game since one of their other recent relesed game titles didn't sell as expected.
That's why some game studios are trying to be contracted by publisher, so it can carry them over dry periods. Well, often this backfires when publishers push for an early release or all the other issues that can arise.
However, all this is not applicable for Paradox, since they have several games in their pipeline at once, which are known to create good to very good sales.
And they are their own publisher who can carry them to their next release.
This is exactly what Paradox currently did/does with Bloodlines 2. They supported the original game studio over a period of several delays until they eventually figured out this will not end well, took their IP and contracted another dev studio.
Paradox invested money for several years of development in this title without any planned release date yet.
They are in the position to keep their game studio without the pressure of pushing out games regularly to stay alive.
This is nothing unusual for company groups to even out profits and costs across their companies.
It is correct to say game studios are being closed when they don't bring in the money they cost. But this is not applicable for Paradox and CK3. Since CK franchise sells very well. The costs during the development phase is easily returned in profit after game release.
Please explain why you insist there will be nine years of development?
I explained how this doesn't make sense since lot of this later released content can be created in much shorter period of time.
And again there are several titles in development in parallel creating huge synergy effects. The Clausewitz Engine already existed and was constantly improve for other game titles and devs were already very experienced on how to work with this engine.
Even for a completely new game a dev period of nine years
Estimates of time to develop games range between 3 to 5 years.
https://en.wikipedia.org/wiki/Video_game_development
AC Valhalla took 2,5 years to complete
https://en.wikipedia.org/wiki/Assassin%27s_Creed_Valhalla
Beside of the points I already addressed in this reply above, what is your point? :)
No... replacing assets and design while keeping game play and architecture is fairly easy and does not necessarily need development efforts.
Skyrim HD texture mods and UI mods for example.
As already said, the engine was not explicitely created for CK3 but was under constant development and used by several other game titles.
Also it is in constant change in course of the whole development. This is what development is all about. Just yesterday I again came across the dev blog talking about the optimizations done in CK3 and the developer said they were changing C++ compiler versions during development.
Other games upgraded the version of the engine (UE, Unity) during development or I have even heard developers changing from Unity to UE.
For sure developers try to avoid those situations but it happens every now and then.
Even this has nothing to do with 'looking dated'.
So yes, it is a business model to maximize profits but it is not out of the need to survive, like your OP suggested.
You might be absolutely right in case of small / indie studios though.
Don't start with politics here :D
Your chances are high to anger a lot of people if you tell them 'you wanted Trump/Biden' :D
A market tends to be monopolistic and not democractic.
If customers would have the choice to have the same content without DLC, or DLC for lower prices, they would definitely chose so.
But we don't have this choice and we either buy DLC for whatever price they are offered or we are not able to play (this content).
Games are not interchangeable, especially in segments that are still quite a niche.
(we could argue if FPS genre is homogene because of how many games are offered and they are all about 'shooting things' but I am sure 99% of FPS gamers would insist 'their' game is the one and only they would play)
Also in sales it is not about 'the winner takes it all' since not all potential customers would buy the DLC if it does not meet their criteria.
It is about maximizing profits. That is why reducing prices may result in higher profits since more potential buyers are attracted.
Even some buyers won't buy even the base game since they won't support a greedy business company at all.
This is why there are regular discounts to also catch those buyers.
But this may lead to have the company look even more greedy.
Like it want squeeze all possible money from early buyers by setting extra high prices (they will buy it anyways) and then promote -20 / -50 discounts after some time, which looks very appealing although the discounted price is more like what people expect as starting price without discounts.
Also bundles are actually marketing tricks to get more money from customers.
So customers (like me lol) will buy the bundle containing 1 item they want and 3 items they don't care about and pay about the same price as they would for the 1 item at not discounted price, which they would have never paid for lol
I think we're missing eachother at a key point: Assuming the logic of this post assumes it would be their business model in full, meaning it would apply to every game they make. In other words, they'd pretty generally only have one or two new games out for sale at a time, while the rest were stuck in a decade-long development cycle simultaneously.
Sorry about that, the point wasn't to upset anyone. Let me clarify why the analogy, since you seem to think this is about 2020 or something.
When Calvin Coolidge won the Presidency in 1924, the popular vote gap was only 25.22%, yet we said "the people want Coolidge".
When Franklin D. Roosevelt won in 1932, the popular vote gap was only 17.76%, yet we said "the people want Roosevelt".
When George W. Bush won in 2004, the popular vote gap was NEGATIVE 0.51%, yet we said "the people want Bush".
When Donald Trump won in 2016, the popular vote gap was NEGATIVE 2.09%, yet we said "the people have spoken".
When Joe Biden won in 2020, the popular vote gap was only 4.45%, yet we said "the people have spoken".
When Crassus became Consul, it's quite possible a hundred thousand people didn't want him, yet "the people had spoken".
The point isn't that X should be President, God places who He will in power. The point is that in a free society, "the people" are rarely if ever in lock step with one another. Thus we say that majority opinion means "the people want x" or "the people have spoken". (Some elections like Bush and Biden notwithstanding, of course, since the "republic" part of "Democratic Republic" does come into play in America specifically sometimes, which adds complexity to the point.)
In short, an enterprise among a free people is successful on the back of the people's vote, be that with their ballot, their time, or in this discussion, their wallet. With sales numbers like Paradox's DLC has, I think it's safe to say that "the people" want DLC, though a large and vocal number of people (with whom I empathize, mind) be against it.
(Edit: I was reading that chart wrong after a while, thanks to the brother who pointed it out.)
Europa Universalis, Hearts of Iron, CK2, CK3, Stellaris... all have regular DLC released.
Why they should restrict themselves to only 1 or 2 games when they can do this with several at once?
But we are off-topic now.
Just to be clear, I really like and appreciate that Paradox is taking care, enhancing and improving their games even years after the release. And they do so not only with DLC but also with free updates.
The point I originally wanted to make is that Paradox won't get bankrupt if they would stop selling DLC. Probably some of the DLC content could already have been included at release. But better to get regular updates and DLC, even when paid, than no updates at all anymore.
I think what bothers most people, is the price model.
not making money off production for 5 years is something people don't typically do.
Put it this way, there is zero way to know how much money a game is going to make. are you making a game for 10m? 50m? 200m? Just look at what is happening to Midnight sun, or Avengers and that will show you what happens when a company over budgets and unperformed. SWtor ran into the exact same thing, and even with EA's deep pockets the game was almost scrapped. Mid night sun, and avengers both got canned, though i think avengers possibly could of continued had the company not been sold, but if i had to guess not making money was part of why it sold in the first place.
The reason why companies do it this way as it's far better to gauge what kind of support a game is going to get and then develop accordingly. If a game gets lots of support and sales, the team gets scaled up, If not it gets scaled down, if it gets little they end support.
But hey, if you want to bank roll 100m dollar projects, by all means go for it, there are very few games that take that chance these days. Hell just look at Mass effect andromeda, The game didn't sell like they wanted so they never made a single DLC. The game still made money but not enough for them to want to continue. Personally i think that was sad as i enjoyed it far more than the trilogy, but oh well, we can't always get what we want.
It's kinda interesting though how long you think things should take, They would be a bit less, but what do you think these people are doing all year? Your not going to suddenly take 6 years worth of work and make it happen in 2. the games you mentioned that were shorter are far less complicated as well. They need to develope systems, implement them, make sure they are fun, often redesign things. It's not a simple RPG that you make some combat animations and then populate a world. But the systems that are used in those style games are far less difficult to balance and even do over all. Then again star citizen is still not done and that's been 10 years but it's about 10x as complex as the average FPS/RPG
Umm, trump lost the popular vote both times, so your numbers are about people are not correct, What he won was the electoral collage, which is a whole other thing that i'm not going to get into other than say it dates back to slavery and a slave being worth 3/5's of a vote. When he won he lost the popular vote by 3m, when he lost it was by around 7m. Republicans represent about 40m less people in the US, again it's all about the electoral collage.
Also it's not the voting public, it's the people that choose to vote which is actually a much smaller number., Barely half the people that can vote do and even fewer vote in primaries. So in other words, only 1/5th of the country basically chooses the person these days the other 1/5th votes for the other person, 2/5th's don't bother, and 1/5th can't because they are children.
You're absolutely right, I was scrolled down and was seeing the Electoral College Margin vs. the Popular Vote Margin and mistaking it for for/against percentages for some reason.
Anyway, the non-voting public isn't the issue at hand here. In this case, they'd be the people who don't buy the game at all.
The point is that often, things work out a certain way despite a great many people being against it. So it is in voting (illustrated even more greatly in the fact that Trump DIDN'T have the popular vote in 2016), and so it is in the gaming market.