Referring to the table i made of some benchmark game sales for Control last autumn, I did a few scenarios of Control’s sales with the following variables:
Variables
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Unit selling price varies by scenario
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Units sold varies by scenario
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VAT assumed 20% (Fin 24%, UK 20%, EU 18%. US doesn’t have gaming VAT as far as I know, but different states have their own sales & other taxes.
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Distributor cut of game sales 30%. In practice, it’s around 25% in retail and 30% on digital. As far as I know, there aren’t any plans to release on cheaper PC platforms like GOG on PC. Steam has a 30% cut. In retail there’s also COGS, if I understand correctly, but these are likely to be paid by the publisher 505 Games.
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Remedy’s cut after distributor is 45%, 505 Games’ cut 55%
Scenario 1: “Out of the park home run”
Control receives 85+/100 in critic reviews, Sony succeeds in their marketing and Remedy’s fanbase on Xbox also find the game. Control sells as well as other successful new IP entries e.g. Dead Space, Dishonored. Success on consoles, preorders and first 3 months’ sales drives average sale price up to 42.5€. Control brings a whopping €43.75M in revenue with 3.9M units sold.
I admit this is scenario is overly optimistic and on a personal level, I don’t think the probability of this scenario is very high, even if the game was a success.
Scenario 2: “Careful optimist”
Control is well received, 80-85 in critic reviews. Commercially a success, although doesn’t reach sales of iconic games new IP games such as Dead Space or Alan Wake. A -40% adjustment is applied to the average game sales of successful new ip entries. Game price is a solid 37.5 and racks in €23.2M in sales with 2.35M units sold.
Scenario 3: “Inderes base scenario”
AKA case: Quantum Break
AKA case: Ninja Theory’s Hellblade: Senua’s Sacrifice
Control scores a solid 75-80/100 in critic ratings and sells according to analyst base expectations. PC sales discounts bring the average sale price down to €35. Control bags in ~€10.8M in revenue. A -70% adjustment is applied to the average of successful new IP launch game sales. Game sells roughly as much as HBSS or QB.
On an interesting note, Ninja Theory, the studio behind Hellblade: SS, moved from a work for hire model (Devil May Cry series) towards a more indipendent model with Hellblade SS. After Hellblade was profitable after about 500k sales, Microsoft acquired the studio. Personally I find the studio to be an interesting and suitable benchmark for Remedy. In total Hellblade announced in 6/18, it sold over 1M, of which roughly PS4 and Xbox sold equally.
Comparing Control’s visibility to e.g. Hellblade, Control has received about as much visibility on e.g. Youtube as HBSS. Considering HBSS has been announced at least 1.5 years prior to control, I’d consider that Control receive more/better hype prior to launch.
It’s (much) possible I screwed up something or have some biases or flaws in these calculations so feel free to point any such things out! And obviously these are under no circumstances to be taken as any recommendations for the stock. Just want to bring my own thoughts out.
I also agree that in my opinion Remedy is likely to be an interesting target for M&A due to market consolidation trend and Remedy’s Northlight game engine technology.
Sources for game sales are from