How does SNK/Playmore make any money?

If the cost of a JAMMA board is $1850, and home carts are about $300, how can they possibly make enough money to stay in business?

How may SVC boards do they expect to sell? How may home carts?

Someone who knows, please explain to me. Thanks.

Oh well, you know, when somebody pays 1850$ for a just released MVS game, they usually don't use it only at home, they have an arcade cab somewhere where people puts coins in order to play. So they expect to have the money they pay back, is just an investment.
However the home cart is only for (duh) be played at home, you are not supposed to make money with it, that's why it gets released later with a cheaper price.
Notice that after a few months since its release the MVS game price drops very quickly as arcades constantly change games.

Yes Jefmcc listen to Amano Jacu, he knows what hes talking about.

omg your avatar is driving me up the wall....
please make it stop.

Well, and about the homecarts costing 300$... there are quite some people who buy them, although I do agree Playmore shouldn't be making that much money from them anymore, but... it's a market nonetheless, and they are sure making some profit from it as otherwise I doubt they would still support the AES.

To answer your question SNK makes money in the following ways:

#1. Low overhead. The ENTIRE U.S. division is 5 people. All of their people are not that highly paid by game industry standards. This means few checks to pay and at reasonable levels of salary.

#2. Recycling code. The games at this point are not rewritten like you would get from one version of say Onimusha to the next, but rather more or less the same code with a tweak here and there. This means the dev. teams are very small and dev. times not 2-3 years like most companies.

#3a. Neo Geo is NOT SNK's future; if they want to stay in business and make money the arcade systems are not their ticket. The games will continue to be developed for the MVS (there are 1 million MVS arcades around the world) for the next couple of years, but that market is not what it used to be- even for cheap games like the ones SNK publishes.

#3b.AES is not a money maker in any real sense. AES games RETAIL for $300 each and are made in quantities of 500 or so a title. So the retail haul is $150,000 (a $300 cart likely sell for $250-$265 or so wholesale). This money is peanuts and their ACTUAL gross profit margin is probably 30-40% of wholesale making for $45,000 per title meaning their net profit is like half of that. To give you a point of comparison, a single page ad in Maxim magazine will run $100K. SNK does the AES for it's fans as a favor. And, yes, that 's very cool of them.

#4. PS2, Xbox, and GBA are the future of SNK titles. Their business model is simple: port Metal Slug and popular fighting titles to these systems and sell to the fans. They will never grow much, if at all, but they will be able to sell 15-20K pieces of each Metal Slug 3 or 4 or 5 when they release them. This is how they plan to make money and stay in business.

#5. No major advertising. They will spend a few bucks now and then, but a fully-featured ad campaign like other game publishers do is not in their cards.

I got the above from Ben Herman, Pres. of SNK USA.

I hope that helps.

<small>[ July 25, 2003, 12:43 PM: Message edited by: rimm_rs ]</small>

rimm_rs The game REATIL for $300 each and are made 500 or so a title. So the retail haul is $15,000 (a $300 cart likely sell for $250-$265 or so wholesale).

Click to expand...

how 'bout getting your facts straight?

i think a better question is how does snk playmore make any money making games for a system thats so easy to pirate? why would an arcade owner spend 1800 on a pcb, when he could buy a boot for much cheaper. A neighbor and friend of mine is a neo geo fan, but is perfectly content playing metal slug 3 and 4 on his computer. thus saving 2 or 3 hundred dollars on carts. of course, he tells me that I should buy a neo geo and get slug 3 and 4. as much as i love the neo, which is alot, i really don't see how making games for it is a smart bussiness move, as the combination of its high prices, and the ease of which it can be emulated now a days spells out trouble financially at least, for playmore. of course, if i ran an arcade, it would be filled with neo stuff because its relatively cheap compared to other arcade games, but then, i dont run an arcade.

Supergoose, twas a typo. Fixed it.

rimm_rs:
Supergoose, twas a typo. Fixed it.

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but there are way more than only 500 carts per game.

Not AES, they make them 500 at a time these days. Back in the early and mid '90s they would make more than that, but not for the past few years.

I broke that paragraph into 2 to make it clear.

The MVS are made a few thousand a a time.

<small>[ July 25, 2003, 12:41 PM: Message edited by: rimm_rs ]</small>

rimm_rs:
Not AES, they make them 500 at a time.

The MVS are made a few thousand a a time.

Click to expand...

500 at a time for AES? Try 500 at a time for each origin......just for the neostore alone.

<small>[ July 25, 2003, 12:47 PM: Message edited by: ResOGlas ]</small>

I don't know about Japan and Europe. Though I am sure they get similar numbers. The beginning of my post talks about the business model of SNK USA as they are the people I know and can and was talking about.

Though I do know that Europe and Japan have the same business models, don't know how many AES carts they produce.

I would GUESS that Japan gets more AEs crtas than the U.S. and Europe gets fewer... just a guess though.

Still SNK's future (worldwide) is PS2, GBA and Xbox.

Oh, and Neostore was the sole distriubtor of the past 6 or so Neo titles, so the 500 Shawn bought were it fo this region. Any copies sold at buyrite or whatever were purchased from the 500 Shawn got initially.

<small>[ July 25, 2003, 12:50 PM: Message edited by: rimm_rs ]</small>

rimm_rs:
I don't know about Japan and Europe. Though I am sure they get similar numbers. The beginning of my post talks about the business model of SNK USA as they are the people I know and can and was talking about.

Though I do know that Europe and Japan have the same business models, don't know how many AES carts they produce.

I would GUESS that Japan gets more AEs crtas than the U.S. and Europe gets fewer... just a guess though.

Still SNK future (worldwide) is PS2, GBA and Xbox.

Oh, and Neostore wwas the sole distriubtor of the past 6 or so Neo titles, so the 500 Shawn bought were it fo this region.

Click to expand...

Sorry dude, Shawn was the sole distributer of the english Metal Slug 3 only. Try searching online and you can find many stores offering "new" matrimelee, ROTD, and KOF2K AES carts for competitive prices.

<small>[ July 25, 2003, 12:54 PM: Message edited by: ResOGlas ]</small>

Reread my post; you missed a big point:

Shawn is the SOLE DISTRIBUTOR for the last 6 or so titles. He sold those games to NCSX or whomever, that is what distributors do, dstribute game for dollars not only to consumers, but also to other stores.

<small>[ July 25, 2003, 12:58 PM: Message edited by: rimm_rs ]</small>

Loud and clear wink

ResOGlas:

rimm_rs:
I don't know about Japan and Europe. Though I am sure they get similar numbers. The beginning of my post talks about the business model of SNK USA as they are the people I know and can and was talking about.

Though I do know that Europe and Japan have the same business models, don't know how many AES carts they produce.

I would GUESS that Japan gets more AEs crtas than the U.S. and Europe gets fewer... just a guess though.

Still SNK future (worldwide) is PS2, GBA and Xbox.

Oh, and Neostore wwas the sole distriubtor of the past 6 or so Neo titles, so the 500 Shawn bought were it fo this region.

Click to expand...

Sorry dude, Shawn was the sole distributer of the english Metal Slug 3 only. Try searching online and you can find many stores offering "new" matrimelee, ROTD, and KOF2K AES carts for competitive prices.

Click to expand...

Shawn is the exclusive distributor of the "English" new releases. Any other store (like NCS) that offers new English releases has had to have gotten them from Shawn first.

That said tons of retailers stock the Japanese versions which are produced in much higher quantities.

Yeah, I hear you guys now. I guess i've been in the arcade hobby so long the word "distributor" has lost most it's meaning to me, lol.

<small>[ July 25, 2003, 01:00 PM: Message edited by: ResOGlas ]</small>

Amano Jacu:
Oh well, you know, when somebody pays 1850$ for a just released MVS game, they usually don't use it only at home, they have an arcade cab somewhere where people puts coins in order to play. So they expect to have the money they pay back, is just an investment.
However the home cart is only for (duh) be played at home, you are not supposed to make money with

Click to expand...

I'm not talking about how much the arcade operator "somebody" makes off it.

I'm pretty sure that when an operator buys the board for $1850, that's all SNK is ever gonna see off the sale. I don't think the operator sends SNK a cut of his profits every month.

What I'm trying to figure out is, how many boards does SNK expect to sell? 1000? 2000? 5000?

jefmcc:
I'm not talking about how much the arcade operator "somebody" makes off it.

I'm pretty sure that when an operator buys the board for $1850, that's all SNK is ever gonna see off the sale. I don't think the operator sends SNK a cut of his profits every month.

What I'm trying to figure out is, how many boards does SNK expect to sell? 1000? 2000? 5000?

Click to expand...

And you think 1850$ is too little money? I have no idea how many games will be sold, but the first run has sold out in the first day, which is pretty positive. There are more than 1 million cabs with MVS round the world.

What rimm is saying seems to make sense for the US market in terms of homecarts.

One thing to note though is that when KoF 2001 came out in the first week it sold over 6,000 copies in Japan (it was like #20 on the magic box list)

As far as SNKs overall strategy rimm seems to be stating what looks to be pretty obvious to me.

They must make serious money off the AES carts, not just chump change. I don't think it's simply for the fanbase. MVS they obviously make a lot on since it's 1800 per cart. There's like, what, maybe 5 bucks of actual material in those? Arcade operators buy them for that much because they're hoping to make their money back on it, and they usually do and then start making profits. So no problem with sales there.

Same goes for the AES cart though. Can't be more than 5 bucks of actual material. Is there really much difference producing an N64 cart and a NeoGeo AES one? I doubt it. And they sell for 300 a piece.

I think playmore makes a great deal more money than people think.

Amano Jacu:

jefmcc:
I'm not talking about how much the arcade operator "somebody" makes off it.

I'm pretty sure that when an operator buys the board for $1850, that's all SNK is ever gonna see off the sale. I don't think the operator sends SNK a cut of his profits every month.

What I'm trying to figure out is, how many boards does SNK expect to sell? 1000? 2000? 5000?

Click to expand...

And you think 1850$ is too little money? I have no idea how many games will be sold, but the first run has sold out in the first day, which is pretty positive. There are more than 1 million cabs with MVS round the world.

Click to expand...

FYI, the first run of SVC is already sold out and expect this title to be a sucess and sequals are bound to come. Remember, in the past, popular arcade games like Mortal Kombat cost $4000 with the cab and they were selling like hot cakes, I can remember myself throwing over $100 of quarter into it.

<a href="http://www.snk-capcom.com/forums/showthread.php?threadid=1420&postid=22412" target="_blank">http://www.snk-capcom.com/forums/showthread.php?threadid=1420&postid=22412</a>

Someone just posted this earlier.

Quote from Anechoicjinx:

"They must make serious money off the AES carts, not just chump change. I don't think it's simply for the fanbase. MVS they obviously make a lot on since it's 1800 per cart. There's like, what, maybe 5 bucks of actual material in those? Arcade operators buy them for that much because they're hoping to make their money back on it, and they usually do and then start making profits. So no problem with sales there.
Same goes for the AES cart though. Can't be more than 5 bucks of actual material. Is there really much difference producing an N64 cart and a NeoGeo AES one? I doubt it. And they sell for 300 a piece.
I think playmore makes a great deal more money than people think."


OK Dude, here's the dilly...

MVS...

The SVC cart costs $1850 RETAIL, which means Neostore pays (I am guessing but likely pretty close) $1650-$1700 each. So if SNK sells say 5000 of them (I know that number is too high, I will find out the exact figure if you want, but I'll go high to make my point) at $1700 a pop, that's 8.5 million in GROSS REVENUE. While a good deal of money to an individual to a game publisher it's chump change. you have to take out the cost of people, development, rent, phones, trade shows (for instance the E3 booth space they had cost them $30,000), cost of making and shipping the games, cost of returns, anf the BIG one, the cost of liscensing the Capcom characters, and I'd be surprised if their net profit margin is even $500,000. Now bear in mind a shrinking arcade market and tight economy (meaning it will be a hard sell to a good portion of the Neo MVS owners), and you have a company that NEEDS to get into the PS2 and Xbox, with out the mass market systems, they WILL NOT survive. Trying to go it alone killed them once. Bear in mind they are only doing 2-3 titles each year and the rest WILL NOT all sell like SVC will, most do MUCH smaller numbers. And some even lose money because sales are not what they expected. Oh and those carts COST A TON, they are not $5, more like $100 or so (this is rough, butagain I can get an exact number if need be).


AES

Yes it is for the fans.

Read my posts above and you'll see that they numbers are tiny. They need to keep their name alive at any cost. You need to understand that Neo pople are talkers and will help move people whom don't own a Geo or own one, but won't pay $300 for a game to the PS2 or Xbox where the same game is $50. There are roughly 70K Neos in the US, but there are over 10 million PS2s for instance with Xbox and GameCube runnig similar numbers. As long as SNK is run by the current management they will support the AES because Ben Herman the current Pres. is OLD school SNK. he was head of sales back when Chad Okada was there. but he's also told me it's no money maker, they don't lose, but they're not rolling in dough from AES.

I am only saying this: SNK will survuve, but the Neo GEO is NOT, NOT their future, it is a means to an end and that end is selling Neo Ports on the 128 bit systems. If they sell 50,0000 copies of SVC on each the GameCube, PS2 and Xbox (making 150K total) at $50, they will make $7.5 million in GROSS sales, but the wholesale cost is $44 making for $6.6 million GROSS REVENUE. The cost of porting is almost othing. CDs are cheap to make and ship, returns are no big cost, and at that quantity (this next thing is big so, please note it) Capcom's fees go WAY, WAY down. On that 6.6 million, they can make about 15% net or a cool million. That is twice what the SVC MVS brought in and they also build more consumer awareness and will sell even more copies of SVC2 in the home market the next time around furthering the gap. Whie the arcade market will continue to slide (I am NOT saying it will go away, but it will get smaller than it is.)

Now The same thing applies to less marketable (good games, but not as easy to sell to the general public and arcade owners) titles like Metal Slug, KOF and Samurai Shodown both in the Neo format and the 128 bit formats.

Oh and I did not mention the Game Boy Advance where you will see a lot of titles, too. hThat's a story for another day. ;-)

Playmore makes money from the Neo-Geo because there many fans of the Neo-Geo around the world that's keeping it alive. If there was no fans, Playmore wouldn't make any money, therefore go bankrupt. But, sadly, hate to say this, Neo-Geo won't last forever. They could make another system, but I don't think they have the money to make another system. We jus' have to be thankful that SNK/Playmore has given us these great games and memories. Neo-Geo was probably go down in history as the longest lasting system out there. Neo-Geo has even surpassed the NES which lasted bout 10 years. Neo-Geo has been round for 13 years. Neo-Geo is kinda like a dinosaur, They ruled the gaming world for quite some time, but they are about to go extinct. I think 2D games, are way more enjoyable than some 3D games because they give me the classic feel that I grew up loving. 3D games emphasize too much about graphics and realism than the game itself.

WOW! Jedite said it better than I ever could!