Too much time on my hands (DLC related)

joeincoloradojoeincolorado Opening Act
edited October 2007 in Rock Band
So, I was just pondering some stuff in my small mind concerning DLC prices. Looking over the 360 version of Guitar Hero II, I see that for $59.99 (Game Only price) a total of 74 songs were provided. That means that each song was worth about 82 cents each (I rounded up). So, what I don't understand is...why should it cost any more than a dollar for them to put these songs out as downloadable content? If anything, maybe they should come up with a way where you can go to a retail store, purchase an "album" with 10-20 songs on it for a anywhere from $12-20 and call it a day...instead of gouging us like Guitar Hero DLC at $2.09 a song.

Let's do the math here...let's say for Nirvana's Nevermind album, if the DLC stays at the GH2 price, we'll be paying $22.99 (that's minus "In Bloom" which is already in the game) for the album. Now, let's say they mark it at the 82 cent price...hell, a dollar even, We'd be looking at anywhere from $9-11 which seems a lot more fair. I'd even be willing to pay $15 for the album...that puts the DLC at $1.37 a song.

I know it's very early..and that's a lot of numbers...and I'm probably going out on a limb but, I mean...does this make sense to anybody else? I swear...if I gotta shell out almost $25 everytime I want to get an album, I'm gonna be broke...that or just have to do without...both of which would suck.

Well, that's it...I'm just throwing that out there...just some ideas. Hope I didn't boggle anyone's mind or sounded too stupid...Yeah. I'm going to bed. Have a good one.

Comments

  • ZkDotNetZkDotNet Rising Star
    edited October 2007
    k.. i have lots of math, but i'm tired.

    I'll say this... the licensing costs for on disc content and DLC content are vastly different.

    This is what we know of DLC content. iTunes set the mold. $0.70.. Microsoft takes 30%. So, at $1 that leaves HMX/MTV with nothing. Not even a penny.

    How many hours and how much do you think those hours are worth to develop, QA and distribute those 16 different tracks (4 instruments, 4 difficulties)?

    I'm tired, so I won't go into detail. But, by pure economics, the fact they're offering us more DLC choices is making it harder on the economically to make a profit overall. (IE, if only 3 songs were available for DLC, they'd have a much higher ROI (return on investment).. 15 songs.. way lower... possibly in the red).
  • Rock_StarmanRock_Starman Headliner
    edited October 2007
    Not all 74 of those should count. Those that work for Harmonix probably gave their songs for free.
  • edited October 2007
    and once again, I'll add that if a million people buy the game, that's a million people purchasing 60 or so songs in BULK quantities. Those licenced songs are gauranteed sold, because they ship on disc.

    With DLC you're talking an individual song, and only a potential fraction of however many people who originally bought the game as customers.

    And that's why disc cost divided by tracklist # doesn't work the same. Not to mention possible differences in licencing (ie. do the record labels take a percentage cut from the game disc? Seems less likely)
  • BakksterBakkster Road Warrior
    edited October 2007
    Anyone heard what the licenses cost on the Amazon MP3 store (which is pretty damn cool, btw)? Their price point on most songs is only $0.89 without DRM, so either Amazon or the record labels are taking less money...
  • toefertoefer Rising Star
    edited October 2007
    Brock_Landers;77254 said:
    and once again, I'll add that if a million people buy the game, that's a million people purchasing 60 or so songs in BULK quantities. Those licenced songs are gauranteed sold, because they ship on disc.

    With DLC you're talking an individual song, and only a potential fraction of however many people who originally bought the game as customers.

    And that's why disc cost divided by tracklist # doesn't work the same. Not to mention possible differences in licencing (ie. do the record labels take a percentage cut from the game disc? Seems less likely)
    It doesn't work the same, but it is still relevant. If HMX was losing money on selling the songs so cheaply on the disc, it doesn't matter that they sell a trillion copies of the game...they're still losing money. Somehow they need to figure out how to pay off the fixed cost of each song. If you go with Bakkster's numbers, you have 70 cents for the licensing, and 30 for MS's cut. So you're working with $1. How much does it really cost to program a song for 4 instruments, on 4 difficulties, and then add in any of the synching? This is the big unknown.

    If it takes a team of 3 people an entire 40 hour work week for one song, that's 120 hours of work. I also have no idea what they make, but lets go with $25 an hour (I'm almost certain that's too high, but let's just go with it for now). So that's another $3000 to cover. Every time a song sells for more than $1, the first $1 goes toward the licensing and MS cut. So anything over the $1 price cuts into the cost that HMX incurred to make the song. With that assumption you get the following:

    $1.10 means 30,000 people have to buy it for HMX to break even
    $1.20 means 15,000 people have to buy it for HMX to break even
    $1.30 means 10,000 people have to buy it for HMX to break even
    $1.40 means 7,500 people have to buy it for HMX to break even
    $1.50 means 6,000 people have to buy it for HMX to break even

    Considering I don't think it takes 120 hours of work to add 1 song into the game (though I could be naive) and I also don't think every programmer at HMX is pulling in 50k a year in salary, these numbers are very conservative, so theoretically they could be even lower.

    The problem is, I don't want to pay higher DLC costs just to subsidize the cost of all these random obscure bands people want to see as DLC, which wouldn't receive enough downloads to break even on their own, at the above prices.

    If you stick to popular, or mildly popular DLC, I don't think there's any reason why it has to be expensive, because a ton of people will certainly buy it, and after a certain number of downloads HMX breaks even, Every download after that break-even point, minus the $1 (because of the licensing and MS cut taken out), is pure profit.

    I think we all realize that it will cost more than an iTunes song costs, but what we fail to realize is that even raising it up a couple of cents results in making a lot more money (provided a good number of people actually pay for it). Take 20 cents, multiply it by 10,000 downloads, and there you go.

    And seriously, 10,000 downloads is incredibly small, considering GH II has sold over 3 million copies. If RB can even sell 1/5th of that (600,000 units), 10,000 downloads would only be 1.5% of the people who own the game.
  • Electric_ZenElectric_Zen Road Warrior
    edited October 2007
    Guys, the math is very simple. This is why DLC will cost more than disc songs.

    Harmonix pays a flat licensing fee for the disc songs. Let's say the average licensing fee is $100K, and they end up moving one million units of the Rock Band disc. The cost to Harmonix is 10 cents per user to license the song.

    I actually think the cost is less than 10 cents. I suspect licensing fees are under $100K, and I expect to Rock Band to move over 1 million units over its lifecycle.

    For DLC, Harmonix pays per-song licensing fee, now known to be 70 cents per user. So licensing is at least seven times as expensive for DLC as it is for the main disc songs.

    We don't have to like it, and we sure as hell don't have to buy anything that we think is too expensive. But that's how it is. Don't hate the playa, hate the game.
  • toefertoefer Rising Star
    edited October 2007
    Electric_Zen;77355 said:
    Guys, the math is very simple. This is why DLC will cost more than disc songs.

    Harmonix pays a flat licensing fee for the disc songs. Let's say the average licensing fee is $100K, and they end up moving one million units of the Rock Band disc. The cost to Harmonix is 10 cents per user to license the song.

    I actually think the cost is less than 10 cents. I suspect licensing fees are under $100K, and I expect to Rock Band to move over 1 million units over its lifecycle.

    For DLC, Harmonix pays per-song licensing fee, now known to be 70 cents per user. So licensing is at least seven times as expensive for DLC as it is for the main disc songs.

    We don't have to like it, and we sure as hell don't have to buy anything that we think is too expensive. But that's how it is. Don't hate the playa, hate the game.
    You can't compare the 10 and 70 cents numbers because there is a lot more that goes into making the game (cost wise) than making DLC. Just because they saved 60 cents on the licensing before doesn't mean they pocketed that money. Nor does it mean that DLC has to be at least 60 cents more.
  • Electric_ZenElectric_Zen Road Warrior
    edited October 2007
    toefer;77365 said:
    You can't compare the 10 and 70 cents numbers because there is a lot more that goes into making the game (cost wise) than making DLC.
    If you're going to factor in the extra costs of producing the game, then you have to factor in the extra large profit margin on the disc.

    At 10 cents a song, total licensing fees are $4.50 a disc, which is 7.5% of the disc price. If the 70 cent licensing cost of DLC were only 7.5% of the price, then DLC would cost over $9 a song.

    So the extra cost has been factored into making the disc game, and you do have to take the per-unit licensing cost into account when pricing the song.
  • BakksterBakkster Road Warrior
    edited October 2007
    toefer;77332 said:
    It doesn't work the same, but it is still relevant. If HMX was losing money on selling the songs so cheaply on the disc, it doesn't matter that they sell a trillion copies of the game...they're still losing money. Somehow they need to figure out how to pay off the fixed cost of each song. If you go with Bakkster's numbers, you have 70 cents for the licensing, and 30 for MS's cut. So you're working with $1. How much does it really cost to program a song for 4 instruments, on 4 difficulties, and then add in any of the synching? This is the big unknown.
    Thirty percent. That means they pay more to MS as the price goes over $1, your math is wrong.
    toefer;77332 said:
    If it takes a team of 3 people an entire 40 hour work week for one song, that's 120 hours of work. I also have no idea what they make, but lets go with $25 an hour (I'm almost certain that's too high, but let's just go with it for now). So that's another $3000 to cover. Every time a song sells for more than $1, the first $1 goes toward the licensing and MS cut. So anything over the $1 price cuts into the cost that HMX incurred to make the song. With that assumption you get the following:
    You've got song selection, note chart creation, audio engineering, motion sync (lip and finger sync), and QA testing, at the minimum. Let's go with your estimate as conservative, and $10k as liberal, although could possibly be even more than that. That means:

    $3k estimate:
    $1.10 means 42,858 people have to buy it for HMX to break even
    $1.20 means 21,429 people have to buy it for HMX to break even
    $1.50 means 8,571 people have to buy it for HMX to break even

    $10k estimate:
    $1.10 means 142,858 people have to buy it for HMX to break even
    $1.20 means 71,429 people have to buy it for HMX to break even
    $1.50 means 28,572 people have to buy it for HMX to break even
    $2 means 14,286 people have to buy it for HMX to break even
  • toefertoefer Rising Star
    edited October 2007
    Bakkster;77454 said:
    Thirty percent. That means they pay more to MS as the price goes over $1, your math is wrong.



    You've got song selection, note chart creation, audio engineering, motion sync (lip and finger sync), and QA testing, at the minimum. Let's go with your estimate as conservative, and $10k as liberal, although could possibly be even more than that. That means:

    $3k estimate:
    $1.10 means 42,858 people have to buy it for HMX to break even
    $1.20 means 21,429 people have to buy it for HMX to break even
    $1.50 means 8,571 people have to buy it for HMX to break even

    $10k estimate:
    $1.10 means 142,858 people have to buy it for HMX to break even
    $1.20 means 71,429 people have to buy it for HMX to break even
    $1.50 means 28,572 people have to buy it for HMX to break even
    $2 means 14,286 people have to buy it for HMX to break even
    The first part I agree on. I forgot that it was a percentage. I guess that's a problem to work out with MS.

    As for the second part, I don't know where you get $10,000 of added costs per song. It seems to be just a number pulled out of thin air.

    Also, even using that number, if they were to charge $1.50, under your high estimate, it still only requires 28,500 people, which is not very much.

    Using my old number of saying this game doesn't do as well as GH II, and sells only 600k copies (compared to GH II's 3 million+), then still only, what, <5% of people need to buy a song for it to break even?

    Even with such a high cost estimate, a $1.50 DLC price doesn't seem unreasonable.
  • edited October 2007
    This thread is quickly devolving into another DLC pricing discussion, already detailed at length in the forum sticky. Please post your thoughts there instead of here.

    http://community.rockband.com/vbforum/showthread.php?t=19
  • fried_blowneyfried_blowney Opening Act
    edited October 2007
    Makes me glad I have a PS3. No 30% BS to have to worry about :)
  • BakksterBakkster Road Warrior
    edited October 2007
    toefer;77502 said:
    As for the second part, I don't know where you get $10,000 of added costs per song. It seems to be just a number pulled out of thin air.
    That's exactly right, but I wanted to put some kind of worst-case estimate, and that sounds reasonable to me. Engineers make a lot of money (average engineering salary in the US is $100k).
    toefer;77502 said:
    Also, even using that number, if they were to charge $1.50, under your high estimate, it still only requires 28,500 people, which is not very much.

    Using my old number of saying this game doesn't do as well as GH II, and sells only 600k copies (compared to GH II's 3 million+), then still only, what, <5% of people need to buy a song for it to break even?

    Even with such a high cost estimate, a $1.50 DLC price doesn't seem unreasonable.</div>
    As long as all of our assumptions are correct, I would guess that the price point would be $2 for single songs with a discount in bulk.

    I agree with Apples. I'll copy my thoughts to the DLC pricing thread and we can continue discussion there.
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