10 Million Units

If anything shows more clearly that the videogame industry is heading for big troubles, it's this. Bioware says their target is selling 10 million units of a new title, and if they don't hit that they aren't making money. Which means a massive investment and time and money, and very few titles are making those kind of numbers. Your margin for error becomes very small indeed. It's as if you were making movies, and said the only way you could make money would be to hit $300 million in sales. I don't think you'll find any studios that would say that; maybe on some films, but not on all of their films. Savvy studios find ways to make money on little movies that only cost them a tenth as much. Some make money on TV shows that cost 1/100th as much... variety keeps the risk lower.

Variety is an important thing to remember when crafting your marketing and product development strategies. Your target demographic probably enjoys more than one type of entertainment. They may like a AAA console FPS, but they may also enjoy a Flash-based game on Kongregate. Or a fantasy novel. Or a card game or a board game. They may not be able to drop $60 on a new console title every month, so they look for a free-to-play game online. There are more options these days, so putting your business's success into one risky type of investment seems less than optimal, to put it nicely. Leverage your IP into multiple titles at different price points and entertainment types (either developing it yourself or through licensing); you'll make products more cheaply, increase your chances for a hit, and promote the brand better.