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Call of Duty Black Ops: Return on Investment is 400% (Updated)

February 8, 2011

Developing games in an inherently risky venture (check out our new development project here for example…).  Lots of games fail and make no return on their development costs.  In addition the marketing cost can often be equal if not more than the development cost.  But when the magic forumla is got right – boy-o-boy is it got right…

Call of Duty: Black Ops Vital Stats:

Cost to develop Call of Duty: Black Ops Estimated $18-28M USD
Release Day Sales 7M Units
Release Day Revenue $350,000,000
Approximate break even time after release 1.5 Hours*
Total Unit Sales 20,000,000 +/-
Total Revenue $1,000,000,000
Return On Investment* 4350%
Approximate Hours Logged By Gamers to Date 600,000,000

*Based on a development cost of $23,000,000

To put these numbers into prospective, if James Cameron enjoyed the same profit margin on Avatar as Activision’s Call of Duty: Black Ops, then Avatar’s $760M Gross would be closer to $33B, or the gross national product of a small Eastern Block Country.

(And £40 of that $1,000,000,000 comes from me!!)

Updated! Since writing this a couple of people have contacted me to point out the headline figure that originally caught my eye is a little misleading. This figure is only the development cost. Nicholas Lovell of Games Brief helpfully spells it out:

You omit (off the top of my head), sales tax (in jurisdictions where it is included in the price), retail margin, the $7 per unit that Sony and Microsoft charge for manufacturing (that adds up to $140m on your numbers alone), the warehousing, distribution and marketing costs.

The approximate launch cost for Modern Warfare 2 was $200 – $250 million, including development, marketing, distribution, console royalty and manufacturer. That’s more than 10x your figure for Black Ops, and that was just for day one launch. If you add in the subsequent manufacturing and markeing costs, you can probably add another $100 million or more to that.

So the correct figure to estimate is the Return on Investment (ROI) is not $23 million but more like $250 million. If so that gives us a ROI of 400%, which is not 4350%, but impressive nonetheless.

(Also thanks to Hut_v)

To see what I’m working on now, click here…

8 Comments leave one →
  1. February 8, 2011 3:28 pm

    I’m afraid that your numbers are way out.
    Way out.

    You omit (off the top of my head), sales tax (in jurisdictions where it is included in the price), retail margin, the $7 per unit that Sony and Microsoft charge for manufacturing (that adds up to $140m on your numbers alone), the warehousing, distribution and marketing costs.

    The approximate launch cost for Modern Warfare 2 was $200 – $250 million, including development, marketing, distribution, console royalty and manufacturer. That’s more than 10x your figure for Black Ops, and that was just for day one launch. If you add in the subsequent manufacturing and markeing costs, you can probably add another $100 million or more to that.

    Modern Warfare is undoubtedly profitable, but no where in the league that you suggest.

    • June 30, 2011 4:29 pm

      Thanks for comments, I’ve amended the post to incorporate them!

  2. nate permalink
    June 30, 2011 7:39 am

    Ya your math is off it is actuall 4000% not 400. 400 would be 92 million in revenue. Its first night alone was over 1500%

    • June 30, 2011 11:25 am

      Depends if you are looking at the development cost alone or if looking at the others costs such as marketing which are in total much more that the actual development cost. But thanks for your comment 🙂

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