Computer Wargames Computer WargamesSpending hundreds of thousands of dollars developing each new game did lead to a number of computer wargame publishers going bankrupt. The largest manual wargames never cost more than a tenth of that. Computer games are more expensive because the people working on them get paid a lot more. These higher pay scales exist because your average game programmer could be making even more money working on non-game software. Games are fun, so many programmers take the pay cut. But even then, most experienced game programmers are making $50,000 a year and up. The people designing manual wargames make half that, or less.
Computer game publishing was a competitive business, even if you got away with paying the authors (programmers) minuscule advances on royalties and paying your programmers less than any other (non-game) employer of programmers. If the games didn't sell in sufficient quantity, you lost money. This was compounded by two other killer items: returns and other types of computer games competing for the wargamers attention (and dollars.)
Returns and Other Risks
Returns are the policy whereby stores buy the games from the publisher with the understanding that they can ship back what they can't sell. The bright side of this is that the store owners don't have to take on a large financial risk to carry a game, the down side is that publishers in these circumstances do. If too many unsold games are returned, the publisher takes a big fiscal hit. The returns are often a total loss, or can be resold for a fraction of their manufacturing cost. Oddly enough, returns were much less common among manual wargame publishers. But everyone smelled more money in computer game publishing and "return privileges" were universally adopted as a competitive tool. Now nearly all computer wargame publishers are stuck with a practice which, for many of them, has proved fatal.
Publishing computer wargames, or any other computer game isn't all that complicated. Let us examine the numbers. For a typical low budget wargame in the mid 1980s, the publisher could get away with giving the designer/programmer $10,000 (or less) and then take delivery of the game, print a minimal manual and a flashy box cover, duplicate the disks and ship the game. In those days the game would fit on one disk, so the total cost of goods (disk, manual and packaging) was two or three dollars. The game would list for $30, discounts to distributors would leave the publisher with $12-14 per game sold. Depending on how lucky the publisher felt (and how large the pre-publication orders were), 5,000-10,000 units would be manufactured. Thus, the $10,000 advance on royalties, $15,000 manufacturing cost and maybe a few thousand dollars for ads, and the game was (as they say in the trade), "in the (distribution) channel." If all 5,000 were sold and paid for, the publisher would realize about $60,000. Royalty rates on such a deal would run about fifteen percent. That would be $9,000 at this point, so the designer would still not get anything as the advance was $10,000. So the gross profit so far is $30,000 ($60,000 less $10,000 advance, $15,000 for packaging and shipping 5,000 units and advertising). The other $30,000 goes for overhead (keeping the publisher alive and the office open). A typical small publisher in those days would need $250,000 a year to keep a few people on staff, pay rent and expenses and so on. If they published six games a year, each game would have to cover over $40,000 in overhead. So selling 5,000 copies won't make it. Even if they sell 10,000 copies ($120,000 in sales less $18,000 in royalties, $30,000 in packaging, $7,000 in advertising), the gross profit is only $65,000. Less the $45,000 overhead and there's only $20,000. That has to cover games that bomb completely, games that require more work in house or take a lot longer to finish (very common) and distributors that go bankrupt and leave you unpaid (happens quite a lot in this business).
What made it so difficult for wargames to get decent sales was the competition from, well, more entertaining software. The first computer games were essentially eye-hand coordination games. These are better known as arcade games (they appeared in arcades in 1975, before PCs were common). The wargame simulators are direct descendants of the arcade games. While tactical and strategic skill are required in combat simulators, nimbleness with the joystick is paramount. And then there are all those science fiction and fantasy games (including the sexually exciting ones, like Leisure Suit Larry, et al). Most publishers realized that they could make more money for their efforts by working on simulators or fantasy titles. This left wargame publishing to the smaller outfits who had even less clout and influence in getting their games into a lot of stores.
Fortunately, there were sufficient numbers of wargamers available to buy enough computer wargames to encourage the publishers to keep publishing. Going into the late 1980s and early 1990s, however, the publishing landscape began to change considerably. Now publishers didn't want a hit best seller, they needed one to stay alive. But this story is still developing.
What
Kind of Computer, What Kind of Wargame?
Genealogy of Computer Wargame Technology
