Financial Planning Budgets
Financial planning is incredibly important, and should be done before development even begins. If finances aren't being managed, a company may run out of money, and be unable to fund their projects, causing cancellation or the release of an unfinished, or lesser quality product.
Companies can use their budgets to find out how much money they would need to make from the product to begin making a profit from it, or if the product is even worth developing at all.
If a company decides to hope for increased income, or less money being spent, they should still make a back up plan/budget, in case their plan doesn't work out. Without a back up plan, there could be serious complications and issues, like a project might become under-funded.
Some companies can overspend on projects, and expect too much profit from the finished product. Budgets have been increasing, with the expectation that profits would too. This is not the case, and companies lose money in the long run doing this.
Companies can use their budgets to find out how much money they would need to make from the product to begin making a profit from it, or if the product is even worth developing at all.
If a company decides to hope for increased income, or less money being spent, they should still make a back up plan/budget, in case their plan doesn't work out. Without a back up plan, there could be serious complications and issues, like a project might become under-funded.
Some companies can overspend on projects, and expect too much profit from the finished product. Budgets have been increasing, with the expectation that profits would too. This is not the case, and companies lose money in the long run doing this.
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| (Source) “We wanted to keep working on Spacebase for years. But Spacebase spends more money than it brings in, and that’s just not something we can afford to do any more.” (Source) |
An example of bad financial management is Spacebase DF-9, developed by Double Fine. The game was released on Steam Early Access on October 15th 2013, and the full release was on October 27th 2014.
Development for the game had to end early because the developers couldn't afford to continue, as they hoped for many more game sales, instead of planning ahead, in case they didn't have enough money.
Developers and publishers aren't the only ones that can have financial issues. Video game retailers can sometimes have trouble, either by selling less than they intended, or being unable to get the products to sell.
GAME is an example of this. On February 29th 2012, GAME announced they would no longer stock new EA games, due to them limiting GAME's credit terms. This caused issues with pre-orders for one of their games, Mass Effect 3, which were out a week later.
On March 5th of the same year, it was announced that GAME wouldn't be stocking Capcom games. People who pre-ordered Street Fighter X Tekken had to be refunded because of this, and in the same month, they began heavily discounting games so that they could bring in more money.
Then Microsoft and Activision stopped supplying their products to GAME, and GAME had their company shares removed from the London Stock Exchange.
On March 5th of the same year, it was announced that GAME wouldn't be stocking Capcom games. People who pre-ordered Street Fighter X Tekken had to be refunded because of this, and in the same month, they began heavily discounting games so that they could bring in more money.
Then Microsoft and Activision stopped supplying their products to GAME, and GAME had their company shares removed from the London Stock Exchange.
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