This guide will not make you hundreds of millions of dollars per console. It will make you tens of billions of dollars per console. This is my (work in progress) ultimate guide on how to win the console wars so hard that Sony and Microsoft rage quit from the entire gaming industry. I’m going to update this with more era/generation-specific details later but this is how the overall mechanics seem to work.
Creating a Console
Technology, timing, requirements, and when to release your console for maximum profits.
Getting started in the console industry can be tricky. For this guide, I’m going to assume that you are starting off in 1976 but after reading it, you’ll be able to jump into the console market at any point in the game.
First off, making a console is going to require 2 things that are very important:
- A really big research department (much, much better than what you would normally use)
- A really big console development room filled with technicians.
They are going to spend 95% of the game not doing anything and cycling through training rooms but that’s okay because they are also going to make us a trillion dollars.
Console hardware is broken up by technology level, starting at level 1. Within each level, you have 2 tiers, a low tier, and a high tier. Low tier components are the first to be available within that technology level but high tear components perform better. For example, a RAM card with 512 bytes (low tier) is in the same technology level as a RAM card with 1024 bytes (high tier), but obviously one is better than the other.
High tier components are available several years after the low tier components are. BUT, when all of the high tier components for a technology level are available, the low tier components of the next technology level will start being released soon after that. Basically, you need to release the main console as soon as you have all of the components from the next technology level. Don’t wait around for the high-tier stuff.
Each technology level represents a new generation of consoles.
There are 4 exceptions to tiers inside the technology level/console generation:
- Cooling systems (fans)
- Handheld screens
These things do not have a low tier and high tier. Casing level 2 is going to apply to ALL consoles in the second generation, there is no upgraded version to wait for.
This is where the research and console development departments become critical. Let’s say that the first level 2 component has just become available. The rest will start to trickle in over the next few years, then at the very end, there will be group components which are the last components of the low tier for that technology level. Even if you have been staying on top of researching available hardware, researching this last group of ~3 components is going to be the most critical part and it’s why we need a really good research department. We NEED to be the first to the market with a next-gen console, and as soon as the last low-tier components of a technology level become available, you are racing against your competitors to put a fancy new console on the market.
How fast you can put the next-gen console on the market is going to depend on how fast you can research this last wave of components and how fast your technicians can develop it. When I say “a good research and console department”, I mean that 1 of the 3 medium-sized buildings on the map should be just researched, console development, and a small bathroom+lounge. The research and console rooms should each take up half of the building (minus the hallway and lounge/bathroom). In the 2000s, you need 1 medium building for consoles and 1 medium building for research if you want to be competitive against Sony and Microsoft.
We need to release the next-gen console before our competitors (or right after they do) so that we can get maximum initial sales (I’ll explain why that matters so much later, but maximum initial sales are what will make your console wildly successful in the long run).
These play by slightly different rules and I think there is a bit of an exploit with them. You can create a handheld right away (basically) but no one else is going to make a handheld for a really long time. I made a handheld in 1980(ish) and it sat at 100% market share throughout the entire second generation of consoles because it had no competition. Eventually, it outsold my main console because it spent 10 years at 100% market share (I literally invented handheld gaming I guess, take that Gameboy.)
Screens are a little different because you will unlock a colored screen and then no new screen will be available until the early 2000s when touch screens become available. Up until touch screens, your handhelds will use screens that are below the technology level of all the other components. Cartridges have a similar situation. Basically, don’t wait for the next generation of screens or handheld cartridges because they aren’t coming until the 2000s.
When your technicians aren’t working, they need to be doing training. All of them. Your researchers should also be constantly cycling through classrooms. As you go through the console generations, your competitors will release their next-gen console faster and faster. Simply having a large research department/console room filled with scientists/technicians isn’t going to work. You need a large department filled with EXCELLENT (level 90) workers.
It’s a hassle to keep them trained and it uses up valuable space, but as I said, they are going to make you billions upon billions upon billions of dollars.
Let’s say that you followed the previous section and you were able to release the next-generation console before your competitors. Simply releasing the first next-gen console will make you money, but now we’re going to talk about how to make tens of billions of dollars with a single console.
Now that you are going to be the first to the market with the next-gen console, how much should you sell it for? After saving right before console releases and then trying something, reloading, trying something else, I think I have it figured out. (Thank you devs for fixing the autosave overwriting issue!)
Releasing a console with the exact same situation but adjusting the price each time revealed that the most profitable console price is going to be about $75 Above Production Costs (APC). In 3 months, the consoles priced at $100 APC generated $64 million in sales. The consoles at $75 APC generated $71 million in sales, and the consoles priced at $50 APC had $54 million in sales. This was consistent across dozens of reloads, down to the million/hundred thousand.
Setting the console to auto-price generated $10 million in sales. So using the auto-price caused me to miss out on $61 million.
Releasing a game with the console/in the first month had no impact on console profits/sales. It’s best to release a game on the console one month AFTER you release the console.
So for the price, $75 APC is the sweet spot. We’ll talk about market share later, don’t worry. But also, market share is about your console making money, not your games (see “Games For Your Console”).
Now the fun part. What makes a console sell better AFTER you release it? After extensive testing, this is what I discovered:
The initial 4-8 weeks of sales are going to be your highest weekly sales volume by quite a bit. Remember how I said that this is really important and we want it to be as high as possible? After the initial sales, your weekly sales/revenue will steadily decline over time BUT, we can prolong the decline as long as possible for maximum revenue. This is also why it’s important to get your next-gen console on the market before anyone else, for maximum initial sales and market share. After the first few weeks/months, you will only sell fewer consoles (a lot less).
I usually developed a game for the console as the console was being built so that I could release a very popular game with overhyping as soon as I released the console. Turns out you don’t need to. Here’s why:
- Releasing a game for your console does not cause a spike in sales, it just prevents console sales from declining at the normal rate. This isn’t an issue for the first month or so.
- Spikes in sales are random and out of your control, but releasing a game at the right time will keep your sales from declining again for a few weeks. If your weekly sales volume was 100,000 units and then it spikes up to 130,000 units, releasing a game at that time (within 1-3 weeks) will keep your weekly sales figure around 130,000 for a bit longer (unless you get a random decline in sales). Releasing a game seems to prevent console sale decline for about 4-12 weeks.
So basically, maximum profit means prolonging the death of your console sales for as long as possible, since the sales will naturally go down except for the random spikes upwards, which aren’t enough to keep it selling forever.
A factor for selling consoles (but not a huge factor) is keeping your console hype above 90 at all times. The best way to do this is to have 2 marketing departments, the normal marketing room for your games, and a smaller marketing room just for running TV ads on your consoles (stationary and handheld). The $500 you spend on TV ads is more than made up by the extra revenue that full hype on a console will get you. We’ll talk about how hype for games affects console sales later. (It doesn’t).
To put the marketing costs vs profits into perspective, a handheld and a stationary console made in 1980 generated $1,600,000,000 ($1.6bil) in profit until 1987, when I replaced them with the 3rd generation consoles. From there, the consoles just get more and more profitable by quite a bit. So don’t be afraid to go all out with spending on your consoles.
Games For Your Console
Once you get into the real console war of Sony, Nintendo, Microsoft, things get a little detached from reality. In the real world:
Sony sells its consoles at a slight loss and relies on a variety of exclusive titles to draw people into the Playstation with the aim of getting you to buy PS+ (Playstation online), they also make a lot of money from third-party licensing fees.
Microsoft sells their consoles at a substantial loss and makes the revenue up in-game sales from the large portfolio of game studios that they outright own. They also sell these games for the PC because, well, Microsoft also sells Windows 10 and most PC gamers aren’t going to buy a console anyways. A console is a one-time expense of $300 for them but each console owner will buy dozens of games at $60 each, not including DLC, in-app purchases, collector’s editions, etc, and a lot of those games will be from a studio that Microsoft outright owns.
Nintendo does sell their consoles for a profit because consoles are basically all that they have to profit from beside the games for those consoles. They don’t have PC sales like Microsoft or TV sales like Sony does. So Nintendo specializes in innovative consoles like the Wii and the Switch, which have a much more child/casual/family-friendly appeal instead of trying to get core gamers like Microsoft and Sony.
That’s not how it works here, because you do not own an entire portfolio of major game studios, an expansive online subscription service, and you aren’t Nintendo. You have to take a more direct approach.
As I said before, games DO NOT spike your console sales, they just keep them from declining. Here’s where things get interesting. It’s not just YOUR games that keep sales from declining, other companies publishing on your console will ALSO keep your console sales from declining. In one year+ I was able to have very stable console sales without making or even starting a single game, my competitors did all the work for me. This is where market share comes into play, the more market share you have the more your competitors will release games on your platform and so the more money YOU will make on console sales in the long run.
Here’s the quick version:
- Set the dev kit price for your console to $1,000 so that anyone can purchase it.
- If you got the next-gen console out before everyone else, then you don’t even need to worry about market share, it will build on its own. If you are late to the next-gen console race, then you need to sell your console cheaper to make up the lost market share so that other studios will make games for your console, they only make games for consoles with decent market share. You’ll lose money in the short term but their published games will keep your console sales going for longer.
- Create an engine for every type of genre available that has EVERYTHING (even out-of-date engine technology) available. Sell them for $1,000 and at a 1% or 0% profit sharing rate. Make sure that the “special console” for the engines is YOUR console. Giving your competition the best engine technology possible for almost nothing might seem like a bad idea, but your console is going to make way more money than your games ever could.
- Your competitors will start buying the dev kits and engines very quickly and within a few weeks, they will start publishing games on your console. This will keep your console sales from declining so fast while you are working on your own games! Now you can focus on the quality of your games without having to worry about quantity to keep your console sales going. Work smarter not harder, or better yet, make someone else work for you!
- “Console exclusive games” will not do anything except losing you money. To be fair, I didn’t buy a Playstation because everyone said that Ratchet and Clank were so great (I went Xbox because that’s what I got for Christmas as a kid). Why would I buy a whole console for a game (or even 50 games) I’ve never even played? Microsoft has the solution here that also works in the game: release your game for your console AND the PC. But it runs better on your console of course. This way you aren’t boosting your competitors, you prevent your console sales from declining, and you aren’t losing money on game sales. PC is its own market, so always sell on PC as your secondary platform. You aren’t competing with the PC, you are competing with the other consoles.
- Selling your console for below production cost will not boost your game revenue, regardless of market share (which is also why console exclusive games don’t work out). “It’s better to own 10% of an elephant than 100% of a rat”. The people who own your console + those people who want that game are just too small of an audience for very profitable games. You need those PC sales to keep your games profitable.
- The quality of the game doesn’t seem to matter much. A hit game will have about the same effect as a decent game, both will keep your console sales stable for a few weeks.
- Hype for your games has 0 effects on console sales. Game hype only affects the sales of the game itself, not the sales of your consoles. Over-hype doesn’t impact your console sales either.
And that’s how you become a bajillion dollar game company that wipes the floor with Microsoft, Sony, and Nintendo.