One thing you're neglecting is the costs of releasing a game every year versus every other year. Maybe instead of (using arbitrary numbers) employing 100 people to create a game every year, you can get by with 80 on the every-other-year cycle. Plus, you won't spend as much money in marketing costs.

So, long story short, because it is (probably) more expensive to work on an every-other year model, you won't need to make up the $36 million shortfall in order to make the same profit.

Those are definite factors that make this whole study a lot more complex but I feel that you could easily make a bigger profit because expenditures could be a bit less with only having to roll out one disc every two years. So yes, you are very right man...it's very possible I could have been way too conservative. Either way, to say developers can't make money with an every other year system is probably not true. It certainly appears you could get similar results.

One other thing I thought about was what impact a better overall game would have on sales. While your game with minimal improvements is selling 1 million titles a year, it is possible the hype and excitement of a much longer release cycle plus possibly a better game overall could lead to close to the same amount of sales anyways. Really, this just comes down to what is the appetite of risk for sports gaming developers as some games would work wonderfully with this system while others might not.

Also, if people had to wait an extra year for your next release, you probably will sell more of that next release. So that 1 million you may have sold on an every year cycle, will increase to 1.5 million the first year of the next release.

I agree with wcrickards. I would add that companies might save some money by not having to make a physical product every year, but marketing costs may stay the same or even increase so that your customers don't forget about the game in years when a disc isn't produced.

I do think companies would generate more enthusiasm for their games if they went to a 2-year production cycle. That's assuming major improvements are made in those two years, however. I think NCAA games would be a perfect fit for a 2-year cycle. Accurate rosters are vital for college games, and they're also difficult to accurately produce from scratch. How much money would Take Two be making if they simply continued to release accurate rosters for CH08 for, say, $15?

A game like madden would never resort to a 2 year cycle. It sells multi millions every year no matter what. and if it ever decided not to release every year, it would leave room for a competitor to release a possibly superior product.
I think in a perfect world they could have two teams working on the product both on 2 year cycles alternating releases. For example team 1 works on NBA2k11 but they started 2 years ago. While team 2 works on 2k12 and was responsible for for 2k10 etc.

I love this perspective. In the end, we get a better product overall in my opinion. It gets kind of basic in the sense that people buy good, quality stuff. If this allows them to put that out, it'd be better. Simple as that in my eyes.

This is way too conservative. I'm not sure were @wcrickards was going but he almost hit the nail on the head. Producing a game every-other-year would possibly reduced marketing expenses but the "work cycle" from initial stage to final production would increase from, maybe, 8/9 months to 21/22 months. Also, to satisfy the nearly guaranteed increase in sales they would still need to supply 2 million hardcopy discs over a 2-year lifespan to customers. The only benefit I see is customer satisfaction which means nothing to them.

Also, the would obviously need more employees to do everything else you stated (roster update, improve online, etc.) which is even more money spent.

Nice model dude, but you certainly forget the fact that a offered dlc is cheaper in terms of production costs than a retail title. Lets have a closer look:
Lets just say for simplicity, that 8 out of the 10$ are revenue of the company after usage of space on servers is deducted etc.. On the other hand, if you make it a retail title, you have to deduct costs for manufacturing (DVD's, Blu-Rays, Boxes, Box Art and other materials) which you wouldn't have in a dlc release.This would imho turn the whole maths in favour of the dlc.

I would be surprised if 20% of people would pay to play online. I know that even RTS games which heavily focus on online play only saw about 10% of people play online, and of that 10% I doubt even 20% (or 2% overall) would be willing to actually 'pay to play'. EA has the numbers, one thing you can be certain of they are going to do whatever is in 'their' best interest and not their customers. They have shown that year after year after year and 2010 was the worst (I plan on blogging and explaining why in the coming week).

Valdarez, 20% wouldn't be paying to play online, they'd be buying a mid cycle roster/stadium/feature update in this experiment, which is a reasonable guess given similar DLC performance which I could find. I pulled a 7% number for people willing to pay to play online, which may or may not be feasible. However, the point of the model was to show that you only need 25-30% of your userbase to buy DLC mid cycle to keep the model as profitable as a yearly cycle. That also assumes (which we know the true meaning of that word) a larger established userbase, which would be the case for some games but not all.

So most likely, some games this might work out well...others not so much.

First of all, I think such a drastic change in how sports games are released suits a smaller publisher rather than a giant such as EA, due to the risks involved. The bigger you get, the less risky you get.
Secondly, publishers like EA do not care about the quality of the product or the happiness of the fans. The decision makers are at the mercy of one group of people only: the shareholders. Due to the way the market works, I don't think you will ever see a publisher taking the risk of having a a smaller revenue every other year. It is way better for a publically traded company to earn 20 millions in year 1 and in year 2 than 35 millions in year 1 and 10 millions in year 2.
Regarding Vast's idea of two development team working on a game, that would never work. It's obvious that what would happen is one of the two cycles being better than the others, so you have people buying the game only a year out of two anyway.

pollbrun,

I would challenge that gaming companies care deeply about what fans think, because sooner or later, you end up with a game with few fans and small sales. They definitely care about quality, but also balancing that with profitability. You can't make a product which isn't considered good and then expect it to sell well forever...NBA Live and Madden both are learning this hard lesson. Madden's sales are much lower today than they were in 2004, just for instance.

The only reason Madden sales have slipped is because last generation's (PS2, xbx, cube) install base was a lot higher. The current format is fine. Their are a ton of gamer's who simply have not connected their 360's and PS3's to the internet. I can guarantee if video game developers were to switch aggressively to this format, it would deal a huge setback to console gaming.

Seasonal sports should be released yearly, while year-around sports released at least every 2 years, with upload-able content in between releases.