Intellivision Entertainment launching a NEW Intellivision console

[mr_me]

They have investors; Tommy T is a good salesman.

 

The way the numbers make sense selling $10 games vs $60 games the others guys are doing is by dramatically reducing development costs.

 

A small design team of six people with an average salary of $100k working on a six month project puts the development cost at about $300k. If they can sell 200k copies at $10 a copy that's $2M in revenue. Lots of room for profit as well as for larger projects.

[Pink]

Does anyone know where Intellivision entertainment is getting the money to fund this console? They are not doing kickstarter or crowdfunding. Who is paying for everything until the console launches in 2020 and they start taking in money?

The same way any other company or corporation funds their products that they make...

[Bill Loguidice]

They have investors; Tommy T is a good salesman.

 

The way the numbers make sense selling $10 games vs $60 games the others guys are doing is by dramatically reducing development costs.

 

A small design team of six people with an average salary of $100k working on a six month project puts the development cost at about $300k. If they can sell 200k copies at $10 a copy that's $2M in revenue. Lots of room for profit as well as for larger projects.

 

To be fair with the comparison, prices for new games vary dramatically. Sure, AAA big budget games cost $60, but other types of games are often $19.99 - $29.99 or less. There are also alternative options (sometimes several) to get games "free" with subscription on each of the big three. So really, there are plenty of options even for modest budgets.

 

In any case, $10 games sound great in theory, but cheap games quickly went south in the mobile space, replaced mostly with freemium stuff. It's now so crowded on mobile that it's very difficult to turn a profit. There may indeed be early profit found on the Amico, but there's also the Ouya issue. Without a sufficient user base, and without a user base eager to spend money on games, you're going to struggle to sell enough copies to make back even the most modest dev budgets. Sure, if you have at least a few million consoles in circulation, you may have a mega-hit or two on the console that moves a few hundred thousand units like in your example, but it's likely they'll struggle breaking tens of thousands of console units early on, let alone hundreds of thousand of console units or more. And without significant momentum early on, it's likely they'll not only not attract new devs, but have trouble keeping the ones who were committed early on (especially with the exclusivity clause, which may possibly be worked around by making special editions of existing games), i.e., "The Jaguar Problem."

 

Of course, I acknowledge that my statements above are bit wet blanket, and I'm sure the team behind the Amico have taken this all into consideration more or less and hopefully have some type of plan of attack that addresses most of these concerns. As it is now, we just don't know what that might be.

[mr_me]

They won't be selling any consoles unless they make games that people want to buy.

[Hannacek]

The same way any other company or corporation funds their products that they make...

Microsoft and Sony are huge corporations with many divisions beyond gaming. They have a sufficient bankroll to fund a new console's development. They can spend millions of dollars and several years to develop their next console, and sell each console at a loss, knowing that in year two or three they will become profitable on software sales.

 

AtariBox, RetroVGS/Chameleon, OUYA, CollectorVision Phoenix, and every other similar console has no giant corporation with a bankroll funding their console development. Every other similar project has had to rely on crowd funding, because they had no private investors, and were unable or unwilling to get a small business loan from a bank. It is a fair question to ask where Intellivision Entertainment is getting the money for console development, if they are not a big corporation, and are not seeking money from crowd finding? If they have private investors or loans from a bank, then they should explain that is the reason they are not crowd funding.

 

 

 

 

Edited November 2, 2018 by Hannacek

[+intvsteve]

At the end of the launch trailer, at least two or three investors are listed. Who knows how many others there are, or how much of their own personal funds the principals have at stake as well.

 

I don't think it's accurate to say that the Amico is similar to AtariBox/CollectorVision Phoenix/RetroVGS/Chameleon. Those consoles' primary objective gaming- and market-wise is focused on the past -- the original games on the respective platforms and those who appreciate them. The Amico is really focused on the new games, with many of them inspired by the originals. We tend to focus on the original games in these parts -- but that's not what Intellivision Entertainment claims to be selling. It's also not who they're going to be primarily targeting. It's going to be a daunting challenge to bring to market and succeed, but clearly they've convinced enough interested parties that they have a reasonable chance of achieving a good deal of success.

 

All indications are that Intellivision Entertainment will "survive until launch day" by carefully managing the investment backing they already have, seeking new investors if necessary, et. al. -- i.e. act like a start-up venture. It seems unlikely they'd have gone as far as making this big announcement -- or that the investors they already have on board would have approved it -- if there wasn't a great deal of trust and faith that they'll at least achieve the goal of producing a console.

 

Then again, venture capitalists are in the business of putting their money on the line not because they are timid! By definition, they take substantial risks with their assets, despite all the assurances, conviction, sincerity, market research and cogent business plans of the parties who approach them with their plans. If it all goes belly up and fails to materialize, those involved who put their investments at risk will come out that much poorer -- presumably they wouldn't have invested without accepting the risk of taking the loss. But -- if the best thing happens, and it's a fabulous success -- well then, guess who's throwing a huge celebration!

 

To me, it's still a little surreal trying to wrap my brain around the fact that this is all happening at this level and building upon the legacy of the Intellivision. We've grown accustomed to having great and talented people producing exciting work at the hobbyist / "mom and pop shop" level, centered around the system we've loved for nearly forty years. Intellivision Entertainment is aiming way, way past that and by all appearances has convinced -- and recruited -- people who have experience operating at the highest levels in the industry.

 

This is a blast! But we have to be honest and accept that our dear old Intellivision is the source of the inspiration for the Amico. That venture all those years ago produced a batch of visionary ideas -- and that spark provides the impetus for this venture. It's the beginning not the end goal.

 

OK, getting a little too flowery there, I admit it. My glass of Kool-Aid needs to be refreshed now....

[+Lathe26]

The question still tho is...what's this new market? The casuals that went to Wii moved over to either smartphones or PS/Xbox (or heck, even PC) after that. So who is left, theoretically?

 

The biggest market they are going after are the folks who are on mobiles (folks who moved there from the Wii are just a subset). Mobile games as a whole is the single biggest gamer segment. The Wii folks who moved to XBox/Playstation will likely stay there. Another market is parents who worry about violence in video games but know they won't be able to lock out their kids out (kids know tech better than them). Another market will be folks who haven't or rarely buy consoles (ex: Tommy T's mom only ever bought 2 consoles, the Intellivision and the Wii only for Wii Sports).

 

Here's a video from Tommy himself. It runs well over an hour so I've highlighted some interesting time-points.

https://youtu.be/OvEkBGUxWDE

 

0:12:00 - Tommy's dad can't turn the Playstation 4 on, talks about Wii failure to capitalize, "Simple, Family, Affordable, Fun"

0:15:30 - The biggest current gaming market is 35+ women (Tommy cites MPD and the ESA). Mobile gaming is 60% of the market.

0:23:30 - "We didn't design the system for... 25, 30 year old gamers..."

0:24:20 - Wii Sports was #4 best selling game of all time, Tetris is #1

0:25:30 - Aiming for groups of people together, not isolating (ex: mobile)

1:12:40 - Why not Nintendo? Hard for real-world parents to set parental controls

[+Lathe26]

I don't think it's accurate to say that the Amico is similar to AtariBox/CollectorVision Phoenix/RetroVGS/Chameleon. Those consoles' primary objective gaming- and market-wise is focused on the past -- the original games on the respective platforms and those who appreciate them. The Amico is really focused on the new games, with many of them inspired by the originals.

 

Completely agree.

 

Over half of the nay-sayers of the Amico overlook that it is not primarily a retro system and not aimed at the stereotypical gamer.

[Hannacek]

At the end of the launch trailer, at least two or three investors are listed. Who knows how many others there are, or how much of their own personal funds the principals have at stake as well.

 

I don't think it's accurate to say that the Amico is similar to AtariBox/CollectorVision Phoenix/RetroVGS/Chameleon. Those consoles' primary objective gaming- and market-wise is focused on the past -- the original games on the respective platforms and those who appreciate them.

 

All indications are that Intellivision Entertainment will "survive until launch day" by carefully managing the investment backing they already have, seeking new investors if necessary, et. al. -- i.e. act like a start-up venture. It seems unlikely they'd have gone as far as making this big announcement -- or that the investors they already have on board would have approved it -- if there wasn't a great deal of trust and faith that they'll at least achieve the goal of producing a console.

 

 

I am not against this console. I just think they have some questions they need to answer. They promised a 2020 launch date, so they have plenty of time to answer those questions. What I don't like is Tommy saying STFU until you have played the console and given it a chance. It is always a red flag when people want to shut down free speech rather than answer questions and let people have their opinions.

 

Where does the trailer mention investors? It mentions a bunch of stuff that costs money like Toe Jam and Earl, and a bunch of people they will have to pay. Unless those people work for free in exchange for equity and a percentage of the sales.

 

All these consoles that use old names like Atari, Coleco, and Intellivision focus on the past. If they wanted nothing to do with the past they would come up with an original name like OUYA, or Game Box.

 

The trailer seems like it is designed to get buzz and attention for the concept, so they can get investors.

[mr_me]

In the promo video David Perry is listed as an investor. Tommy Tallarico has done lots of interviews and has even answered questions on reddit and youtube comments. Of course, you can't really judge this thing until you see the games. They already have a team in place; they have to pay them. They clearly said developers are being paid in advance of royalties to make games. So they must already have investors. They promise new games as well as the remakes. Once they are able to show the new games you'll likely hear less about the remakes. The name of the company doesn't matter, today it is unknown to most people.

Edited November 2, 2018 by mr_me

[+intvsteve]

Starting at about here, "The Team" lists quite a few people. Like mr_me said, David Perry is the one listed as advisor / investor. For some reason, I thought more investors were listed in the video, but obviously misremembered that. Not sure of those announced members, aside from David Perry, if any also have invested in the venture themselves.

 

Given they've announced the acquisition of licenses for certain properties indicates they've already been busy - and using some of the investment capital they have on hand. I'm willing to bet that they want to show off demos as soon as they can, too. It's a delicate balance -- you need to gin up interest for getting that investment and potentially attracting more -- and you have to address the skeptics by producing demonstrable product. Chicken and egg problem really - hence the need for at least a high-risk bundle of seed capital. That seems to already be in place.

 

Hopefully the combination of old and new names doesn't end up being self-defeating. I think the vibe they're going for is that parents / retro fans / old farts are intrigued by the old part of the name, and that everyone -- but especially the "under-served market" could care less about the name and instead be drawn toward the "hey, fun cheap games with your family and friends!" aspect.

 

And I'm going to keep saying this: They have a lot of experienced talent on-board behind this project - and a good number of them don't approach it from a fan's perspective, but very, very seriously. It's so much bigger than what we're used to dealing with in our fun little dusty corner of gaming. I'm taking that list of people at face value -- and having been lucky enough to meet and speak with several of them at PRGE -- or at least see them at the booth and at the keynote -- there's no reason to doubt their claims and intent at this point.

[Greg2600]

I personally kind of ignore all the talk about the launch date, who supports it, price, controllers, etc., etc. I simply wonder, like with all these consoles, what size of install based they NEED to make it a successful venture? Like I do with the others, I'll honestly be shocked if they get that.

[Hannacek]

I personally kind of ignore all the talk about the launch date, who supports it, price, controllers, etc., etc. I simply wonder, like with all these consoles, what size of install based they NEED to make it a successful venture? Like I do with the others, I'll honestly be shocked if they get that.

 

They need to sell a minimum number of units to not lose money on the hardware sales, unless David Perry has a substantial bankroll to lose money on the hardware, and make it back years down the road on software.

 

They promised they will be funding 3rd party developers, which costs money. They promised exclusives, which means paying money to developers in exchange for not releasing the game on android, IOS, steam, etc.

[Greg2600]

 

They need to sell a minimum number of units to not lose money on the hardware sales, unless David Perry has a substantial bankroll to lose money on the hardware, and make it back years down the road on software.

 

They promised they will be funding 3rd party developers, which costs money. They promised exclusives, which means paying money to developers in exchange for not releasing the game on android, IOS, steam, etc.

 

ALL console makers lose money on the hardware. Gotta make it up with software.

[+intvsteve]

Yeah, this is an area that will be really interesting to monitor -- COGS and profitability. Will Intellivision Entertainment attain the goal of not losing money on the hardware? That's been the approach of the current big consoles, but is it what they plan to do? I thought one of those videos out there said no, but I don't have a link.

 

Between now and when manufacturing kicks off, will the tech get meaningfully cheaper to manufacture? Once the initial launch passes, will there be momentum to keep existing developers as well as attract new ones without "honey pot" money?

 

Hopefully -- YES!

[Hannacek]

 

ALL console makers lose money on the hardware. Gotta make it up with software.

 

The difference is big companies (Sony, Microsoft) have the money to lose in their bank accounts. Homebrew companies use crowdfunding and pre-orders to make sure they do not lose money, because they don't have the ability to lose millions of dollars in the hopes thye make it back years down the road.

[imstarryeyed]

I am looking forward to that console. I was right on the edge until they mentioned Andre LaMothe, I have met him before, bought the XGamestation and read his book Black Art of Video Game Console Design. Andre is a great engineer and I am hope with him on board the system is going to be really well designed and hopefully not miss many / any details.

 

2020 is a long time away so I am going to continue to follow to see what happens.

[Pink]

Microsoft and Sony are huge corporations with many divisions beyond gaming. They have a sufficient bankroll to fund a new console's development. They can spend millions of dollars and several years to develop their next console, and sell each console at a loss, knowing that in year two or three they will become profitable on software sales.

 

AtariBox, RetroVGS/Chameleon, OUYA, CollectorVision Phoenix, and every other similar console has no giant corporation with a bankroll funding their console development. Every other similar project has had to rely on crowd funding, because they had no private investors, and were unable or unwilling to get a small business loan from a bank. It is a fair question to ask where Intellivision Entertainment is getting the money for console development, if they are not a big corporation, and are not seeking money from crowd finding? If they have private investors or loans from a bank, then they should explain that is the reason they are not crowd funding.

 

 

 

 

Kickstarter has been around since 2009 and Indiegogo since 2008. I can assure you that before 2008 there were tons and tons of small companies that aren't massive corporations that don't have massive bankrolls that were developing and creating products of all kinds and getting them onto store shelves.

[Hannacek]

Kickstarter has been around since 2009 and Indiegogo since 2008. I can assure you that before 2008 there were tons and tons of small companies that aren't massive corporations that don't have massive bankrolls that were developing and creating products of all kinds and getting them onto store shelves.

 

Claiming they have investors is not the same as actually having investors. If it was so easy to get private capital, someone else making one of these modem consoles with an old company name would have done it.

Edited November 2, 2018 by Hannacek

[mr_me]

Nobody said it was easy.

[Mockduck]

There's some real economic viability questions with this thing, not for the INTV crew, but for anyone theoretically making a game for it.

 

Team of 4, taking a year to make a game, each needing let's say $50,000 - $200,000

Assuming the Amica takes a typical 30% cut of sales (similar to Apple, Steam, and just about any other digital storefront)

Selling max price $6.99 (rounded to $7)

 

They'd need to sell about $260,000 worth to break even. That means about 37,142 copies sold to break even.

 

Now, it's an exclusive game, so can't make that loss up anywhere else. You can't sell DLC to raise additional revenue.

 

I know some 3DS, Steam, and Vita "indie"-ish developers estimate approximately 10,000-20,000 sales if successful per platform (this is based on personal conversations with some people who have sold on these platforms).

 

The idea that your super-low-budget game will sell 40,000+ copies on the Amico is pretty questionable. And that's at the maximum allowed price?

 

It just doesn't add up from a development perspective.

[+intvsteve]

I don't think we can expect Intellivision Entertainment to open up their books to us and tell us the details of their business operations. We can only really talk about things based on the information that's been made public. Those who may know more but are under NDAs are probably biting their tongues pretty hard, what with all the musings we're posting here that are surely off the mark.

 

FWIW (and that's not much) I met and spoke with some of the individuals at the tail end of that trailer at PRGE -- and not all of them were BSRs. At no point did anyone imply this was going to be easy. I infer that there had to have been a lot of market research and planning going on long before any announcements of any kind were made (counting back in May). And if there wasn't already enough committed backing to give Intellivision Entertainment a good deal of confidence of success before "going live" then they would have been making a colossally stupid mistake, IMO. Not that such mistakes haven't been made, and won't continue to be made. But really, all indications are that this is dead serious.

 

As passionate and some may say impulsive as Tommy Tallarico is, he's been pretty successful and seems to have the ability to draw others who are also successful experts into his vision. It's not bad to be skeptical, but we also have to accept that this console's primary long-range focus is not 'Fans-of-the-Intellivision'-service. That's part of it, but the end goal is something larger. Everyone I met sincerely and attentively listened to "fanboi feedback' - and I like to think that by having numrix involved, it's way more than just lip service. It's just that the wishes from the "retro community" aren't going to win out if they conflict with the larger goals. I like to hope that they complement them.

[+intvsteve]

Yeah -- the budgets and sales prices and volume numbers for games is going to really be an interesting area to watch. That's probably the part that's the hardest to come to grips with, and to really take off, will require some big, big numbers.

 

I guess the charitable take on that is that it's going to be a walled garden and with a lower number of ostensibly higher quality titles, the adoption rate per user will be higher.

 

Honest question: How may indie titles are there on Steam? And how many users? If you've got 50,000 titles to choose from, it's overwhelming from the consumer's perspective. It's going to be a challenge to hit the sweet spot of quality, variety, and selection to draw people in. Too few titles, and people think it's a failure. Too many, and people get nearly as frustrated and walk away.

[mr_me]

In a recent interview Tommy T suggested there is no maximum price on games. However, he clarified that at launch all games will be under $8. I don't know what their sales goals and expectations are but my guess is that it's much more than 250k consoles and 40k per title.

Edited November 2, 2018 by mr_me

[Mockduck]

I suspect they will need to back off on a bunch of the rallying cry bullet points by the time they launch. Prices will have to be realistic for actual game development if they intend to have no DLC/free to play, or they will need to open the door to DLC. I also hear competing marketing: This isn't for the traditional retro gamer or hardcore gamer, but the list of games announced includes a bunch of old titles that your average non-gamer has never heard of. Miner 2049er reimagined?!?!

 

I think hitting the $180 console price point is fairly easy, and they may even be able to turn a small profit per console sold. But game development is a business, not a charity, and the current bullet points as given in the announcement don't match to the actual game economy.