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Sload Soap
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Re: Shenmue III Release Topic

by Sload Soap Fri Feb 14, 2020 10:28 am

Well that's disappointing but not totally unexpected. It's quite a big loss for Deep Silver considering they probably considered Shenmue 3 a relatively low risk investment.
Will probably end any interest they had in a sequel.
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Re: Shenmue III Release Topic

by pierrot Fri Feb 14, 2020 1:48 pm

ABG is the investment bank that performed it, and they apparently do so for many different companies, without any input from the companies themselves in order to remain independent. (Unfortunately, they also seem to do shoddy work, considering their data "acquisition" methods.)

It seems this could have actually been a case of the Shenmue community shooting itself in the foot, though, since this report was available from January 19th, and it was only picked up by "news" outlets (I do feel like a nut putting that in quotes, but Shenmue III has shown me how truly negligent most game outlets are) after being highlighted on the Dojo, and I guess Resetera after that. I truly hate this. This is so damaging to the brand, and if I were Yu Suzuki, or Sega, I would be totally ripshit.


Reprise wrote:Some good news is the story quest DLC pack is out on Tuesday! :D

About the rewards, I'm planning/hoping to move soon, so I do hope they hurry up. Although I'll probably set up a redirect, I don't know what kind of postal service they will use. I'm assuming just normal mail, but who knows.

Is that DLC release actually confirmed? I wasn't sure if it was just a rumor.

Yeah, hopefully you'll receive stuff before moving.


Sload Soap wrote:Well that's disappointing but not totally unexpected. It's quite a big loss for Deep Silver considering they probably considered Shenmue 3 a relatively low risk investment.
Will probably end any interest they had in a sequel.

The problem is, it's almost unthinkable that Deep Silver could have "lost" anything. Like, that's how it's being presented by other outlets, but the budget for Shenmue III was said to be $12 million. About $6-7 million would have come from backers, and Shibuya Productions has been conjectured to have footed maybe a million or two. Even at the high end of, say $5 million investment from Deep Silver, they signed the exclusivity deal with EGS which likely saw EGS pre-buying a hefty chunk of PC downloads, at a value that potentially well exceeds their investment. For instance, say the deal was for 100,000 copies @ $50 dollars (the price of the game on EGS) then it ends up being exactly $5 million that Deep Silver gets out of the deal. Say for whatever reason, EGS still wants to take their 12% out of the pre-buys for UE4 games on EGS, then Deep SIlver would still see $44 on each copy, at the previous assumption of 100,000, that's then $4.4 million. It's hard to conceive of a scenario where Deep Silver wasn't playing with house money, unless they simply didn't receive anything of value from the exclusivity deal, in which case I'd have to point back to extreme negligence.

It's very conceivable, despite all data I've seen pointing toward relatively positive sales numbers, that Deep Silver thought Shenmue III was going to sell gangbusters, and projected it over 500k or 1 million units sold in the first quarter, and it fell short of those bars. That doesn't lead to deficits, though. If there are deficits on the books, there's almost no way they could come from Shenmue III--seems much more likely it would come from that Terminator game they spent seven years with.
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Re: Shenmue III Release Topic

by MrPopo Fri Feb 14, 2020 1:57 pm

pierrot wrote:It's very conceivable, despite all data I've seen pointing toward relatively positive sales numbers, that Deep Silver thought Shenmue III was going to sell gangbusters, and projected it over 500k or 1 million units sold in the first quarter, and it fell short of those bars. That doesn't lead to deficits, though. If there are deficits on the books, there's almost no way they could come from Shenmue III--seems much more likely it would come from that Terminator game they spent seven years with.

That actually IS how you would get a sales deficit. They do their financial forecasting around expected sales, so if those projections are unreasonably high then they will have a sales deficit. Which doesn't mean the overall operating ledger is red. As you listed earlier in the thread:

a report that pinned a roughly $6 million sales deficit squarely on Shenmue III

A company can turn a profit, but if they forecasted a larger profit they have to explain why they fell short, and the two main reasons are either higher than expected costs or lower than expected sales, which is a sales deficit.
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Re: Shenmue III Release Topic

by pierrot Fri Feb 14, 2020 2:54 pm

You're right. I was thinking "losses," and wrote "deficits." That's my bad. I don't recall what the games articles were saying exactly, and I don't feel like returning to them to find out, but the ABG report just says that Deep Silver failed to meet projections for Shenmue III, and that it was the primary reason for the adjustment to the sales forecast by 72 million SEK. (The full report is here, btw.) I can understand a bank wanting to be as conservative as possible with their estimates, but the basis is still all sorts of wrong. They appear to attribute a total of 50,000 'active' players on PS4 to total PS4 sales of the game--I doubt they even realize that Shenmue III apparently doesn't appear in people's trophy lists (the entire basis for gamestats numbers) until the first trophy is unlocked by progressing, potentially, a couple hours into the game. Also, that number would include backers of the game, which wouldn't figure into sales for Deep Silver.

There are just so many problems here, it's hard to even keep up with all the potential errors, not to mention Gamstat's hand waving with some of their methods. ABG also isn't very transparent about their methods, so it's not clear what level of research they actually did, but it's pretty clear they didn't do a good job.


EDIT: Somewhat unrelated, but holy shit, what a fucking cesspool reddit is. The level of man-baby in the Epic Games Store threads there is off the charts. 'I demand to have every game ever released available for my immediate consumption, at bargain, basement prices, in the very specific place I want them, because PC is an "open" platform. Now let me go launch my proprietary store front of choice, with thousands of games I don't own, and aggressive DRM, because I'm a good little meeple, Gabe. Please urinate on me, and tease me about Half-Life, Gabe.' <--- (The majority of what I read in my ten minutes of browsing.)
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Re: Shenmue III Release Topic

by Sload Soap Fri Feb 14, 2020 9:22 pm

I'll agree that it does seem odd to single out Shemue for the loss when no concrete sales data is at hand. That said, it's also historically been quite hard to get hold of said concrete numbers on game sales. In this case, while Steam are more transparent (no pun intended) than Epic with their sales figures, they've also got a 15 year headstart in the market. And from what I understand, the Epic store front is both A) new and B) kind of a shambles.

As for the trophies thing, tracking active players is now a pretty common practice for companies to prove player bases, especially with the raft of extremely popular freeware titles. So, Fortnite and Apex Legends have their player bases tracked via accounts, concurrent gamers and achievements/trophies but again this isn't concrete, at least not from what I can see. I don't have PSN but if it's anything like Xbox Live you also don't need to have actually got an achievement to show the game in your list of achievements (you do need to be online though). I found it hard to find out if Sony themselves even track this data, nevermind if they'd give it up to a third party on request. However I can still totally understand using this data, if available, to estimate combination physical/digital sales on PS4 and don't think it's to be dismissed.

If I were to speculate, perhaps Deep Silver thought Shenmue might pay similar dividends as Kingdom Come: Deliverance, another game that was initially Kickstarted before they picked it up. Now, the situation wasn't exactly the same; with KC:D the purpose of the Kickstarter was more to prove the concept had a player base worth publishing properly rather than to help with distribution. I believe quite a lot of money was put into KC:D after they partnered up as well so it was much more of an investment than Shenmue. However, it paid off as KC:D has done well enough to get a GOTY style reissue on consoles. It's not done Skyrim numbers but it's a solid title for a mid-tier publisher and definitely a hit for DS. I imagine that Shenmue III must have looked very enticing with its record breaking KS haul and massive hype after Sony's E3 conference. Maybe DS just overestimated its broader appeal and set their targets too high? Maybe the targets were quite modest and Shemue III didn't even meet those? Either way, it cost them.

Mainly though, I don't really see why there is any controversy here. What point is there to ABG "framing" Shenmue III as it were for this loss? What benefit would it be to them? They don't care about the Kickstarter or the fans or any of that, they were just hired to produce a boring report for a boring game publisher. Job done on their part. I see no reason to doubt them.
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Re: Shenmue III Release Topic

by MrPopo Fri Feb 14, 2020 10:22 pm

In fact, going off of trophies is a good indicator of whether there is enough of a fanbase to warrant another game in the series; if only 10% of the people who bought it recorded a trophy then you would expect that 10% to be your sales core of a sequel plus some amount of new people, but likely the bulk of that 90% who couldn't be bothered to get one trophy won't be interested in the sequel.
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Re: Shenmue III Release Topic

by Sload Soap Fri Feb 14, 2020 11:02 pm

MrPopo wrote:In fact, going off of trophies is a good indicator of whether there is enough of a fanbase to warrant another game in the series; if only 10% of the people who bought it recorded a trophy then you would expect that 10% to be your sales core of a sequel plus some amount of new people, but likely the bulk of that 90% who couldn't be bothered to get one trophy won't be interested in the sequel.


Yeah, good point. Even huge games aren't immune to this. I'm sure I heard Treyarch dropped the story mode from Black Ops 4 when they realised that only 10% of COD users actually got the achievement for beating the first campaign mission. Either way it's obviously something that is tabulated when considering sales these days. I also guess that even poor quality data is better than no data in case like this. It's a bit finding the jawbone of a dinosaur; you can't be sure of the whole animal but at least now you know it exists.

EDIT: Not to further put the boot in, but, going off trophies could actually inflate the number of people who bought the game as it doesn't discriminate against those who got the game as part of their backing the kickstarter or from a second hand retailer.
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Re: Shenmue III Release Topic

by PartridgeSenpai Sat Feb 15, 2020 12:59 am

Sload Soap wrote: I don't have PSN but if it's anything like Xbox Live you also don't need to have actually got an achievement to show the game in your list of achievements (you do need to be online though).


I can confirm that is indeed the case. I have several games on my Trophy List that have 0% achievements because I only have the game installed but have never really gotten in and played it.
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Re: Shenmue III Release Topic

by pierrot Sat Feb 15, 2020 2:42 am

Sload Soap wrote:In this case, while Steam are more transparent (no pun intended) than Epic with their sales figures, they've also got a 15 year headstart in the market. And from what I understand, the Epic store front is both A) new and B) kind of a shambles.

The report didn't look at EGS sales, though, because they don't have a way to track them. They don't have any input from Deep SIlver, because they do independent reports. They only mentioned the partnership with EGS, and appear to rely exclusively on the Gamstats estimate of PS4 players for the level of sales.

Sload Soap wrote:If I were to speculate, perhaps Deep Silver thought Shenmue might pay similar dividends as Kingdom Come: Deliverance, another game that was initially Kickstarted before they picked it up.

I think it's certainly possible that Deep Silver did believe they were going to ride a golden pony all the way to the bank, but either way, I find it a little hard to believe that Deep Silver actually failed estimates by such a great margin. I think it's abundantly more likely that ABG is working from bad data, and estimated sales figures very poorly, and I'll get to why.

Sload Soap wrote:Mainly though, I don't really see why there is any controversy here. What point is there to ABG "framing" Shenmue III as it were for this loss?

I wasn't suggesting that ABG did this intentionally out of malice. Any insinuations as such would have been wrought out of wry irony. I generally tend to think things like this happen more out of incompetence. The problem at this point is that the result of that incompetence, at best, potentially damages the franchise in the eyes of the Embracer Group shareholders.

Sload Soap wrote:
MrPopo wrote:In fact, going off of trophies is a good indicator of whether there is enough of a fanbase to warrant another game in the series.


Yeah, good point.

So, bad data is bad data. I'm sure plenty of companies make decisions based on bad data all the time, but that's on them. Working from bad data is unfortunately common, though, and that's not an excuse for it.

I'm going to do a couple things here, because it's clear that people haven't been following along, and the major points have been lost.

First, I'm going to describe briefly what Gamstats does with its estimates, but here's their web page on it, in full. So first, they track the percentage of PSN accounts with a particular game's trophy list registered, relative to all other games, through the PSN API (sample p-values). (Even at this point alarm bells should be ringing, because, sure most games' lists will be registered even without any trophies earned, but Shenmue III apparently has a bug where it is not.) Also the "significant number" of polled accounts is dubious. Then, they base the 'population' for sample p-values on leaks from My PS4 Life statistics for rarity of users' rarest trophy relative to the total number of users. Finally, they add "some minor adjustments and tricks behind the scenes." So what they apparently end up with (on their global Playstation page) is 170 million PS4 users, when Sony has indicated in the past year that the number of active PSN users (all platforms) here here is actually 94 million. So, hopefully that adequately demonstrates how wildly inaccurate Gamstats is.

Next let me just go ahead and prove that the actual PS4 sales must be greater than 50,000 (based on the most accurate data available to date). First, we know that Shenmue III sold at least 20,000 units (physical PS4 copies) in Japan, and 1,900 in Spain in the first two weeks. We also know that 7,500 Pix'n'love/Limited Run limited editions were sold before release. A rather diligent user over at the Dojo, by the handle of tomboz, tracked growth rates from the 10th of December on three of the largest trophy tracking websites (PSN Profiles, True Trophies, and PSN Trophy Leaders). Over the period of the 10th to the 31st, he found growth rates of 52.2%, 22.0%, and 27.1% (respectively). So, let's take one of the worse cases over that period, and assume the true mean is close to 27.4% sales growth rate, as a baseline. This would indicate that the bare minimum of sales in Q4 were: (20,000 + 1,900) * (1.271) + 7,500 = 35,336 physical PS4 copies. This would not include digital PS4 sales, physical sales in NA/UK/EU (other than Spain), or the standard limited editions. (I left out the LEs from the initial sales factor because it's unlikely they would have been opened and played in order to contribute to the growth rates.) This is also still missing available data, because the growth rates would also likely include backers who accounted for probably 78,459 initial copies. The sample statistic we have for the proportion of PS4 backers (based on the two physical kickstarter tiers) is 75.8%, which gives a total of 59,509 PS4 backer copies (physical and digital). This would lead to an additional sales figure of (59,509) * (0.271) = 16,127 copies sold between December 10th and 31st, on top of the previous physical sales calculation of 35,336, for a grand total of--drum-roll, please-51,463 units sold. That's still without any initial sales figures (and their corresponding growth rate contributions) for most of the world, or basically any digital sales.

Sure, there's a few assumptions made, but I'm going to give my conclusion in the least scientific way possible to drive the point here: There is absolutely, positively, no fucking way Shenmue III only sold 50,000 copies in Q4, and it was irresponsible for ABG to even suggest as much.

(A lot of the numbers are distilled from a post by tomboz, but I disagree with a few of his methods, which are reflected in the calculations.)

Oh, yeah. Also: QED.
Last edited by pierrot on Sat Feb 15, 2020 12:28 pm, edited 1 time in total.
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Re: Shenmue III Release Topic

by Sload Soap Sat Feb 15, 2020 9:40 am

Okay but even if Shenmue 3 had around 75,000+ sales that's not great especially if Deep Silver projected many more, which they may well have given that Shenmue 3 is both a long awaited installment in a beloved franchise and the biggest grossing game Kickstarter of all time. Even a few thousand sales here and there are basically nothing if they expected to rack up say 200,000 units. This poor turnout is also in the release period where you would expect the highest sales so they might be looking to cut their losses.

Honestly I find it a bit churlish of the Shenmue fanbase to criticise a professional body like ABG for their methodolgy while going by the word of some dude in a forum, whose methodology is pretty similar minus any actual interaction with the publisher so is likely less accurate.

Looking objectively, is it a surprise that a poorly reviewed, outdated, niche game flopped, especially one sold at full retail price? Not really.
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