Hey everyone,
Nice to see you again here! This is Jack!!
It is Week 10 now and this will be the last chapter of “The book named Jack”.Anyone gaming fans here?Anyone enjoy playing GTA5 these days?Jack had a lot of fun in GTA5!
Oh, back to the point. Today Jack is going to talk about a new stuff called: ROI and see how incredible ROI the gaming company RockStar has made relying on just the GTA5 game.Want to explore more?Come with Jack!Go!
So, what is ROI?Generally speaking, ROI(Return On Investment) is the concept of an investment of some resource yielding a benefit to the investor. A high ROI means the investment gains compare favorably to investment cost. Experts usually use ROI to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments.
So why we use the GTA 5 game as study case to talk about the ROI here?
The game is super hot these days!Too hot!
When I am telling you a gaming company spent 250 million dollar on a game, implementing Google Satellite to setup the whole map in a game, probably you will say:Are they insane? That’s how RockStar creates GTA 5. Such a luxury gaming plan made GTA 5 the expensive game in history.Let’s see the chart below:
But RockStar still controls the gaming market,even they put 250 million dollar on a game.
Here is the weekly top-selling games chart obtained from VGCHARTZ.com:
Notice that the release date of GTA5 is Step.17,2013.We can see from the chart, 17,524,494 copies of GTA 5 game sold within only the first 5 days!Assume that the average price of each GTA 5 game is 85 dollar,so the profit will be 1,489,581,990 dollar!Almost half of the cost had been returned.Good news isn’t it?
Dear reader you may ask,so what?The above is all you mean by incredible ROI of GTA 5? Of course not..But nice question!
As a wise reader, you may have noticed that I have forgot the cost of advertisement.Thanks for your noticing!
Here’s the thing!Let’s change the topic to advertisement.Today Jack is not going to talk about the normal commercial TV advertisement or Street ads.Let’s focus more on social media advertisement.Jack is used to call it advertisement 2.0.
Imaging that Jack is the CEO of RockStar gaming company.Now I created a GTA 5 gaming trailer as the official trailer and uploaded it to YouTube.I also made a Facebook page for my lovely GTA 5 gaming.Then I release the news that the user who repost the video or like the GTA 5 official Facebook page will have the chance to win some virtual clothes in GTA 5.
Let’s make an assumption about the total cost for these two activities:
Let’s say the awesome trailer is made by a group of 5 RockStar staff in 5 days’ limitation.
GTA 5 gaming trailer edit and creation: 5000 dollar;
Staff Payment:20 dollar/hour, 8 hours/day.
Staff Payment in total:20x8x5x5=4000 dollar;
One limited edition cloth design: 2000 dollar;
Social media account creation and monitoring and other fee:5000 dollar;
So the cost of these two activities are:16000 dollar, which equals to the price of nearly 190 copies of GTA 5 game.
Let’s see what’s happening with the official GTA 5 trailer posted on YouTube by RockStar Company 2 weeks ago:
458,294 times of view;69 likes and 17 dislike within 2 weeks.
The “like rate” will be (69/(69+17))x100% = 80.23%
According to the data above, let’s make another assumption.
The worst situation: only 1% viewers decided to buy GTA 5 after watching the trailer.
So the profit will be 458,294×0.01×85 =4583*85=389555 dollar in total.
The average situation:80% viewers wanted to buy GTA 5 after watching the trailer.
The profit in total will be 31,164,400 dollars.
The greatest situation that 100% viewers decided to become GTA 5 gamers:
The profit in total will be 38,955,500 dollars.
Remember the cost of our GTA5 trailer and Facebook reposting plans? Only 16000 dollar.
Let’s calculate ROI for these activities:
According to the formula above:The ROI is going to be
In the worst situlation: (389555-16000)/16000 *100%=2334%
Even only 1% of viewers bought GTA 5, the ROI is still 2334%!What a huge percentage!Remember Jack is not calculating the Facebook repost activity at this time,if added,the percentage will be higher.
As a wise reader you may question if it is possible for costing only 16000 dollar to achieve these two activities.Nice question!Let’s see in this way:
I assume that the ROI is 200% and I put all the saved money to the cost of trailer creation; YouTube Facebook page maintenance and the Repost and Win activity.If the ROI is 200%, in the worst situlation (1% viewers bought GTA 5) the cost will be increased to 186,778 dollars.It means when my 186,778 dollars’ budget to complete such two activities, I will still got 200% ROI. How could you spend 186,778 dollars to make a one-minute trailer; to create some social media accounts and do some social monitoring? Jack believes that the budget is to rich.
That’s why Jack is saying the ROI of GTA5 is incredible with the help of social media.
Cool, that’s all for this week!Since this is going to be my last blog post,Jack wants to say something more.Really appreciate those readers who follow my blog,hope that all of you whatever my followers or not, can learn something from my blog post,even just little. Jack is willing to share my knowledge and opinions with all of you guys!Proud of you!
Have a nice day and enjoy the happy life!
Jack
References:
http://www.youtube.com/watch?v=3pUmbRMCHRk
http://en.wikipedia.org/wiki/Return_on_Investment
http://www.vgchartz.com/weekly/41539/Global/
A book named "Jack" 