The last game that studio published was 6 years ago - Bioshock in 2007; Bioshock 2 was shipped by another studio. If they had 100+ employees (not unreasonable for a AAA game studio), they could have incurred personnel costs of $60M+ for the game's development. Which could definitely be considered a failure in the eyes of a game that only shipped 4MM games.
Sure, but just look at the numbers - let's firstly boost the number to 300 employees, not 100, I think that's closer to real, with an everage salary of around $60k. That puts salaries at about $180m. But, they sold 4 million copies at about $60 each, which makes $240m profit. Allowing for a decent ad spend, you're still looking at a back of the envelope break-even. OK, I get that investors might be bummed about that, but it's enough money to mean that they live to fight another day, have another crack at hitting it out of the park.
As others have noted, AAA games are hit-based propositions. You pretty much have a few (3-5) titles that make all of the money each year, another 10 or so that hold the line, and everyone else loses. It's the last group that are flops, the second group are the par result. I think we can safely say that Bioshock Infinite was in the second group...
The $240m figure is not profit, it's gross income.
Taxes, marketing costs and distribution costs will dwarf that figure.
In some cases, AAA games can even spend more on marketing than wages.
Yup. Usually I remember the rubric being about $30 back to the publisher on a $60-$70 title. MS/Sony each take a cut and so does the distributor (Steam, Wal-Mart, Best Buy, etc). Plus, as pointed out in comments below, there's also the fact that not all copies were sold at full price. So you're looking AT BEST at $120M in revenue, plus Irrational had TV ads and other large costs in addition to their staffing.
For PC games, Hard copies return roughly 40-45% of the title to the publisher.
Valve gets a 30% slice for distribution on Steam.
I do not know what the breakdown of costs are on consoles, but I assume both Sony and MS still get a cut of the sales.
Consider that the bulk of a game's sales will be realized during the first week, and the rapid time to discount, it's no wonder T2 decided to pull the cord on Irrational Games.
