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Why do big companies save on product and spend on marketing? (alien.top)

submitted 2 years ago by quantum-fitness@alien.top to c/entrepreneur@indiehackers.space

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Okay riddle me this why do big companies save on product but increase spending on marketing and admin?

I was reading though Blizzard-Activision financial statement and saw how they increased spending on both sales and marketing and admin by more than twice what they increased spending on product development.

This is coming Ib the wake of the flop on their newesr CoD game. The same thing is happening for Creative assenbly and the total war franchise. Way to much time spend on milking the product and not enough on making a good product.

It seem to be something that mostly happens when the companies think they cant grow anymore. They live on past glory while they slowly tank the product.

However this really seems like a bad strategy. We have seen that with games like BG3, but it also seem to be the goals with stratgies like content marketing.

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[–] AnonJian@alien.top 1 points 2 years ago

There are very roughly speaking two things in business: Overhead and Profit. Businesses want to minimize overhead and increase profit. So, if you cut overhead in the right way and proper amount, you could increase profit.

Startups optimize over time but start out hemorrhaging money until they get their shit together.

Wantrepreneurs are often product-obsessed lunatics, so that may be tough to puzzle out.