The following appeared in a memo from the chief executive of a video game company.
“We have recently been offered the opportunity to buy the rights to produce a video game based on the soon-to-be-published children’s book ‘Squirrel Power,’ by Peter Wood. While the cost of the rights is substantial and will place economic constraints on our company in the short-term, there are two reasons that the purchase of these rights will undoubtedly be a wise investment. First, Wood’s last three books have been best sellers and the movie based on his first book was highly profitable. Second, the popular characters and story line in ‘Squirrel Power’ will save us time in developing our video game, thereby reducing our costs.”
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The chief executive of the video game company believes that purchasing the rights for the video game production will bring profit to the company. However, his arguments are not convincing, because they have significant flaws in logic.
First of all, the book was not published yet, so he may not know for sure if it become popular at all. Although the first three books written by Peter Wood were popular, there is no guarantee that the last one will.
The chief executive mentions that the movie based on the first book was popular. Unfortunately, he does not tell anything concerning the other two books. Probably the movies based on them exist, but they failed.
Another point that the chief executive believes, is that the company will reduce production costs by using the storyline and the characters that were already worked out by the writer. To prove this, he needs to compare the cost of developing a storyline and characters by the company with the cost of the rights he is suggesting to buy. Since no such data were presented, it is not clear which option is cheaper.
Even if the last book become popular, there is no guarantee that the computer game will. Children may not like playing it, because they will already be familiar with the storyline. In addition, popularity of any computer game strongly depends on its advertisement. If the company will not be able to provide it, since a significant amount of money is required to buy the rights, they may never sell the game successfully.
In conclusion, I believe that the suggestion, proposed by the chief executive is shortsighted. He failed to predict possible negative outcomes of his proposal, which can harm the company.