Basic Gaming Sales/ Money Questions

[theRepublic]

mrstickball said:

theRepublic said:

mrstickball said:

Not according to Epic:

http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames_print.html

I think you misinterpreted the article.

The way I read it is the publishers make $1 per copy only after they recuperate their costs.  Before that it sounds like they take as much as possible since they paid the developer up front to make the game.

The developer then makes nearly 45% of the remaining $59.  That means $26.55 at best, not $30 to $40.  This is only after the game starts making a profit.

The rest goes to retailers, distributers, licensing fees, etc.

The article makes no such assumptions as to who takes what percentage other than the ones given..So why assume the publisher makes more than the stated revenue?

There are lots of variables on the Gears of War estimate. Licensing (which was/is 5% of the pie) may or may not be needed for any given game. Marketing (7%) can also greatly vary....What if the marketing team is in-house? Also, corporate costs and hardware development would be associated with developer costs, I'd think.

So it really depends on how you want to quantify it.

I gave an esitmate of $30-40 profit for developers. The low end of the spectrum would be $25 in very bad cases, but it could near $40 if the right requirements were met (lower marketing budget, no licensing).

For the companies that do put next-generation titles out early, making a profit is tough. Namco Bandai president Takeo Takasu said his company needs to sell at least 500,000 copies of each PlayStation 3 game it creates to make a profit. Analysts predict that some other publishers will need to clear 1 million units to get in the black--and start making about $1 per game sold.

 The key word here is start making $1 per game sold.  Think about it, if the publisher only made $1 for every game, how could they make a profit on 1 million units sold?  That would only be $1 million.  They take the developers portion until they make it into the black.  That gives us:

$26.55 + $1.00 = $27.55

$27.55 × 500,000 ≈ $13.8 million

$27.55 × 1,000,000 ≈ $28.5 million

Those numbers put us in line with what we know about the costs of HD development.

So overall, the picture looks like this: The publisher pays a developer a certain amount to make a game, developer makes the game, publisher publishes game, publisher takes lion's share of money until they break even, publisher makes $1 per game after that, developer makes additional money after game breaks even.

The remaining $59 per game goes into many hands. The biggest portion--nearly 45%--goes toward simply programming and designing the game itself.

How do you get $30-40 out of that?