Okay, before this gets any crazier, let me explain what I believe the dev is stating.
His company, the 2nd party developer of Crackdown, never recieved any royalties from their publisher, because, by their contract, the game didn't sell enough for them to "profit" on it.
Typical publishing contract:
(A) We pay you, the dev, $20 mil to make this game, paid in partial installments every 3 months during development.
(B) Game net proceeds are split between us (75%), the publisher, and you(25%), the dev, for all eternity.
(C) Before we pay you a dime, your portion of the proceeds are used to pay off the dev cost of $20 million.
Yes, it is totally biased toward the publisher, given that the game is successful. This is standard practice in the games industry. If you read that closely, you'll realize that the game has to net $80 million before the developer sees a dime of royalties, even though only $20 million was invested in development. The publisher, bless their generous hearts, gets the rest.
Also, not every new game is sold at full price.
I hope that clarifies things a bit. The publisher and developer "break even" at different points, but there is no penalty for the developer "not breaking even" -- only the publisher, which is the reason they get the larger cut. The only penalty the dev sees is a bad record going forward, which publishers will pay attention to.
