| donkeykong128 said: all the sales charts are for consoles does this mean that console sales are what matter for share holders as opposed to actual game sales? i thought companys made all there money off games and nilch off consoles? |
Consoles are usually sold a below their cost, so that a large number of them are sold. Nintendo, being the exception, that likes to sell their console at a slight premium to costs.
Most of the money is in games. Once the cost of the development of the game is paid for in sales, the profit can get quite large since you are still selling the game at $50+ and its costs are the disc, packaging and the standard overhead. Maybe at most, $10. Probably less.
But the console makers have another large source of income. Royalities from the 3rd party game makers who pay to have their games run on the various consoles. Started by Nintendo back for the NES, a lockout system was devised so that the game had to match a code else it would not play on the NES. To get this lockout code, the 3rd party pays say $7 per copy. Thus an initial run of 300k discs, the 3rd party would pay the console maker $2.1M. This is describe in Wikipedia if you want more info.
Needless to say, handing out lockout codes w/o having to do anything (well, except make the console itself) is very profitable as well.
Torturing the numbers. Hear them scream.
