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Kasz216 on 15 June 2008
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Bodhesatva said:
Kasz216 said:
Bodhesatva said:
Viper1 said:
Bodhesatva said:
Viper1 said:
Hey Bod, you're calculating retail cost, not wholesale.

Right? As I said, 4-5 of the extra 10 retail dollars go to the producers. Can you explain what's wrong with that?


Because retailers don't buy the game at $60.00, they pay approximately $48.00 from the distributor (Jack of all Games, D&H Distributing, Ingram Entertainment, Mecca electronics, etc...) who pay even less from the publisher. ~$40.00 depending on their annual unit contract.

 

Now you want to redo your math?


That's exactly what I did, we're just looking at this from different angles.

Of the 60 total dollars, retailers get a share, developers get a share, publishers get a share, console manufacturer gets a share.

Both the Wii and Ps3/360 suffer from this problem, the difference is that with Ps3/360 games, retailers get an additional 2-3 dollars, the console manufacturer gets an additional 2-3 dollars, which leaves an additional 4-5 dollars for the publisher/developer, totaling 10 extra dollars.

Let me put it more generally: there are 10 dollars more to go around with each game sold on the PS3/360. Some of that 10 dollars go to retail, some to the console manufacturer, and whatever is "extra money" for the developer/publisher. That extra money adds up when you're talking about large amounts of sales.


The question is... are you sure that the developer is even getting any piece of that larger price... You've also got to add in the extra expenses that HD console development can bring shipping and production wise.


I am adding in that extra cost, Kaz. That was the whole point of my post.

If you don't sell many copies, then you don't make the extra development costs back. If you sell lots of copies, you do. Look at simple examples.

Wii game: 10 million dev cost.
PS3/360 game: 20 million dev cost.

If we assume each PS3/360 game gives 4 dollars extra per copy, then the following math holds:

1 million copies sold: The PS3/360 game makes 4 million dollars more than the Wii game. The PS3/360 game therefore "makes back" 4 million of the additional development cost.

2 million copies sold: 8 million dollars more than the equivalent Wii game.

2.5 million copies sold: 10 million dollars more than the equivalent Wii game.

In this simplified model, a 10 million dollar Wii game and 20 million dollar PS3/360 game have made equivalent amounts of profit. Whatever the profit is is irrelevant; if it's 100 million dollars for the Wii, the PS3/360 version has made 100 million also, but it has done so by producing 10 million more revenue and costing 10 million more to make.

Now, any copies sold beyond 2.5 million mean the PS3/360 project has made more money.

 

 

 

I'm not entirely sure where the cut off point is,of course, but I don't think there is any question that the mega-hit games on the PS3/360 make more money than the mega hit games for the Wii, even when you factor in development cost.


No i'm talking about the fixed costs of production. It costs more to make and buy blu-ray discs..... etc.

That's part of the reason for the extra $10 as well. Of course this is a bigger deal for the PS3. It's still something to take into consideration. Each platform has different fixed costs of production.

What i'm saying is that i believe none of that extra $10 actually makes it back to the developers and they make the same margin (or VERY close) per copy as they would a Wii game... to where even 5 million copies wouldn't make much difference.

That everything is getting eaten up by the publisher and others basically.