Former EA producer - a $100 million game needs to sell about 6 million just to break even

[PAOerfulone]

$100 million budget.
$70 x 6 million = $420 million in revenue
$420m - $100m in the budget = $320 million left in revenue.

Now let's say the game had a $40 million marketing budget. That brings it down to $280 million in revenue.

Now it's time to pay the publishers and platform providers.
The platform holders (Nintendo, Sony, Microsoft, Apple, Valve, etc.) gets a roughly 30% platformer's fee for each game that is sold on their platform (Switch, PlayStation, Xbox, iOS, Steam, etc) If a game sold 6 million copies at $70 for a total of $420 million in revenue - 30% of $420m is $126m

Subtract that from the $280 million we still have - That brings us down to $154 million left.
Now, it's the publishers' turn. And publishers get anywhere from 10-25% of the revenue generated from the game's sales. Which means that publishers get anywhere from $42 to $105m off this game.
That brings us down to a range of $49-$102 million left in revenue.

But we're not done! Now we gotta pay the retailers who sold the physical copies of the game!
Of the 6 million copies sold, let's say 2 million were physical; 2 million x $70 = $140 million in revenue.
Retailers take roughly 30% of that cut; Thirty percent of $140m is $42 million.
Subtract that, and we are left with a measly $7-$60 million in total revenue - Depending on the publisher's rate.

Then factor in how many of these games go on sale quickly and regularly, if not discounted altogether, whether the dev is using disc or cartridge, and that revenue goes down even further to the point where they may even be LOSING money despite selling 6 million copies.

That's one of the main reasons why as recently as 2023 (as far as I'm aware) - Even though Sony dwarfed their other two primary competitors in terms of revenue off their consoles, Nintendo - Who was 3rd place in revenue, was 1st in operating profit.

Now there are other factors to consider there, such as Sony's acquisition of Bungie. But in general, despite a massive discrepancy in revenue, Nintendo and Sony were surprisingly close in operating profit. And that's because whereas PlayStation's primary driving force and ecosystem is Third parties, Nintendo's primary driving force and ecosystem is... Nintendo! Whereas Sony has to share and split a lot of the costs and fees I just listed, Nintendo gets to keep almost all of it for themselves since they are the #1 software developer making money off their hardware - which sells at a profit while Sony (at least at the beginning) sells at a loss.

Which is why it baffles the Hell out of me why Sony (and Microsoft to a lesser extent, though they're more a PC company than a gaming company so I at least get it on their end) would:
A) Sell their games on PC - Effectively losing tens of millions on platformer fees to Valve - Who discount games on their stores quite frequently and had Sony's discounted fairly recently. Not to mention potentially losing tens, if not hundreds, of millions of dollars in hardware sales, which will then lead to reduced platformers' royalties, because now people who needed a PlayStation to buy and play Sony's 1st party games can now just wait patiently for the PC versions roughly 1-2 years later.
B) Over inflate their budget and spending on AAA games to diminishing returns. Hey Sony, instead of taking an eternity to make Interstellar, how about more Astrobot? How about more Ratchet and Clank. How about more of these AA offerings that are light on the budget and heavy on the fun to provide ample revenue and profits while we're waiting for the big boys? It's working wonders for Nintendo, it can work wonders for you too!

Last edited by PAOerfulone - on 25 November 2025