| Zippy6 said: You're heavily overestimating the profit they get for each physical copy sold. Retailers also typically take a 30% cut from physical games. So that takes a $70/$60 game down to $49/$42 even before taking into account the manufacturing and logistics costs. IGN Article. 4.5m-5m to break even may be too high, not sure how reliable he is, another tweet recently he put the budget at $100-$200 Million saying he didn't know exactly where in that range it was lol. Though that would make the 1.5m copies sold posted in another thread also unreliable. He did an interview with the Metroid Prime 2 producer about recouping dev costs which he's basing some of this on. |
Usually the sheet-price (what the publisher sells a game to the retailer) is like $10-12 below MSRP on a $60 AAA game that is expected to sell well. It's not a fixed percentage. It depends on how well the publisher thinks the game will sell and for how much it will sell, etc. A retailer initially buying a $60 MSRP AAA game for $48-$50 is typical from what I've read on this topic. Add on the logistics (ship to retailer) and manufacturing costs for another $5-15. For a $60 game that sheet price would be 16-20% of the total sale. Then the manufacturing and logistic costs would be another 10%-25%. So you're looking at 26-45% of the sale being consumed by physical costs. That roughly matches IGN's estimate, which makes me think they're not reporting what the retailer nets in profit (MSRP - sheet price), but rather what it costs overall to the publisher here.
For Nintendo though, you're probably right that I was being conservative on costs because the storage they use for physical releases is expensive. If a retailer buys Metroid Prime 4 for $48 (Switch 1) or $58 (Switch 2), and shipping + manufacturing costs are something like $10 for Switch 1 and $15 for Switch 2, then it probably is indeed closer to about 60-65% of the sale going to Nintendo rather than 80%.
This makes sense when you consider that many AAA third party publishers have said they get approximately 50% of the games sale revenue in the end; sometimes more and sometimes less, and platform holders also charge something like a 10-15% licensing fee on physical sales for third party developers, which Nintendo obviously wouldn't pay.
But even then, $38 per Switch 1 game, and $43 per Switch 2 physical game still is a decent profit. If Prime 4 only sold 1.01 Million copies, and they all sold on Switch 1, and they all were physical that would be about $38 million. But obviously not all copies are Switch 1 copies, not all copies are physical, and there is no reason to believe it only sold 1.01 Million copies in the first three weeks rather than much more. Given digital sales, a profit in the upper $40's or even lower $50's depending on the physical : digital ratio for the average copy isn't unrealistic or farfetched.
Even the current discounts are relatively anemic compared to what you see with other publishers, who heavily discount their games. Metroid Prime 4 is still MSRP here in North America, the game's largest region. That's not typical for AAA releases.
Edit: Interesting answer on Quora about this topic.
