Ever wonder where your hard-earned money goes after you've plunked $60 down on a game at GameStop or Target? Here's one answer: 

Much of the data came via a slide shown Thursday by Steve Perlman, founder of OnLive, an on-demand video game service based in Palo Alto.

Perlman, who spoke during the Design Innovate Communicate Entertain Summit in Las Vegas, showed the slide as part of an update on his company's service, which is expected to launch later this year.

Another way to look at it is to say publishers such as Activision and Electronic Arts receive $45 after retailers take a $15 cut. Publishers turn around and pay a $7 licensing fee to console manufacturers such as Microsoft, Sony and Nintendo. The cost of making, packaging and shipping game discs to stores carves up another $4. Finally, not all games sell, so the expense of returning unsold inventory eats up another $7.

That leaves publishers with about $27 per disc sold for development, marketing and other expenses. These are, of course, back-of-the-envelope averages. Each of these numbers can vary. For instance, a publisher could negotiate a smaller licensing fee with console manufacturers. And by deploying the Goldilocks method of inventory (not too much, not too little), they can also minimize returns. Tinkering with the margins in these ways lets companies tune their bottom lines.

-- Alex Pham

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/02/anatomy-of-a-60-dollar-video-game.html

"Finally, not all games sell, so the expense of returning unsold inventory eats up another $7."


how is that higher than distribution + cost of goods???

Then why aren't d/l games costing $19 less than physical copies?

Wasn't the retailer margin listed as $12 elsewhere? In any case it does fall in line aproximately with what Publishers have said in the past regarding break even points.

Pretty sure the platform royalty portion of that graph is off, at least in regards to PS360. 7$ is closer to a PSP or DS royalty. Ofc I cannot prove this as current gen royalty rates are tightly held by NDA clauses in the platform development licensing contracts, but I am reasonably certain that HD console rates are in the 10-12$ range.

The publisher gets 45% of the retail price. That reconfirms the number I've been hearing.

where's the percentage for the ivory back scratcher?

do u really need to ask?? maybe they want more profit ???

@galaki

hoho

you assume people think fair and all that eh?

No wonder they want retail stores out of the picture. That would mean they would get 70-80% of the money from each copy.

Luckily I don't think they will ever succeed with getting retail out of the picture. I prefer my physical copies >: