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Forums - Sales Discussion - Pachter's explanation on where your 60 dollars goes

aragod on 11 April 2010
jarrod said:
MonstaMack said:

For once I think Pachter is right. Retailers do get a good chunk ($12 seems fair) for each game. I think with a 50 million dollar budget a game should easily break a million or more (if not It would be a flop, wouldn't it?) but it makes you wonder how much the average Wii game costs, or games like Deadly Premonition. Obviously not every game costs the same to make.

 

I work in retail and the mark up % did account to close to $12 profit per game. I think it was around $4 for a $20 game, so that means budget games have to sell a lot more or actual be budget in budget development costs (lol). So I hope Deadly Prem didn't run them much.

Does he also factor in price cuts? I mean if the game drops to $40 it has to obviously sell more to make up for the difference.

Average multiplatfom HD game R&D budget: $15-30m, AAA HD games regularly exceed $40m

Average Wii game R&D budget: $5-7m

Average budget for GC/PS2/Xbox games last gen: $3-5m

For AAA HD games, typically advertising budgets match or exceed development budgets.

And a few random R&D budgets...

  • Gears of War: $10m (no engine/tech costs, built "for free" alongside UE3)
  • Red Steel: $12m
  • Spore: $35m
  • Gran Turismo 5: $60m
  • Grand Theft Auto IV: $100m+
  • Modern Warfare 2: $40-50m ($200m advertising budget)

I just wonder where did you get access to these numbers, I'm curious as I'd like to find out few more game budgets.



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binary solo on 11 April 2010

I'm guessing like publishers and authors and record labels and musicians there are lots of different deals depending on the developer's reputation and even the specific IP.

I's say with CoD: MW2 Activision paid IW the full development costs up front, plus there was probably a bit of a % of gross sales on top.

An indie dev isn't going to have their full dev costs paid up front because the publisher isn't going to be sure they are going to make on the deal, so they will be making the dev take some of the risk. The Publisher will pay a bit up front bit most of it will be drip fed as the sales receipts come in. What's important for the indie dev is that the Publisher will have an agreement that if the game achieves a certain level of sales then the next game will be a better deal for the dev.



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pizzahut451 on 11 April 2010
Squilliam said:
It goes something like this:

$12 Console maker
$12 Retailer
$30 Publisher
$6 shipping, packaging and handling as well as returns.

why should console maker get the money if they didnt make the game?



scottie on 11 April 2010
pizzahut451 said:
Squilliam said:
It goes something like this:

$12 Console maker
$12 Retailer
$30 Publisher
$6 shipping, packaging and handling as well as returns.

why should console maker get the money if they didnt make the game?

That's just how the games industry works, and explains both why PC games are cheaper, and why MS and Sony are willing to sell their hardware at a loss. If you want to make a game on a console, you have to pay to do so



DirtyP2002 on 11 April 2010
pizzahut451 said:
Squilliam said:
It goes something like this:

$12 Console maker
$12 Retailer
$30 Publisher
$6 shipping, packaging and handling as well as returns.

why should console maker get the money if they didnt make the game?


because they make the console the game is on.



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drakesfortune on 11 April 2010

NFL teams spend 6 months getting ready for games, playing players to practice, updating their stadiums, and don't make very much money until they start playing games.

It's just economics. Yes, it makes sense to do it this way. If they want to put out a game on someone's console, they have to take risks. Sony, and Microsoft have to take HUUUUGE risks in putting a new console out. The risks they take make the risks devs take pale in comparison.



kingofwale on 11 April 2010
Chairman-Mao said:
Wow $12 to the retailer that's crazy. Also I didn't think it was as high as $12 to the console manufacturer.

what are you talking about? 12 dollars is nothing, considering how many failed games are sitting there in the store warehouse. They have to sell 5 copy for each copy that is not sold to break even.

 

to me, there is nothing 'crazy' about it.

 



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Rhonin the wizard on 11 April 2010
scottie said:
pizzahut451 said:
Squilliam said:
It goes something like this:

$12 Console maker
$12 Retailer
$30 Publisher
$6 shipping, packaging and handling as well as returns.

why should console maker get the money if they didnt make the game?

That's just how the games industry works, and explains both why PC games are cheaper, and why MS and Sony are willing to sell their hardware at a loss. If you want to make a game on a console, you have to pay to do so

PC games are starting to cost the same as their console counterparts.



ProdigyBam on 11 April 2010

i also heard that sony wants 3 dollar more money from third party per copy than ms



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http://www.youtube.com/watch?v=lVVrNOQtlzY

ProdigyBam on 11 April 2010
aragod said:
jarrod said:
MonstaMack said:

For once I think Pachter is right. Retailers do get a good chunk ($12 seems fair) for each game. I think with a 50 million dollar budget a game should easily break a million or more (if not It would be a flop, wouldn't it?) but it makes you wonder how much the average Wii game costs, or games like Deadly Premonition. Obviously not every game costs the same to make.

 

I work in retail and the mark up % did account to close to $12 profit per game. I think it was around $4 for a $20 game, so that means budget games have to sell a lot more or actual be budget in budget development costs (lol). So I hope Deadly Prem didn't run them much.

Does he also factor in price cuts? I mean if the game drops to $40 it has to obviously sell more to make up for the difference.

Average multiplatfom HD game R&D budget: $15-30m, AAA HD games regularly exceed $40m

Average Wii game R&D budget: $5-7m

Average budget for GC/PS2/Xbox games last gen: $3-5m

For AAA HD games, typically advertising budgets match or exceed development budgets.

And a few random R&D budgets...

  • Gears of War: $10m (no engine/tech costs, built "for free" alongside UE3)
  • Red Steel: $12m
  • Spore: $35m
  • Gran Turismo 5: $60m
  • Grand Theft Auto IV: $100m+
  • Modern Warfare 2: $40-50m ($200m advertising budget)

I just wonder where did you get access to these numbers, I'm curious as I'd like to find out few more game budgets.

God Of War 3: $44m (with engine)

Uncharted 2: $20m

Infamous: $40m+ (with engine)

MGS4: less than $60m (with engine)

Thats the few i know



Fedor Emelianenko - Greatest Fighter and most humble man to ever walk the earth:

http://www.youtube.com/watch?v=lVVrNOQtlzY