We know for a fact that digital copies are way cheaper than physical retail copies to produce.

However, they cost you the same at full retail price.

So, what happened to all that extra money for digital sales?

It's split between the publisher and the platform holder, of course.

They cost the same? PSP and Vita games tend to be 500-1500 yen cheaper to buy digital.

Developers seem to also get a higher cut of the sale cost because there's no retail middlemen and no physical distribution costs. Recent upward earnings adjustments from companies such as Falcom and Marvelous AQL have been citing digital sales as big factors in higher than expected earnings.

Often digital is more expensive

New game is store $79/$89 AUD
New game on PSN $99.99 AUD

Games are not budgeted out of the selling price like that. I know it's convenient to think of it in that way, but what happens is:

- Game has allocated budget, say $100m
- Sales for that game are added to the income for that game, or even that department
- If the second is greater than the first, the game is said to have profited

I know that's obvious, but what it means is that they charge whatever they can for the game and hope that game price * copies sold is greater than budget. So a higher digital price allows them to get there faster. There is no extra money "from digital", it just manifests as greater profit.

Kaz

The production costs are minimal, $5-10 at most on an average $60 game

I suspect Sony take a roughly 30% cut, assuming they copy Apple

So basically, the publishers get an extra cut, I suspect the developers cut depends on the precise deal with the publisher

Having said that, I suspect the reason for the high prices is because the publishers do not want to lose the retailers support, so aren't ready to start undercutting them yet

He's building a new house

No one is giving Galkai the answer he wants.

The evil corporation Sony takes that pure profit and puts it towards its program to build its New World Empire that seeks to enslave humanity.

Pach-Attack - Games Price Breakdown in retail, somewhat depending on the success of the game (60$ game)

(starts somewhere around 2:40 into video)
http://www.gametrailers.com/videos/qba2o2/pach-attack--episode-111

Retail - $12
Console Manufacturer - $12
R&D (Developer) (industry average) - $10
Sales&Marketing - $9
Profit - $17

He states that making a disk costs around 70 cents.

So, if they own the Online store, that Retail part goes to them....as he likes to say often - "IT'S A PROFIT DEAL" ;)