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Forums - Sales - Basic Gaming Sales/ Money Questions

silicon on 12 June 2009

I had some basic questions relating to the gaming industry and thought this was the perfect place to ask:

When people mention companies like Sony or MS giving money to developers for exclusives, do they mean payments, or capital investments?

What's the average cost to develop a game for PS3, X360, PSP,  DS, Wii?

How much does a developer make per sale of a game?

How much does a publisher make per sale of a game?

 

And any other information similar/related to this, please post... thanks!!!



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mrstickball on 12 June 2009
silicon said:

I had some basic questions relating to the gaming industry and thought this was the perfect place to ask:

When people mention companies like Sony or MS giving money to developers for exclusives, do they mean payments, or capital investments?

What's the average cost to develop a game for PS3, X360, PSP,  DS, Wii?

How much does a developer make per sale of a game?

How much does a publisher make per sale of a game?

And any other information similar/related to this, please post... thanks!!!
  1. Usually, when a company gives money to developers for exclusives, it can be paid in many different ways. Some do it by publishing the game for them, which saves money (eg, Microsoft and Gears of War). Others by free marketing, and still others by capital investments.
  2. Average costs for a PS3/360 title range from $10m for a low/mid budget X360 title (add a few m for a PS3 title), and up to $30-40m for a high-budget 360 title, and $50m for a high budget PS3 title. Wii is between $5-10m on most titles, but it can always be  more or less depending on scope. DS is around $1-$5m depending on title, and I would assume PSP is about triple of the DS.
  3. Devs make about $30-40 per title, depending on the company and what system it's on. A developer will make more money per game on a 360 at $60 than a Wii dev at $50.
  4. Pubs make $1-3 per game, AFAIK.


Back from the dead, I'm afraid.

Slimebeast on 12 June 2009
mrstickball said:
silicon said:

I had some basic questions relating to the gaming industry and thought this was the perfect place to ask:

When people mention companies like Sony or MS giving money to developers for exclusives, do they mean payments, or capital investments?

What's the average cost to develop a game for PS3, X360, PSP,  DS, Wii?

How much does a developer make per sale of a game?

How much does a publisher make per sale of a game?

And any other information similar/related to this, please post... thanks!!!
  1. Usually, when a company gives money to developers for exclusives, it can be paid in many different ways. Some do it by publishing the game for them, which saves money (eg, Microsoft and Gears of War). Others by free marketing, and still others by capital investments.
  2. Average costs for a PS3/360 title range from $10m for a low/mid budget X360 title (add a few m for a PS3 title), and up to $30-40m for a high-budget 360 title, and $50m for a high budget PS3 title. Wii is between $5-10m on most titles, but it can always be  more or less depending on scope. DS is around $1-$5m depending on title, and I would assume PSP is about triple of the DS.
  3. Devs make about $30-40 per title, depending on the company and what system it's on. A developer will make more money per game on a 360 at $60 than a Wii dev at $50.
  4. Pubs make $1-3 per game, AFAIK.

No 3 & 4 is crazy talk mrstick. With $1-3 per game, you are thinking of distributors.

Between dev and publisher it's a lot more even. I'd say dev gets $25 and publisher $15 on average, something like that (on average, it varies a lot depening on if the game underperformed or overperformed - if a game underperforms, the proportion of money can actually become for example $50 per copy to the develeoper and -$10 to publisher, because many titles simply are a loss to the publisher). 

Publishers need to take such a high proportion of money because they pay for all all the marketing and extra expenses, plus they take the bigger financial risk with funding the game and taking care of all losses.



mrstickball on 12 June 2009

Not according to Epic:

http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames_print.html



Back from the dead, I'm afraid.

theRepublic on 13 June 2009
mrstickball said:

Not according to Epic:

http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames_print.html

I think you misinterpreted the article.

The way I read it is the publishers make $1 per copy only after they recuperate their costs.  Before that it sounds like they take as much as possible since they paid the developer up front to make the game.

The developer then makes nearly 45% of the remaining $59.  That means $26.55 at best, not $30 to $40.  This is only after the game starts making a profit.

The rest goes to retailers, distributers, licensing fees, etc.



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Slimebeast on 13 June 2009

^Yes.

People need to understand that there's never a fixed amount that goes to developer and publisher from each copy sold (although the total amount split between the two is pretty much fixed, and it is rufly $35-40). The proportion between dev and publisher is always dynamic, depending on how much the game in question sells (and how contracts are written).



mrstickball on 13 June 2009
theRepublic said:
mrstickball said:

Not according to Epic:

http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames_print.html

I think you misinterpreted the article.

The way I read it is the publishers make $1 per copy only after they recuperate their costs.  Before that it sounds like they take as much as possible since they paid the developer up front to make the game.

The developer then makes nearly 45% of the remaining $59.  That means $26.55 at best, not $30 to $40.  This is only after the game starts making a profit.

The rest goes to retailers, distributers, licensing fees, etc.

The article makes no such assumptions as to who takes what percentage other than the ones given..So why assume the publisher makes more than the stated revenue?

There are lots of variables on the Gears of War estimate. Licensing (which was/is 5% of the pie) may or may not be needed for any given game. Marketing (7%) can also greatly vary....What if the marketing team is in-house? Also, corporate costs and hardware development would be associated with developer costs, I'd think.

So it really depends on how you want to quantify it.

I gave an esitmate of $30-40 profit for developers. The low end of the spectrum would be $25 in very bad cases, but it could near $40 if the right requirements were met (lower marketing budget, no licensing).



Back from the dead, I'm afraid.

theRepublic on 13 June 2009
mrstickball said:
theRepublic said:
mrstickball said:

Not according to Epic:

http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames_print.html

I think you misinterpreted the article.

The way I read it is the publishers make $1 per copy only after they recuperate their costs.  Before that it sounds like they take as much as possible since they paid the developer up front to make the game.

The developer then makes nearly 45% of the remaining $59.  That means $26.55 at best, not $30 to $40.  This is only after the game starts making a profit.

The rest goes to retailers, distributers, licensing fees, etc.

The article makes no such assumptions as to who takes what percentage other than the ones given..So why assume the publisher makes more than the stated revenue?

There are lots of variables on the Gears of War estimate. Licensing (which was/is 5% of the pie) may or may not be needed for any given game. Marketing (7%) can also greatly vary....What if the marketing team is in-house? Also, corporate costs and hardware development would be associated with developer costs, I'd think.

So it really depends on how you want to quantify it.

I gave an esitmate of $30-40 profit for developers. The low end of the spectrum would be $25 in very bad cases, but it could near $40 if the right requirements were met (lower marketing budget, no licensing).

For the companies that do put next-generation titles out early, making a profit is tough. Namco Bandai president Takeo Takasu said his company needs to sell at least 500,000 copies of each PlayStation 3 game it creates to make a profit. Analysts predict that some other publishers will need to clear 1 million units to get in the black--and start making about $1 per game sold.
 The key word here is start making $1 per game sold.  Think about it, if the publisher only made $1 for every game, how could they make a profit on 1 million units sold?  That would only be $1 million.  They take the developers portion until they make it into the black.  That gives us:

$26.55 + $1.00 = $27.55

$27.55 × 500,000 ≈ $13.8 million

$27.55 × 1,000,000 ≈ $28.5 million

Those numbers put us in line with what we know about the costs of HD development.

So overall, the picture looks like this: The publisher pays a developer a certain amount to make a game, developer makes the game, publisher publishes game, publisher takes lion's share of money until they break even, publisher makes $1 per game after that, developer makes additional money after game breaks even.

The remaining $59 per game goes into many hands. The biggest portion--nearly 45%--goes toward simply programming and designing the game itself.
How do you get $30-40 out of that?



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Now Playing
Switch - Super Mario Maker 2 (2019)
3DS - Phoenix Wright: Ace Attorney (Trilogy) (2005/2014)
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Mobile - Super Mario Run (2017)
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PC - Deep Rock Galactic (2020)

Nightmare24 on 13 June 2009

Thanks for the information.



Slimebeast on 13 June 2009
theRepublic said:
mrstickball said:
theRepublic said:
mrstickball said:

Not according to Epic:

http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames_print.html

I think you misinterpreted the article.

The way I read it is the publishers make $1 per copy only after they recuperate their costs.  Before that it sounds like they take as much as possible since they paid the developer up front to make the game.

The developer then makes nearly 45% of the remaining $59.  That means $26.55 at best, not $30 to $40.  This is only after the game starts making a profit.

The rest goes to retailers, distributers, licensing fees, etc.

The article makes no such assumptions as to who takes what percentage other than the ones given..So why assume the publisher makes more than the stated revenue?

There are lots of variables on the Gears of War estimate. Licensing (which was/is 5% of the pie) may or may not be needed for any given game. Marketing (7%) can also greatly vary....What if the marketing team is in-house? Also, corporate costs and hardware development would be associated with developer costs, I'd think.

So it really depends on how you want to quantify it.

I gave an esitmate of $30-40 profit for developers. The low end of the spectrum would be $25 in very bad cases, but it could near $40 if the right requirements were met (lower marketing budget, no licensing).

For the companies that do put next-generation titles out early, making a profit is tough. Namco Bandai president Takeo Takasu said his company needs to sell at least 500,000 copies of each PlayStation 3 game it creates to make a profit. Analysts predict that some other publishers will need to clear 1 million units to get in the black--and start making about $1 per game sold.
 The key word here is start making $1 per game sold.  Think about it, if the publisher only made $1 for every game, how could they make a profit on 1 million units sold?  That would only be $1 million.  They take the developers portion until they make it into the black.  That gives us:

$26.55 + $1.00 = $27.55

$27.55 × 500,000 ≈ $13.8 million

$27.55 × 1,000,000 ≈ $28.5 million

Those numbers put us in line with what we know about the costs of HD development.

So overall, the picture looks like this: The publisher pays a developer a certain amount to make a game, developer makes the game, publisher publishes game, publisher takes lion's share of money until they break even, publisher makes $1 per game after that, developer makes additional money after game breaks even.


What do you exactly mean with that part of the sentence?