How much go to retailers, to factory costs, for publisher and for the console company? It's true that EU copies generate more profit than US copies?

There are no good answers to this question. It varies by title, publisher, platform, and region, and nobody likes to talk about their cut.

If you want ballpark numbers, I usually estimate 40% to the publisher (who must pay for development and marketing), 40% to retailer, and the remaining 20% is split amongst manufacturing, platform licensing, and distribution.

Much of this information isn't publically availiable, but I'll do my best on it. The most concrete one I can give is the US retailer, and that is about 20% of the retail cost (at MSRP). I don't have the percentage for EU, but I do know that on both systems and games, the retailer take is much better. (The EU is the only place where a retailer can put a system on sale and still profit, but that's detracting.) Truth be told, I'd not be surprised if what they pay in the EU is slightly more than the US, only offsetting for shipping costs.

Factory costs, well, that's pretty neglible. There are companies that sell DVDs at retail for $1. Wholesale price on those is about 85 cents. Allowing for a very thin margin, it's safe to assume that the factory costs on DVD are no more than 75 cents, and that's at the high end for low print runs. BR costs a bit more to press, but it's come down enough that using the same max costs, you'd be looking at 80 cents. These costs do include inserts, case, disk, AND shipping domestically.

The console company is the toughest, as the rumored numbers have ranged from 5% to 40%. Many of the rumors are in the 20-30% of the company's take, which would put it as the first thing paid out from the wholesale price. However, these numbers I can not confirm.

What's left after paying these bills is for the publisher and developer. If they are the same company, great, the buck stops. The numbers may shift around for financial reports, but the money remains. If they are not the same company, well... numbers really don't exist for this; they will vary from game to game. Hypothetically, let's say Infinity Ward was to shop Modern Warfare 2 around. Activision may say they want 25% of the take, some other publisher, say, Sega (merely for an example) offers to take 20%. IW may go back to Activision stating this other offer, which may get a counter-offer of 18%. This will go on for a bit. Conversely, company Q makes a game nobody's heard of, not to mention the company itself. They will go around, trying to even find someone willing to publish their game, and when they finally find someone, that someone may want 60% of the take due to the higher risk. So this part really can be anywhere.

There are breakdowns available. A lot of it depends on the agreement the developer has with the publisher, and with the systems it is being produced on.

Roughly 50% goes to the developer. The rest goes to:

- Publisher
- Marketing
- Console licensing fees
- Retail markup
- Packaging Fees & Distribution

Now, this can really vary, depending on contractual agreement. The publisher may be the developer (EA, Square Enix) which negates publishing costs. The developer may have an agreement with the console manufacturer to reduce costs for the licensing fees, or the console maker may pay for some of the marketing. Some games are digitally distributed, which contain no packaging fees and integrate other costs into the schema (such as licensing fees, retailer markup and licensing fees)

That is one reason why DD is so popular: the cut that goes to the developer is MUCH higher. Regularly, the dev may get 40-50% of the income from the traditional method (dev to publisher to retailer), whereas XBLA, PSN, WiiWare, Steam, and iPhope as well as the rest are quite a bit more lucrative.

In the end, you get (to devs)

Traditional: 40-50%
Steam: 60%
XBLA: 70%
PSN: 70%
WiiWare/VC: 70% (AFAIK)
iPhone: 70%

Which shows you why DD is becoming popular: with no middleman such as the store, the developer gets a much more lucrative deal.

I believe the figure used is that US retailers buy games ($60 RRP) in bulk for approx $45 - $48 per copy depending on the game, publisher, amount ordered etc. EU is supposedly to be lower, but this is offset by EU typically ordering more and then discounting them.

From the $45 they then have to pay an approx 10% royalty fee to Sony / Microsoft, manufacturing, shipping, tax etc.

What I find most interesting is that company will sell their games to retail for less in exchange for 'priority' shelf space, i.e. when you walk into a store and see the new Halo at the front on the new releases shelf, and spaced all around the store with posters etc, it's cause microsoft effectively paid for it.

Hell, that top 10 chart the game stores have is pretty much based on how much the publishers pay them, as opposed to sales. The same goes for Music stores >_>.

for a 60 dollar game they get 45-48 dollars a copy. which is 75-80%

Taxes can take a fair share of the retail price. For example, in Germany it's 19% from the price of the game, Finland 22% etc.

The profit in different regions depends also on the current currency exchange rates and the currency used in trading.

One example i can recall, was someone posting a NOE list price that retailers paid for Super Mario Galaxy, that was 35€, and the game retailed for 50€, if i recall.

One other variable is the size of the retail establishment.
If you are ordering games one or a few at a time, you pay much more than if you are able to order them in bulk.
When someone I knew owned a game store, he made less than 15% on AAA titles.
That's why game stores love the used game business -- much higher margins.

Mike from Morgantown

There are several splits in revenue, for an average 60$ next gen game you get this kind of breakdown:

Console owner: 10-15$
Retailer 4-5$

Production: the rest
Production consists of paying the developers for their wages, costs associated with development, marketing, packaging, distribution.

In the initial phase the developers make about 1$ per copy sold of profit. Later on, when the previously mentioned "production costs" is paid off, that revenue becomes dev profit.

Example:
Retailer buys games for 55$
15$ goes to Sony for every game sold.

game costs 50Million USD to make.
Revenue for each game sold is 40$ USD.
Dev makes 1$ per game sold.
Costs associated with sales (packaging, discs, distribution) is about 4$ per copy.
Remaining revenue is 35$

35$ per game sold x 1.428 Million copies sold = 50M (development costs are paid off)

In the case of a game like MGS 4, which sold 4.4M copies,
3 Million games x 35$ per copy = Dev profit (105 Million USD + 1$ per copy for first 1.428M copies)

Additionally, at 4.4 Million copies sold, Sony, being the console owner, gets 4.4M x 15$, or 66 Million USD.

@theprof: Licensing costs are below $15, I think 5-10 is a better figure. And retailers make a lot more than $5, they don't make money on the hardware so they need to make a profit on software/accessories.