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[sirris]

Anyone have any idea what the average rough estimate breakdown is for a $50 (or $60 for that matter) game sale? Who get what cut amount? You have to figure the pieces of the game sale pie go to:

Publisher
Developer
Licensing
Retail Outlet
Shipping

So who gets what amount out of that? I know it varies. First party titles obviously don't pay licensing and some devs on a rare occasions self publish. But what would be considered an average?

 

[WindyMan]

Assuming a $50 game's content is wholly owned by a publisher, I believe it goes something like this:

Retail - $4-8
Disc production/duplication/packaging/distribution - $3-8
Publisher - Everything else ($30-40)

Developers are paid up front, so their "slice of the pie" is dependent on how well the game sells, if you can really call it that. That "everything else" for the publishers is a bit of a misnomer, mostly because the overall development, production and QA costs associated with a game and vary wildly. How much profit is taken from a game is obviously determined on how well it sells.

Licensing deals are usually paid up front too, but there also might be licenses that are paid out on a per-sold basis. Those types average in the $1-3 range, but again it can be different for other publishers and different licenses.

I've worked in retail previously, and can get games at work (THQ) for $10 and less. So I'm just basing it off of that experience.

 

[PG2G]

i assume a few bucks also go to microsoft/sony/nintendo

 

[WindyMan]

i assume a few bucks also go to microsoft/sony/nintendo

Oops, forgot about that. Licensing can set you back $4-9 per copy. So add that in there.

 

[ToxicAdam]

You are forgetting another large out-of-pocket expense: Advertising.

 

[Tarazet]

Publishers get so much more than they used to just because of optical media. The number $22 seems to be stuck in my head - I believe that's what a single N64 cartridge cost to produce. By comparison, a DVD costs a few cents. Scale that savings up to millions of units and it's easy to see one big reason why, for example, companies like Atlus can produce games in small print runs and still turn a profit...

 

[Spencerr]

4-8 for retail sounds way too high to me.

I know for a fact grocery stores operate at around 1% profit so.. I don't know.

 

[Dyne]

i assume a few bucks also go to microsoft/sony/nintendo

Yes, and apparently Nintendo demands higher royalties. I remember a thread here about that a long time ago. It was one of the many ways fanboys justified that they were making more money.

 

[FreakyFink]

4-8 for retail sounds way too high to me.

I know for a fact grocery stores operate at around 1% profit so.. I don't know.

Nah. Despite high volume sales at large-chain supermarkets, they can not stay open at 1% net margins. The average supermarket net margin is 5% - 7% (source: Go Go Google Answers). However some staples, like bread, have uber-low margins typically, if not negative (i.e. loss leaders).

As for wholesale cost for new, $50-MSRP video game software, take Microsoft's 360 launch games as an example:

S7100009 Microsoft (X-Box)
S71-00009 Added on 8/19 Perfect Dark Zero X360 42.58

S7100051 Microsoft (X-Box)
S71-00051 Added on 8/19 Perfect Dark Zero Tin Box X360 51.30

S7400023 Microsoft (X-Box)
S74-00023 Added on 8/19 Kameo X360 42.58

U2500009 Microsoft (X-Box)
U25-00009 Added on 8/19 Project Gotham Racing 3 X360 42.58

(pseudo-source)

 

[ziran]

Anyone have any idea what the average rough estimate breakdown is for a $50 (or $60 for that matter) game sale? Who get what cut amount? You have to figure the pieces of the game sale pie go to:

Publisher
Developer
Licensing
Retail Outlet
Shipping

So who gets what amount out of that? I know it varies. First party titles obviously don't pay licensing and some devs on a rare occasions self publish. But what would be considered an average?

I've always thought, roughly, half the retail cost of a game (without tax) goes to the Publisher.

So for a $50 game i'd guess:

Developer if independent, negociated with Publisher, i guess ~$10-15 20-30%

Publisher (incl. Developer) ~$25 50%
Licensing, Manufacture, Shipping, etc ~$15 30%
Retail Outlet/Distributor ~$10 20% (major retailers and distributors will be paid extra incentives if sufficient stock is sold).

So for a $30 DS/GBA game the Publisher and Developer would be getting around $15.

 

[JackFrost2012]

Developer if independent, negociated with Publisher, i guess ~$10-15 20-30%

I found a flaw in your math--some money is going to the developer.

 

[Rayne.S]

Full priced game ( € 59.99 ) in PAL land sets retail on a net profit of € 17.-

 

[ziran]

I found a flaw in your math--some money is going to the developer.

your point/sarcasm/wit is lost on me.

 

[Jewbacca]

10-15% is usually the margin on fully priced games for the retailer... From my experience.

Target would pay anywhere from 38-43 dollars for a new release.

 

[svenuce]

nm... not worth it.

 

[ziran]

The innacuracies of the above estimates are funny to me.

You're suggesting you know what the breakdown is, so if you do know please reveal the truth. Especially since everything posted here is so far off you find it funny...

 

[Koren]

Full priced game ( € 59.99 ) in PAL land sets retail on a net profit of € 17.-

If that's true, there's a problem with some independent shops. The one I usually shop receive games for ~51€, and sell them for ~54.90€-57.90€ (with a 5% rebate for returning customers). So that's 1.50-4€ net profit for customers like me... They don't make a secret that nearly all their profits come from second-hand market.

I haven't worked for independant VG shops, but I used to work for an independant music store. The profits were minored because the prices of the goods were higher in order to allow returns : when a product is not sold, ot was possible for the reseller to sell it back to the producer. A kind of insurance... I guess small shops have smaller profits due to this problem.

 

[ziran]

(for regular priced games, not budget)

i seem to remember the n64 licensing fee being really high ~$19. add to this the cartridge costs which were $12-16 and you already had at least $31!:
http://www.n-sider.com/articleview.php?articleid=279

A game cartridge cost a Nintendo game manufacturer $12 to $16, while a CD cost only $1 to $2.

the playstation license fee is ~$7-9:
http://www.findarticles.com/p/articles/mi_zdegm/is_200402/ai_ziff119386#continue

Sony, for instance, may take $7 to $9 for every copy of a PlayStation 2 game made—but the better the title does, the lower this royalty rate becomes (as long as such deals are arranged beforehand). Also, royalties are less if it's a game made exclusively for that console.

nintendo did reduce fee's with the following, supposed, breakdown:
http://cube.ign.com/articles/390/390420p1.html

March 21, 2003

NOA Restructures its Price Plan

Now, a little dirt from the Nintendo neck of the woods for you. Sources working at some of the big publishers in the US -- okay, they work the vending machines -- allege that Nintendo has recently restructured its third-party licensing fees program. Previously it was a flat fee regardless of whether or not a third-party would be trying to sell its title at a bargain rate, but now the royalty is "bendable," or flexible. It goes a little something like this: third-parties now pay Nintendo an overall $10 royalty if their game sells for $50 on GameCube. If it goes for $40, the fee is $8.50, and if it's $30 the royalty is $7 flat. Meanwhile, truly bargain bin games priced at under $20 will carry a licensing fee of $5.50, say insiders.

The same sources note that Sony's pricing structure is still the best, but that this change, which was greenlighted only recently by Nintendo, has helped balance out the playing field quite a bit.

microsoft's xbox license fee is $7-8:
http://www.globetechnology.com/servlet/story/RTGAM.20051124.gtibxbox24/BNStory

Microsoft gets $7 to $8 hardware royalties for each game made by outside companies, and more on games produced by its own game studio, Harris Nesbitt analyst Edward Williams said in a Nov. 8 report.

also using a tie-in franchise add costs:
http://www.findarticles.com/p/articles/mi_zdegm/is_200402/ai_ziff119386#continue

Licensing costs have a broad range, adding potentially $5 million to $15 million (or higher) for a triple-A license (like Harry Potter), down to $1 million for a B license (say, Daredevil). Licensing usually includes a certain percentage of revenues, too, which can range from 3 to 10 percent. But if the well-known name on the box attracts more casual gamers, publishers are happy to fork over the dough.