How much developers earn per copy of a game.

[hamenaglar]

How much developers earn per copy of a game.

I've been wondering, when I buy a game how much do I support a developor and how much do I support a publisher/distributor. How much of the percentage per sold copy goes to developers, they are the guys who in the end did the hard stuff. One might say that transport, material etc. all cost money, but how come that digital downloadable (through STEAM) games aren't cheaper.

 

[Corylea.723]

When I worked in a bookstore, we bought books from the publishers for 60 - 80% of the retail price. I'm told that grocery stores have very small markups on food -- maybe 2% -- and clothing retailers have 100% markup or more. My guess is that computer games are more like books or clothes than they are like food, which suggests that 30 - 50% of what you pay for a game goes to the person who sold it to you.

 

[hamenaglar]

When I worked in a bookstore, we bought books from the publishers for 60 - 80% of the retail price. I'm told that grocery stores have very small markups on food -- maybe 2% -- and clothing retailers have 100% markup or more. My guess is that computer games are more like books or clothes than they are like food, which suggests that 30 - 50% of what you pay for a game goes to the person who sold it to you.

I hate that. Imagine if I could get games fo 50% of their price. I wish there was a way to buy it directly from a developer and not paying as much money.

 

[Corylea.723]

I hate that. Imagine if I could get games fo 50% of their price. I wish there was a way to buy it directly from a developer and not paying as much money.

With developers like these, I wish there were a way to buy it directly from the developer so that they would get the money that otherwise goes to the retailer.

 

[petra_silie]

I think developing and distributing a pc- videogame is very expensive and there is no guarantee that you will make a fortune or earn much money when you publish your first game. Many developing companies have to bury their games right before release because production costs are too high. I don't know why it isn't possible to buy the game directly from the devolopers. Maybe it's a question of marketing? ;DSome years ago there was Ryzom from a French company in developement, a fantasy / SciFi rpg / mmorpg. They already struggle during production and during closed beta they went bankrupt. There was an other company who agreed to buy this game and finish it. There was already a strong community behind the game and they were afraid, the new owner will spoil the game. Then there was an unique compagne. The community had the chance to buy all rights of the game and forward it to the French company so they could continue. There was a calculation what the production and maintance of Ryzome costs which was supposed to be the purchase price (250.000 €) which isn't much in comparison The Witcher.http://www.ryzom.org/page/project_budget

 

[Corylea.723]

There are independent companies who make games that they sell directly to the public. I've played some and beta-tested some. Some of those games are fun, but they aren't on the scale of The Witcher; usually they're single-person operations, so the games are small and simple. I'd post some links, but I'm not sure that posting links to competing companies would be a proper use of this forum.

 

[velkito]

I read somewhere, most likely somewhere on the official site, that "The Witcher is golden = has sold a million copies" and also "developping The Witcher cost us 11 million dollars and it's nice to get some of our money back" . If that's so it would mean that the developpers gain less than 11$ per copy. But the game's price where I'm from is in the range, equivalent to 30-45 euros! I wonder what's missing in the big picture..

 

[TC_Coyote]

I read somewhere, most likely somewhere on the official site, that "The Witcher is golden = has sold a million copies" and also "developping The Witcher cost us 11 million dollars and it's nice to get some of our money back" . If that's so it would mean that the developpers gain less than 11$ per copy. But the game's price where I'm from is in the range, equivalent to 30-45 euros! I wonder what's missing in the big picture..

Distributors tack on their cut, advertising/marketing department(s) tack on their cuts, shipping tacks on a cost.... Everything adds on. I don't know the exact percentages for the software industry. I know in the book industry, the author's cut on a hardcover is something like 8-10% (less than that once their agent gets his cut of the author's cut). So, let's say there's a hardcover book for $20 at the store. The bookstore (using Corylea's example) would be getting $4-8 on the sale which covers their opportunity costs (in other words: "What could I put on the shelf instead of that book?"), employee costs, utilities, etc. used in storing/selling the book. So that leaves $12-16 remaining. Take out shipping costs next. Then advertising (usually just if it's a big-name author). Then the printer's costs. Then the publisher's costs... So the person who actually wrote the book would probably only make about $2 off it (and then from that $2, their agent might get 20-40 cents)

 

[username_2075278]

I read somewhere, most likely somewhere on the official site, that "The Witcher is golden = has sold a million copies" and also "developping The Witcher cost us 11 million dollars and it's nice to get some of our money back" . If that's so it would mean that the developpers gain less than 11$ per copy. But the game's price where I'm from is in the range, equivalent to 30-45 euros! I wonder what's missing in the big picture..

What you're missing is that Atari are taking a huge cut - probably (I don't know this) significantly more than CD-Projekt are getting.If 25% of what we pay gets home to the developers I'd be surprised.

 

[vanworden]

There is a slight difference about what gets Publisher and the Developer..

 

[lovely_psycho]

One might say that transport, material etc. all cost money, but how come that digital downloadable (through STEAM) games aren't cheaper.

Digital distribution models are still in their infancy and are plagued by their own problems; namely, as you've said here, pricing, but also less choice for the consumer and segregation of the world market. They also have a curiously symbiotic relationship with bricks-and-mortar retailers, in that they generally don't tend to (or can't) undercut the pricing of bricks-and-mortar retailers for current, on-the-shelf games.In many parts of the world (Australia included), broadband technology isn't comprehensive enough to thoroughly drive digital distribution forwards on its own, not yet. A great many gamers either don't have the bandwidth or capacity to spare to download their games and so still buy from the shop down the road. So from the publisher's point of view, I would imagine the far greater penetration would be from bricks-and-mortar retailers, meaning they cannot afford to price the online versions of the game to be considerably lower than their on-the-shelf counterparts.The gaming industry worldwide faces unique challenges in each jurisdiction, further complicated by local legislations, classification schemes, retail models, economic fluctuations... all these things are bumps in the road for games developers and the industry as a whole, not to mention being further barriers to establishing a healthy and competent online distribution model. For the time being There needs to be a mentality shift in the way online distribution models are viewed by the public and treated by the industry.

I've been wondering, when I buy a game how much do I support a developor and how much do I support a publisher/distributor. How much of the percentage per sold copy goes to developers, they are the guys who in the end did the hard stuff.

It's an interesting question. I nearly hear the echoes of a dozen Polish voices yelling out, "not enough!" from here

 

[lycos]

Video game development is slightly different than book/clothing in that someone has to pony up the money to actually make the game. Developer - makes the game (duh)Publisher - Sells the game, and provides the initial capital to the developer to make the game So the dev goes to the pub and presents a case to make game 'X'. The publisher says yes hands over the capital and the devs get to work. When done - the publisher markets, transports, etc which makes up about 30% of the wholesale price, Another 10% or so for miscellaneous stuff, and a final profit of 60% of the wholesale or so. Now, this 60% goes straight to the publisher to pay off their initial investment capital - the Devs don’t see a penny of it. Only once the publisher is 'paid off' do the devs start receiving royalties which is usually in the range of 20% or so. Of course devs tend to put in 'profit margin' padding into the development costs during the initial stages - so they do make some money - but to actually start making royalties you have to sell a lot of 'game units'. You can read more on it at...*Video game economics*The Economics of the Gaming IndustryHowever...CDP-Red Studio (developers) is a part of CDP which is a publisher - so any profits made all return to the company and the board of directors decide how much of the total profits to give to CDP-R next year.Though I am uncertain how the money would work with the 'local publishers' (Atari etc) - though I suspect the returns would be much greater as the Dev studio already has a large publisher backing it so the 'risk' would be considerably less than a dev studio on its own. It's also why Studios which are part of a established publisher tend to do a lot better than the independant devs, as they have (slightly) easier access to the capital and can get better deals with other publishers in the international market.

 

[deoren]

Wow, awesome explanation Lyc!

 

[lycos]

Wow, awesome explanation Lyc!

No problem. I hope it wasn't too confusing. I doubt CDP-R can give us exact numbers, as I would bet that most of the details of who gets what are all 'Business in Confidence" and not for general consumption.But it shows that CDP-R making money (ie: recieving royalties) from Witcher is not a small feat in todays video game market where an average game costs millions to make. Add on top of that they were a realatively obscure publisher internationally at the time, and the game has its own distinct style. But they have paid back the initial investment to their parent company, but are now smoking rolled up dollar bills from the royalties. ;DThis also explains why games tend to 'settle into a mold' if they are sucessful (eg: Bethesda, EA, Blizzard, etc). Developers go with what has been shown to work, as risk taking could mean bankruptcy if they fail and publishers can be incredibly stingy with money for new ideas. And with less capital/time/risk needed to release the next game, they sadly tend to hammer their franchies into the ground (Madden).The video game market is a incredibly cut-throat industry and the mangled bodies of failed developers litter the long highway to a games release.