And the fine they face if they are fined is $1.36 million. They will still be laughing all the way to the bank.
And the fine they face if they are fined is $1.36 million. They will still be laughing all the way to the bank.
Companies will, on occasion, chance fines if they believe the reward is greater than the risk.
Actually - I was thinking the same thing while playing W3. Considering the amount of content and the size of the team I hope they're not all burned out!
I hope that management knows what they're doing and that they give people time to recuperate. Don't know about the European game industry but at least the US game industry is infamous for working their people until they drop. I hope CDPR is different, even the most talented and enthusiastic people need their vacation!
Thats because CDPR is in a unique position where the combination of insanely low development costs and their ability to self publish to their own distribution platform means that their 4million sales probably has the same impact as 8-10 million for a company like Square Enix that spends far more on development and has to share every dollar.
From the outside looking in, Witcher 3 seems like the perfect launch. No major game breaking bugs, fantastic reviews and a great model for dlc. It also helps that there is bugger all worth buying for the next gen consoles, so those who might not have picked it up are more inclined to do so.
Hopefully those newcomers enjoyed the experience, and will return for any future instalments.
Hopefully those newcomers enjoyed the experience, and will return for any future instalments.
That's very true, but I don't believe that to be the case in this instance. I think it was an oversight on CDPR's part that they released the information before the shareholders could see it.
Either way, CDPR is coming out on top in this deal no matter what the results are. Their stock prices shot up around 30% if the reports are to be believed and I guarantee you not a single shareholder will pull out over this given the considerable profits they are probably making from TW3 right now. A fine of under $1.5 million was a worthwhile investment if it comes to that.
Oh ya, I'm not suggesting it one way or another just merely pointing out that it has happened in business before.
For those querying profitability split, some rough numbers below based on an even $20 split across CDPR/Publisher/Rest of Market @$60 average revenue per unit.
There are many unknowns e.g does the 4mill unit sales include free bundles with Nvidia cards. Is the publisher cut $20 or less as in many regions CDPR only required a distributor. Where does the manufacturing cost sit for the physical media? What is the profitability of the collectors edition. What is the revenue split for Playstation Plus and Xbox Live purchases. Steam cut is 30% of revenue value, surely a better price is negotiated on a major AAA release on so on.
Sales Units GOG - 650,000
Sales Units Elsewhere - 3,350,000
Total Unit Sales - 4,000,000
Revenue $$ GOG @$60 - $39,000,000
Revenue $$ Elsewhere @$60 - $201,000,000
Total Revenue $$ $240,000,000
Profit per unit GOG $60 - $39,000,000
Profit per unit Elsewhere- $20 - $67,000,000
Gross Profit to CDPR - $106,000,000
Development Cost CDPR - $35,000,000
Net Profit CDPR - $71,000,000
Marketing Cost Publisher - $35,000,000
Publisher Profit per unit $20 - $67,000,000
Net Profit Publisher - $32,000,000
Profit (Steam/Retail etc) @$20 - $67,000,000
So yeah, looks like a healthy profit in 2 weeks to CDPR, shareholders will be happy with their dividends.
I think the actual trading terms are more favorable toward CDPR and their return is higher than what I am estimating.
CDPR can easily fund Cyberpunk and based on the quality of Witcher 3, sales will have a long tail, no doubt they will be breaking out the champagne.
There are many unknowns e.g does the 4mill unit sales include free bundles with Nvidia cards. Is the publisher cut $20 or less as in many regions CDPR only required a distributor. Where does the manufacturing cost sit for the physical media? What is the profitability of the collectors edition. What is the revenue split for Playstation Plus and Xbox Live purchases. Steam cut is 30% of revenue value, surely a better price is negotiated on a major AAA release on so on.
Sales Units GOG - 650,000
Sales Units Elsewhere - 3,350,000
Total Unit Sales - 4,000,000
Revenue $$ GOG @$60 - $39,000,000
Revenue $$ Elsewhere @$60 - $201,000,000
Total Revenue $$ $240,000,000
Profit per unit GOG $60 - $39,000,000
Profit per unit Elsewhere- $20 - $67,000,000
Gross Profit to CDPR - $106,000,000
Development Cost CDPR - $35,000,000
Net Profit CDPR - $71,000,000
Marketing Cost Publisher - $35,000,000
Publisher Profit per unit $20 - $67,000,000
Net Profit Publisher - $32,000,000
Profit (Steam/Retail etc) @$20 - $67,000,000
So yeah, looks like a healthy profit in 2 weeks to CDPR, shareholders will be happy with their dividends.
I think the actual trading terms are more favorable toward CDPR and their return is higher than what I am estimating.
CDPR can easily fund Cyberpunk and based on the quality of Witcher 3, sales will have a long tail, no doubt they will be breaking out the champagne.
One thing I'm curious about due to the wording in the press release... did CDPR sell 4 million units or 5 million? It claimed it sold 4 million in the first two weeks since launch, but prior to that they announced they sold over 1 million pre-orders... was that number included in the 4 million statement or was it separate?
It's not as simple as that. Do you realize that those 650k registered on GOG Galaxy is also from retail sale? TW 3 box version costs 40€ in my country for example, and retailers have to get their cut as well as publisher. We don't really know how many copies were sold DIGITALLY through GOG Galaxy. We only know the total number of GOG Galaxy registered versions.
Why do none of you include business and sales taxes into your equation?
Not to mention the discount they gave all pre orders.
Not to mention the discount they gave all pre orders.
Yeah - all of EU has on average something like 22% sales tax. You're not getting away from that.
How is tax calculated, is it from retail price or net profit ?
Like for example :
- Retail price is $60
- All costs is $30,
-------------------------- -
Net profit $30.
If sales tax 20% is taken from $60 , that would be $12. If taken from net profit = 6.
Now if the tax 20% is taken from retail price, which is $12, that would be equal to 40% cut from net profit. Sometimes I'm confused how this kind of thing works.
Like for example :
- Retail price is $60
- All costs is $30,
-------------------------- -
Net profit $30.
If sales tax 20% is taken from $60 , that would be $12. If taken from net profit = 6.
Now if the tax 20% is taken from retail price, which is $12, that would be equal to 40% cut from net profit. Sometimes I'm confused how this kind of thing works.
The approx 20% sales tax is taken from the retail sticker price. So if the sticker price is $60 the sales tax is $12.
The company then receives $48 into their coffins. Then there are overheads, taxes for employee salaries etc etc.
All in all I think $60 is a very competitive price when you consider the amount of entertainment per hour!
Some games I will wait until they are on sale until I buy them but with the W3 I certainly think you're getting your money's worth even at full price.
The company then receives $48 into their coffins. Then there are overheads, taxes for employee salaries etc etc.
All in all I think $60 is a very competitive price when you consider the amount of entertainment per hour!
Some games I will wait until they are on sale until I buy them but with the W3 I certainly think you're getting your money's worth even at full price.
Then sales tax is redundant, it's like taxing something that was already taxed before, like $30 production cost, somewhere down the line of the production, other companies are taxed, when these products go to another company (in this case, CDPR/retailer), they are taxed again.
It also happens with importing goods, the taxes are deducted from total expenses, even the shipping fee is included in calculating tax, how ridiculous is that, that shipping company must have been taxed on their own, but then the importer is also taxed based on the total value paid to get the goods on hand including shipping fees.
Or like the example I said earlier, that $12 is equal to 40% cut, right ? the net profit is $30 but the cut is $12 => 12/30 = 40%.
It also happens with importing goods, the taxes are deducted from total expenses, even the shipping fee is included in calculating tax, how ridiculous is that, that shipping company must have been taxed on their own, but then the importer is also taxed based on the total value paid to get the goods on hand including shipping fees.
Or like the example I said earlier, that $12 is equal to 40% cut, right ? the net profit is $30 but the cut is $12 => 12/30 = 40%.
Last edited:
There is also annual corporate taxes, production costs for disc versions, shipping and distribution and server hosting for the digital versions.
My pre-order was $52 with the discounted pre-order deal then you take off taxes and all the other aspects , the fact they still have a full team working on fixes and expansion etc, no way are they getting a pure $60 from all games so all these simplistic calculations of 60 x 4mil is no where near accurate.
My pre-order was $52 with the discounted pre-order deal then you take off taxes and all the other aspects , the fact they still have a full team working on fixes and expansion etc, no way are they getting a pure $60 from all games so all these simplistic calculations of 60 x 4mil is no where near accurate.