Games: Where does your £50 go?
22nd Apr 2010 | 13:11
While busy convincing the world that his on-demand gaming platform OnLive is a great investment, OnLive boss Steve Perlman shed light on just where your money goes every time you buy a fifty quid game.
Speaking at the DICE summit in Las Vegas, Perlman's slide broke down just how much money is lost to reproduction costs, returns, and retailers. OnLive cuts out the middle man and allows high-end gaming on almost any device, but we don't really care about that; we care about who makes what from our extremely hard-earned cash.
Converting the percentages on the sixty dollars to percentages on the pound gives us our figures for a game with a £50 RRP.
Getting the code onto discs and into the backs of lorries costs money. Like returns, distribution costs are a hard and fast percentage of the overall price - no matter whether the game sells for ten pounds or ﬁfty, it'll always cost the same to deliver it.
Twelve percent of a game's RRP price goes to Microsoft; hardware manufacturers sell consoles cheap and make their returns on games, and they've been doing it since the days of the NES. Even if the industry switched to a digital model, the one fee they'll always pay is the manufacturer's tribute.
Not every copy of every game sells and it's better to over-estimate demand than to under-estimate it, so most publishers are left with unsold copies on shelves months after demand has subsided. Returning them and disposing of the discs in an environmentally-friendly fashion costs six quid.
Retailers make £12.50 on every game they sell at £50; most retailers price aggressively and sell for under the RRP, making less cash. They can make back their lost revenue by offering trade-ins and selling pre-owned copies for a full 100% return on every sale.
The remaining forty-ﬁve percent goes to the game's publisher to pay staff, fund further development, and reward the studio behind the game. In some cases, how little the guys who actually developed the game make might just be scarier than anyone knows.