Author Topic: For reference in future threads. Anatomy of a $60 video game (Read 2496 times)

Damian79 · « **on:** February 25, 2010, 08:29:24 PM »

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/02/anatomy-of-a-60-dollar-video-game.html

Quote

Ever wonder where your hard-earned money goes after you've plunked $60 down on a game at GameStop or Target? Here's one answer:

Much of the data came via a slide shown Thursday by Steve Perlman, founder of OnLive, an on-demand video game service based in Palo Alto.

Perlman, who spoke during the Design Innovate Communicate Entertain Summit in Las Vegas, showed the slide as part of an update on his company's service, which is expected to launch later this year.

Another way to look at it is to say publishers such as Activision and Electronic Arts receive $45 after retailers take a $15 cut. Publishers turn around and pay a $7 licensing fee to console manufacturers such as Microsoft, Sony and Nintendo. The cost of making, packaging and shipping game discs to stores carves up another $4. Finally, not all games sell, so the expense of returning unsold inventory eats up another $7.

That leaves publishers with about $27 per disc sold for development, marketing and other expenses. These are, of course, back-of-the-envelope averages. Each of these numbers can vary. For instance, a publisher could negotiate a smaller licensing fee with console manufacturers. And by deploying the Goldilocks method of inventory (not too much, not too little), they can also minimize returns. Tinkering with the margins in these ways lets companies tune their bottom lines.

-- Alex Pham

demi · « **Reply #1 on:** February 25, 2010, 08:29:55 PM »

source: onlive

lools

Damian79 · « **Reply #2 on:** February 25, 2010, 08:31:12 PM »

You saying they are wrong?

demi · « **Reply #3 on:** February 25, 2010, 08:33:30 PM »

AdmiralViscen · « **Reply #4 on:** February 25, 2010, 08:36:08 PM »

Oooh, reference materials

Damian79 · « **Reply #5 on:** February 25, 2010, 08:36:13 PM »

You got an alternative to it?

duckman2000 · « **Reply #6 on:** February 25, 2010, 08:39:15 PM »

Smells like GAF here

demi · « **Reply #7 on:** February 25, 2010, 08:40:18 PM »

Quote from: Damian79 on February 25, 2010, 08:36:13 PM

You got an alternative to it?

Nope, dont care

Damian79 · « **Reply #8 on:** February 25, 2010, 08:41:54 PM »

This is just for knowledge. Why even come into thread if you got nothing to contribute? This is simply a reference thread.

EDIT: It was a reply to duckman.

Damian79 · « **Reply #9 on:** February 25, 2010, 08:43:28 PM »

Quote from: a slime appears on February 25, 2010, 08:42:12 PM

That's rather inaccurate.

You got an alternative to it? Anything at all?

Damian79 · « **Reply #10 on:** February 25, 2010, 08:46:24 PM »

Maybe it is a discrepancy between other countries. For example i know that in a $50 game it was $10 to retailers here in Australia because a retailer here told me so.

duckman2000 · « **Reply #11 on:** February 25, 2010, 08:50:12 PM »

Quote from: Damian79 on February 25, 2010, 08:41:54 PM

This is simply a reference thread.

EDIT: It was a reply to duckman.

Reference for what, more efficient GAFstink discussion?

Damian79 · « **Reply #12 on:** February 25, 2010, 08:54:43 PM »

Well we argued in the past NPD thread so i thought it would be good to know these things. And i dont see what is wrong with GAF anyway, please educate me what is wrong with GAF.

duckman2000 · « **Reply #13 on:** February 25, 2010, 08:58:05 PM »

Quote from: Damian79 on February 25, 2010, 08:54:43 PM

please educate me what is wrong with GAF.

Well, the need for reference threads, for one. The fact that there have been monthly multipage NPD argument here as of late is enough of a blight on the site.

AdmiralViscen · « **Reply #14 on:** February 25, 2010, 08:59:34 PM »

Duckman is going to feel like such a fucking idiot when he says something in some future thread and I bust out these reference materials on his ass.

Kestastrophe · « **Reply #15 on:** February 25, 2010, 09:00:37 PM »

$15 retailer cut = 25% margin

Doesn't sound right to me

duckman2000 · « **Reply #16 on:** February 25, 2010, 09:01:21 PM »

Quote from: AdmiralViscen on February 25, 2010, 08:59:34 PM

Duckman is going to feel like such a fucking idiot when he says something in some future thread and I bust out these reference materials on his ass.

Probably!

AdmiralViscen · « **Reply #17 on:** February 25, 2010, 09:02:25 PM »

You didn't have to wait long! Booya!

The Fake Shemp · « **Reply #18 on:** February 25, 2010, 09:05:12 PM »

Quote from: Kestastrophe on February 25, 2010, 09:00:37 PM

$15 retailer cut = 25% margin

Doesn't sound right to me

Retailers usually make less. Not kidding. If GameStop only sold new software, it'd be in the shitter.

Kestastrophe · « **Reply #19 on:** February 25, 2010, 09:08:58 PM »

That's what I was saying

. There's no way they're getting 25% profit off of game sales

EmCeeGrammar · « **Reply #20 on:** February 25, 2010, 09:21:16 PM »

I hope this makes all the bayonetta fans cry.

Bildi · « **Reply #21 on:** February 25, 2010, 09:25:25 PM »

Quote from: Kestastrophe on February 25, 2010, 09:00:37 PM

$15 retailer cut = 25% margin

Doesn't sound right to me

Dude, there's a pie chart and everything.

pilonv1 · « **Reply #22 on:** February 25, 2010, 09:27:46 PM »

Quote from: Kestastrophe on February 25, 2010, 09:00:37 PM

$15 retailer cut = 25% margin

Doesn't sound right to me

depends on the retailer and/or publisher. maybe it averages to 25% but that number isn't common as willco said

Damian79 · « **Reply #23 on:** February 25, 2010, 09:28:24 PM »

Quote from: The Fake Shemp on February 25, 2010, 09:05:12 PM

Quote from: Kestastrophe on February 25, 2010, 09:00:37 PM
$15 retailer cut = 25% margin

Doesn't sound right to me

Retailers usually make less. Not kidding. If GameStop only sold new software, it'd be in the shitter.

Something is fishy. Vireland at GAF is saying that you guys make even more than that, he says that you make 21$ off every $60 game, that's gotta make you laugh. I am assuming that both the retailer and publisher is getting ripped off somewhere.

treythemovie · « **Reply #24 on:** February 25, 2010, 09:30:05 PM »

If this was true then games would never drop to $20 MSRPs.

Damian79 · « **Reply #25 on:** February 25, 2010, 09:33:01 PM »

pilonv1 · « **Reply #26 on:** February 25, 2010, 09:37:27 PM »

Vireland from small publisher makes less than EA or Activision, shocking news.

demi · « **Reply #27 on:** February 25, 2010, 10:15:49 PM »

Wow, I better start buying more games then

demi · « **Reply #28 on:** February 25, 2010, 10:17:42 PM »

Damian is now admin

Trent Dole · « **Reply #29 on:** February 25, 2010, 10:31:33 PM »

Quote from: The Fake Shemp on February 25, 2010, 09:05:12 PM

Quote from: Kestastrophe on February 25, 2010, 09:00:37 PM
$15 retailer cut = 25% margin

Doesn't sound right to me

Retailers usually make less. Not kidding. If GameStop only sold new software, it'd be in the shitter.

Yep, I used to work someplace where we could look stuff up and see how much the store paid. I remember at least one N64 game which was sold for $59.99 cost them $53.

Human Snorenado · « **Reply #30 on:** February 25, 2010, 10:40:38 PM »

Yeah, back in the days when games were $50 GS was lucky to get $10 from a new game sale. These days I'd imagine they're lucky to get $12. The reason GS is able to survive and thrive is the high margins they make from selling used games.

Barry Egan · « **Reply #31 on:** February 25, 2010, 11:32:18 PM »

shit/bin this fucking ATROCIOUS thread

Bocsius · « **Reply #32 on:** February 26, 2010, 12:20:21 AM »

The publisher margin looks about right. It's halfway between 3 and 4 slices on a Papa John's large. 3 slices is a bit too little, but the 4th always makes me wish I stopped at 3. 3.5 might just work.

I'll have mine with pepperoni, italian sausage, green peppers, and onions, thanks. Oh, light on the cheese. Almost non-existant, sort of like actual retail margins.

The Fake Shemp · « **Reply #33 on:** February 26, 2010, 10:41:54 AM »

Quote from: Damian79 on February 25, 2010, 09:28:24 PM

Something is fishy. Vireland at GAF is saying that you guys make even more than that, he says that you make 21$ off every $60 game, that's gotta make you laugh. I am assuming that both the retailer and publisher is getting ripped off somewhere.

Retailers make $20 off a $60 game?

... As someone that was privy to what two separate retailers pay wholesale, it's rare that retailers make more than $10 off a game. And on the Triple-A stuff, it's usually far less. Losing new software to internal or customer theft can destroy a store's inventory numbers as a result - since the cost is so high on each unit.

The publisher isn't getting ripped off, but if it wants to fudge the numbers so it doesn't have to pay their people accordingly, that's their prerogative. The fact is that a specialty store like GameStop could not survive on new software sales alone, and it's one of the big reasons why GameCrazy has nosedived (so much of their business was new software/hardware and not used). Retailers like Wal-Mart, Target, Best Buy, etc. don't have that problem.

Brehvolution · « **Reply #34 on:** February 26, 2010, 11:04:26 AM »

I swear we had this same thread a couple weeks ago.

Mupepe · « **Reply #35 on:** February 26, 2010, 12:12:30 PM »

Wow, Cohen.

I guess you've never had a mushrooms and chicken pizza? Fucking godly.

Howard Alan Treesong · « **Reply #36 on:** February 26, 2010, 01:09:16 PM »

chicken on pizza

might I suggest a nice pairing

News:

Author Topic: For reference in future threads. Anatomy of a $60 video game (Read 2496 times)