That PC game revenue figure includes various 'free to play' and MMO titles though. For the subset of console-like games, is it really more profitable? Publisher financials like EAs show PC represents about 20-25% of revenues. So if you filter out to Steam-type and indie games, it looks like PC isn't generating more revenue.
At which price-point? More sales at a higher percentage margin but lower gross sell price == less money.
100,000 console sales at $60 with a 50% to publishers is worth more than 2,000,000 download sales at $2 with a 70% cut to the developer.
The question cannot be answered without lots of pretty detailed information about profits from Steam and other platforms.
You're thinking about it wrong. The PC market generates more revenue than the console market.
We're not talking about unit sales, but total revenue. If we go with a very naive example that doesn't go into changing margins with lower cost for physical distribution...
1,000,000,000 revenue on console titles with 33% going to the publisher/developer would be 330,000,000 in profit. This obviously ignores the margin erosion at lower price points.
versus
1,000,000,000 revenue on PC titles with 70% going to the publisher/developer means that it generated 700,000,000 in profit. Or over twice as much profit as was generated from console sales with the same revenue.
When talking unit volumes that means that unit sale volume on PC will be significantly greater than on console due to the low ASPs when you take into account Steam sales, GOG sales, Origin sales, Humble Bundles, massive number of low cost Indie titles, etc.
Referring back to Pixel Junk. Unit volume doesn't matter in the same way as it would if it was a traditional retail product.. They had twice as much revenue/income (same as it's a flat % off the price versus physical which has a lower profit margin the lower the price is) as they did in all the months combined up until that sale. Those sales would likely never have come no matter how long they waited at the original or slightly discounted retail price.
Here's on more. I'll let someone else do the Googling from now on.
http://www.vg247.com/2013/05/07/ea-...ium-has-over-3-5-million-subscribers-to-date/
From EA financial
Digital revenue is up (by which they mean downloadable content, because all the content is digital!) and represents 453 / 3800 or 12% of total revenue. So if it's argued PC is almost entirely download titles, PC is providing only part of that 12% revenue and none of the non-download revenue.
As I pointed out in another post somewhere, that is horribly outdated now. FY 2014 marks the first Fiscal Year where digital revenue surpassed revenue generated from physical product sales.
EA's revenue's have been trending towards that for the past few years with it greatly accelerated in FY 2013 and FY 2014. You can find the relevant documents here (
http://investor.ea.com/annuals.cfm ). Careful, those are very dense documents meant for investors (tax information, investments, board of directors, blah blah blah).
FY 2014
Packaged goods and other generated 1.663 billion in revenue.
Digital generated 1.833 billion in revenue.
Unfortunately, they don't do a breakdown of income (profit) along those lines. But I'd be more than willing to bet that Digital generated far more profits than packaged goods. Especially, if you consider that sales via their Origin service all go to EA alone and doesn't have to be split with another storefront owner.
They also don't do a breakdown between console titles and PC titles, but considering we recently learned that consoles are in the 10-12% range for digital sales versus PC which is greater than 90% digital sales, you can infer that most of it is likely PC. But that PC likely still trails console by a fair margin although not by nearly as much as back in 2012.
This is a trend in the industry at the moment and why publisher's are scrambling to change how they do business and how they sell their products.
You also mentioned how traditional physically packaged companies (or console companies) fare in this. They are slowly transitioning some of their development spending towards F2P. Some more than others. Blizzard has both Hearthstone (seems to be hugely profitable thus far) as well as upcoming Heroes of the Storm. EA has a MOBA (like DOTA 2/LOL) that I can't remember the name of as well as other F2P games. UBIsoft has Ghost Recon online as well as other F2P initiatives.
You also mentioned MMOs. That also is moving into the console space. Square Enix is basically surviving off of the revenue generated by Final Fantasy 14 at the moment and not as much from games that you would traditionally think of as a Square Enix console title. Much of that due to the huge influx of players they got with the release of the PS4 version.
Basically both Sony and Microsoft (along with the publishers that make games for those consoles) are attempting to tap into that PC revenue pool. Whether it be via opening up to more indie development or adopting revenue streams that have up to now been dominated by PC titles (F2P, MMO's, etc.).
And finally, going back to whether Steam sales are good?
They serve a two fold purpose. They give a title much larger exposure than they otherwise would have had. And they get people to buy the game that would not otherwise have done so. Either people that would have pirated it or people that just weren't interested in trying the game at the original price point.
Does that erode some of the sales from the launch price points. Absolutely. But most developer's have had positive experiences with it. They still get some or most of the initial sales. But as the price goes down they have an exponential growth in unit sales which typically leads to far greater dollar sales (revenue/profit). The ASP goes down, but unlike physical product sales your profit margin doesn't erode. In the case of Steam it is basically always 70%. Versus physical product sales where margins erode rapidly as the price decreases (manufacturing and shipping are constants that don't get lower just because you lowered the price).
Regards,
SB
