All purpose sales and sales rumors/anecdotes thread next gen+
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Just to make sure I do not misunderstand, that was £30 excluding VAT for the retailer and £45-50 including VAT for the end user?
The retail markup for a physical £50 game then is £50 - vat (£50/1,20) - £30 = £41,67 - 30 = £11,67
So if the cost for a retailer is £30, I guesstimate that the distributor has a cut of max 10%, I guess closer to 5% if they are inline with hw distributors. Which means I guesstimate again that the publishers sell the game for £28 excluding VAT to the distributors.
As for the digital side, if we go by what's known on Apple/Google app store setups, its 30% to the platform/online store owner and the rest to the developer/publisher.
That means £28 * 1.30 = 36,4 and then we add the VAT of 20%, £36.4 * 1.20 = £43,68
Now £28 might be a bit high since there is no disc production cost etc, but still.
From the publishers point of view, with these numbers, there is an extra £5-£10 profit on the table for the publisher for digital releases.
Is this inline with what we as end-users expect the prices are/should be and is it anywhere close to the real word numbers?
Silent_Buddha
Legend
I seem to remember that we have recycled this discussion a couple of times, did we ever get a comparison of digital vs physical cost?
In my head it breaks down to something like this, for the publisher...
Physical
1. Manufactor BD disc with an image on
2. Create and print box material, not art, but fitting it to box etc
3. Ship to distributor (cost covered by distributor?)
4. Ship to retailer (cost covered by retailer?)
5. Profit
6. Retailers discount games to get rid of inventory, since throwing it out means its a loss (I assume retailers do not get stock return deals)
I assume that 1 + 2 is done by supplier of such services and not done inhouse by everybody
Digital
1. Upload image to a server
2. Pay for space on servers, PSN/XBLive
3. Profit
Anybody got a better, more accurate breakdown?
Physical seems its more a one time cost for different steps and that digital is a more recurring cost. And whether one model is cheaper than the other for the publisher is up for discussion I guess.
It's pretty close.
Physical.
- Physical medium - duplication, packaging, and associated labor costs. [Fixed cost]
- Distribution - shipping and handling either directly to retailer (like Walmart) or to distributors then retailers (smaller outlets). [Fixed cost]
- Margins - Developer margin, Publisher margin (required unlike digital distribution), distributor margin (for smaller outlets), Retailer margins, Platform holder margins (this might be part of [1] above and only applicable to console games). [Variable cost]
- Developer margin, Publisher margin (not necessarily needed), Platform holder margins (console maker or e-tailer) [Variable cost]
Fixed costs are just that. They do not vary except with volume. Higher volume should lead to cheaper costs, but also comes with higher risk. This is a sunk cost regardless of how many titles are actually sold. If you make 1,000,000 copies of a game and only sell 500,000 copies, you likely just lost a ton of a money.
Variable costs scale with price of the product. If there is no fixed cost, every sale = profit generated(in other words, even if a title sold for only 1 USD, the developer/publisher will still make money).
Note all the above ignores recouping the original investment in developing the title. It's just whether a profit is made from the game sale. Profitable sales could still lead to a development loss if it doesn't cover the original development costs. But if you lose money on physical sales, that would compound the losses due to non-recoverable development costs. Hence, digital only sales are significantly less risky to the developer/publisher than physical + digital sales.
For Digital sales, at least on PC, the Developer/Publisher doesn't have to pay any storage of bandwidth costs, those are covered by the Digital storefront and included in the standard margins associated with that digital storefront. Not sure how it is handled on consoles.
In the PC space, depending on Digital Storefront, there is legal wording that gives the Digital Storefront legal rights to the version of the game packaged for sale through that Storefront. That means that even if a developer/publisher withdraws their game from that storefront, the storefront still has the legal rights to distribute the game to consumers that have purchased the title and the original rights holder cannot remove that right.
It is possible that Sony does not have that wording. So if a publisher request their game to be removed from PSN, that game can no longer legally be distributed to anyone by Sony, even those that purchased it. That right would belong exclusively to the publisher/developer. Or it could be that Sony just don't want people to be able to download it again even if they have downloaded it for free in the past. Or the legal wording might exclude games that are offered without charge.
Discounts can come from the storefront, the distributor, or the publisher/developer. Launch day discounts included.
Launch day discounts for physical copies of a game likely come at the expense of the retailer while launch day discounts for Digital Titles (like you often, but not always, see on Steam) likely come at the expense of the Publisher/Developer (each sale will still generate more profit than a physical sale).
As a side note, all sales on Steam are due to publisher/developer involvement. Either the publisher/developer initiates the sale, or Steam will offer to feature them in a sale and they can opt in or not. Regardless, Steam will still take their standard cut (percentage of sale) of any software sale regardless of whether it is on sale or not (IE - it's always a 30/70 split between Steam and developer/publisher).
Regards,
SB
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I assumed, again, that the development cost does not change much if you decide to go digital and physical vs just one or the other, basically that the cost would be shared across the versions. And again if a AAA game cost a bazillion dollars to make, it would still sell for the £50 price, which again means it would not have much impact on the price a consumer pays. Just bigger chance of not making a profit...
I do not have a link for it, but I seem to remember it was mentioned on here some years back, specifically PS3 era. That the reason for PSN not having demo's and trailers for all the games in the store, was because the publisher had to pay extra for the bandwidth. Which means I assume that it there is also a cost for delivering the game from the storage unit over the internet to the consumer. Then again it might only be fore extras like demos and trailers.
I am hoping somebody will read the terms and conditions for PSN/XBLive to see whether they are in their right to withdraw something you already payed for. Would be decent indication on whether or not if it's in the contract between the storefront and the publisher.
As for the case of physical being lower than digital price for the consumer, it's most likely the retailer that does the discount and not the publisher or storefront. So when people complain about high price for digital, they should remember its your local store that often makes it cheaper to buy.
Personally I am not so sure, the price of selling a digital version is that much cheaper than physical. And whether or not the publisher should just give away that believed textra margin that's in here to me.
As a consumer, sure I want everything as cheap as possible, but as a business owner I also know that all things can not be free.
So in conclusion, personal only, I doubt that the physical and digital price is very much out of sync from the publishers pov. Its just the the digital store front is more "greedy" than the physical storefront guys. Next we will see the EU forcing Appe, Google, MS etc to allow independent stores their platforms. Would be interesting to see how different storefronts would compete.
I guess we already have it on Android with Google's play store and amazon's android storefront. But is the amazon any popular? I have never used, not even sure if its available where I live.
Redoing the price break down
Physical
£50 consumer price including VAT
£41.67 consumer price excluding VAT
£30 the retailers price
£28 the distributors price
If we extrapolate a bit, in regards to digital price breakdown, using the information we have and using expected standard practices.
Digital
£50 consumer price including VAT
£41.67 consumer price excluding VAT
£32.06 is what the publisher gets after the storefront has taken their 30%
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63% that's a nice slice of pie...
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D
Deleted member 86764
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...Farming Simulator at #2?! Who buys these games??
Sony must be over the moon at 63% of Witcher 3's sales on PS4.
Sony must be over the moon at 63% of Witcher 3's sales on PS4.
How is that terrbile, doesnt that track with hardware ratio, meaning its no more horrible for xbox one than it is horrible for ps4.
Rikimaru
Veteran
HW ratio is not 2:1 in UK it's 1.5 I believe. Also MS had W3 excusive marketing rights.
It's more like 1.3 : 1
What games are they even buying?
Who? UK in general? It looks more or less like a NPD list. UK gamers are like US gamers. Lots of shooters and sports (swap out Madden for FIFA).
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Watching TV in the UK you'd think W3 was an Xbox exclusive. And the adverts are on all the bloody time.
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