The console losses discussion thread (or 'how companies blow billions on products')*

[Cheezdoodles]

When publishers get them printed. They pay the license fee per disc printed regardless of whether the disc sells or not. If Game X is made, 200,000 copied printed, and yet never distributed to the store shelves, the publisher still needs to pony up about $2 million bucks to the console company.

Uhh..

Are you sure about this, or did you just make this up?

Im pretty sure that Sony\Microsoft only charge % of revenue (in other words, x amount usd per disc sold).

I know that back in the days, Nintendo got money for every copy printed (because they where only supplier of the ridicusly expensive carts). When Playstation came out, Sony offered much more publisher friendly licencing deals, making all the talent come over.

It seems like an incredibly ineffective way to go about business these days, terribly inconvinient for the publisher. The largest publishers have so much power these days that you'd have to be mentally retarded not to be able to negotiate a better deal than $10 per copy printed.

On top of that, no way in hell, does the publisher have to pay 1-2 million for 200k printed copies. Thats 10-20% of most games total budget. Youd never break even at such high costs for just printing the discs.

How many copies are printed of the big sellers like CoD4? 20 million copies?

Surely, Activision did not pay $200 million in game licencing. CoD4 would be supply sustrained until September 08, because at $10 per printed copy, nobody wants to make a few million to many.

 

[Shifty Geezer]

Uhh..

Are you sure about this, or did you just make this up?

Yes, I completely made it up just to look big and clever...

I learnt this info from a developer in the PS2 era, and it came as a shock = $10 per disc printed regardless of whether it sells. I think it's been raised here before but a quick search didn't find anything, though it would have been an old conversation. I see no reason to think things have changed this gen.

I accept I could be very wrong with no link to the source or confirmation from other parties, but this is still what I've learnt about how the industry works.

 

[Acert93]

Royalties are a close kept secret in the industry, but not every publishers works the same. NG way back in the day actually released some numbers and minor details about how MS and Sony compared back in 2001ish or there about (iirc it was $6 and $8, respectively). Even if there is an up front cost on production, the nice thing about optical media is the fast turn around. In a matter of weeks you can produce millions of units if necessary at a relatively insignificant cost. Of course there is another factor: sold through to retail. How retailers work, pre-order, etc will play into how many units are made and so forth.

 

[Laa-Yosh]

I also recall one of the devs - EFP or Faf maybe - mentioning this, that publishers do have to pay royalties in advance.

There's a monetary reason why MS wanted to get into the console business, after all.

 

[Shifty Geezer]

I also recall one of the devs - EFP or Faf maybe - mentioning this, that publishers do have to pay royalties in advance.

Good, it wasn't just me remembering one or other of them (although I had archie4oz in the list as well) I think they contributed in the old thread, but haven't found it.

At first it sounds pretty mad, but then what if someone wants to give away console games for free? They'll still have to pay a license fee (assuming no prior arrangement!). So I suppose the console companies levy a flat fee and leave it for the publisher to work out how many copies to print. But this is in part why developers giong solo is a tough choice - the costs aren't just in the development, but marketing and paying fees. And this is how publishers can grab devs by the short-and-curlies and boss them around, because they are needed.

 

[V3]

Yes, I completely made it up just to look big and clever...

I learnt this info from a developer in the PS2 era, and it came as a shock = $10 per disc printed regardless of whether it sells. I think it's been raised here before but a quick search didn't find anything, though it would have been an old conversation. I see no reason to think things have changed this gen.

I accept I could be very wrong with no link to the source or confirmation from other parties, but this is still what I've learnt about how the industry works.

I am pretty sure during the Super Nintendo era, Nintendo charged alot more for the catridges. That's one of the reason why third parties embraced the Playstation.

Anyone know how much they charged publisher for PSN and XBLA titles ?

 

[obonicus]

I am pretty sure during the Super Nintendo era, Nintendo charged alot more for the catridges. That's one of the reason why third parties embraced the Playstation.

Anyone know how much they charged publisher for PSN and XBLA titles ?

Well, it's a percentage of sales, right?

I'm not entirely sure, but back during GDC when MS changed the royalty scheme, there was a talk of a shift from developers keeping 70% of the royalties to devs keeping 35%. This is for indie developers, though. I'm guessing publishers probably are closer to the 70% number still.

I'd guess PSN is in the same ballpark (maybe with better indie terms if you actually get a game approved).

 

[eastmen]

I'm pretty sure that n64 carts with the data programed on cost upwards of $30 from nintendo depending on capacity.

 

[Shifty Geezer]

I'm not entirely sure, but back during GDC when MS changed the royalty scheme, there was a talk of a shift from developers keeping 70% of the royalties to devs keeping 35%.

Let's sjust be clear on this. There is a difference between the cut to MS for a published game, and the cut for a game they publish. The reporting suggested the shigt was from 35% to 70% (or whatever it was) but that was reporters getting things muddled. If someone else is doing the publishing, you'll be on a lower fee structure, but then the developer's still going to see a wad of the takings going to the publisher. AFAIK we've never been privvy to the fee amounts prior to that reporting, so we don't really know what changes happened. I'm not sure any developer sees as much as 30% of takings from disc/cartridge sales without self publishing.

 

[obonicus]

Let's sjust be clear on this. There is a difference between the cut to MS for a published game, and the cut for a game they publish. The reporting suggested the shigt was from 35% to 70% (or whatever it was) but that was reporters getting things muddled. If someone else is doing the publishing, you'll be on a lower fee structure, but then the developer's still going to see a wad of the takings going to the publisher. AFAIK we've never been privvy to the fee amounts prior to that reporting, so we don't really know what changes happened. I'm not sure any developer sees as much as 30% of takings from disc/cartridge sales without self publishing.

I wasn't saying they were the same. The 70% to 35% shift was supposedly suggested by developers themselves, if you check. And it always referred to indie developers, those published by Microsoft. My speculation is based off the supposed reasons for the shift: namely, that the 70% number meant the dev was responsible for QA/certification, while the 35% meant that MS would take care of all that. Third party publishers will clearly be in charge of their own QA/certification. So their number will likely be closer to the earlier number.

For a good summary, check here.