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InQ

Money-money-money

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I know that my questions are incorrect, but I really need to know some exact numbers to communicate with investors and I''m sure that I''m not the only one interested in this topic. How much money does the developer get from every sold copy of the game? Can you tell some average sum, cause I can''t even imagine myself what sum of money it is? Can I find information about the amount of the game copies sold by some company and what sum of money did they get internet? Maybe some specific web site or something? Thank you very much in advance.

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Thanks, I can try to guess too
but I would like to know some real examples. I think 5-10% is too little. Considering, that we made the game for our own money and publisher gets about 40-50%, so developer should get 30-40% from this sum (publisher''s part), so it''s about 5-10$ from every sold copy, am I right?

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If the game would be sold through Internet - i.e. download the game and pay for it, you can get anywhere between 25-75% of the retail price depending on exclusive agreement, and amount of services handled by publisher (customer service, payment processing...).

If the game would be sold in physical boxes, it first has to pay for the development but usually through royalties. I mean, if you`d settle for $2 as royalties from each copy sold, and your development budget was $200.000, then you need to sell 100.000 copies to start receiving any royalties.

If you developed the game by yourself, you`re just looking for distribution, therefore the publisher`s costs are related just to getting the game on market, making some advertisements and marketing campaign. It still can cost for $100.000 even for a simple game, but if the publisher takes the game, he believes it`s going to bring some money, therefore there`s little risk for you.Only problem might be, that the publisher might invest too much into advertisement, therefore you`d have to wait a little longet to start receiving royalties. But of course, in that case, more people would know about your game, and therefore the sales would be higher compared to the situation if he spent less on marketing campaign.

VladR
Avenger game

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quote:
Original post by InQ
Thanks, I can try to guess too
but I would like to know some real examples. I think 5-10% is too little. Considering, that we made the game for our own money and publisher gets about 40-50%, so developer should get 30-40% from this sum (publisher''s part), so it''s about 5-10$ from every sold copy, am I right?

No it is generally less than this but the actual figures depend on a lot of factors and you have not given us nearly enough information.
What format
what price point (full, mid, value)
what genre (big rpg, small puzzle etc)

With a full price game, self funding will mean you get a better deal (and advance and larger royalty). With mid price and value many publishers expect you to fund and you don''t get a better deal at the end. It also depends on how good you are at negotiating.



Dan Marchant
Obscure Productions
Game Development & Design consultant

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2Obscure: Actually, we''re thinking of making a WWII fps 3D shooter with high quality graphics (motion capture, polybump, etc.), strong scenario and, probably, Havok engine for PC.

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quote:
Original post by InQ
How much money does the developer get from every sold copy of the game? Can you tell some average sum, cause I can't even imagine myself what sum of money it is?

Can I find information about the amount of the game copies sold by some company and what sum of money did they get internet? Maybe some specific web site or something?

Royalty Rates these days are highly dependent upon the developer's reputation & the publisher. The last numbers I have heard for traditional publishing channels was an average of about 15% of the WHOLESALE cost- which is probably top-end for a newbie development company. From what I have heard, it is actually FAR more complex than that. There are a whole bunch of additional points of detail, including scaling royalty rates (a better royalty kicks in once a certain sales threshold is met), the amount that the publisher withholds as security against returns, how the sales units are accounted for, etc. etc. I don't pretend to understand it all.

One bit I have heard is that if you are being funded by a publisher, do not expect to get ANY back-end royalties --- most of the time the games don't sell enough to earn money past the initial advances. Obviously, if it's a self-funded project, that's not an issue.

When you go into non-traditional distribution, the rules change a bit. The percentages go much higher, but your total sales become much lower. MUCH. Like an order of magnitude or worse. Garage Games (www.garagegames.com) tries to fulfill some of the roles of a traditional publisher (so you don't have to handle all the marketing & sales yourself), and their royalty rates begin extremely high - 50% or 65% to start, with a chance of it going up if you support and improve upon their Torque engine. However, you can get an even higher percentage if you go through other shareware services - they only skim about 15% (or less) off the top. Or you could set up your own for a flat fee investment of just a couple hundred dollars, and then you just have to pay credit card transaction charges. (There may be more to it than that - I haven't set anything like this up yet, so this information is secondhand).

The question is whether or not an online "publisher" provides enough additional sales & support to be worth the percentage.

(BTW - Please feel free to correct this information - I have no first-hand experience with the business side of things either - I'm a lowly programmer...)

[edited by - Jay Barnson on September 23, 2003 11:38:49 AM]

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Well, we develop for GBA and we are currently getting a pretty good royalty rate of 30% of what the publisher receives. It''s a complicated affair, but you shouldn''t expect too much money at first. It''s best to expect little and ask for little if you want to get published. You have, I assume, no experience so the publisher will see that and figure you''re a very high risk. If you present the publisher with a scenario in which they venture as little as possible and can potentially earn a lot (low royalties for you), then you have a good chance of getting published. You''ll want to get your feet wet anyway, so just getting into the industry is worth it.

Anyway, if I were you I''d expect 10-15% royalties off what the publisher receives (and count on them receiving 60% of the shelf price). So you''ll get 10-15% of 60% of the shelf price. As for your choice of material, I''m not sure there''s exactly a low supply of those type of games on the market. So just a bit of friendly advice; I''d consider making another genre or somehow make yours VERY different. Publishers are apt to say, "Oh, another WW2 FPS..."

Charles Galyon
www.neopong.com

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But don''t be TOO innovative. Established publishers tend to go after what Greg Costikyan refers to as "checkbox innovation" - a unique spin on an existing, well-established (and high-selling) genre. They want something that is both easy to sell and easy to differentiate from the competition. Lamentably, something really unique and different from everything else out there is a pretty hard sell (look at how many times EA tried to shut down Will Wright''s "The Sims" -- and after that other game he created that everybody knew wouldn''t sell, Sim City, they should have known better).

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Jay is right. The developers track record and the publishers financial strength, market position etc will have a big effect on the royalty rate (as will the eventual quality of the finished game).

Many publishers calculate royalties as a % of net sales, not wholesale. Net sales = wholesale - agreed deductions such as marketing, packaging etc.

With a standard publishing deal your royalty rate will likely be between 10% and 35% depending on all the factors mentioned previously.

However I would disagree with the quoted figure of 60% as the publishers share. Most publishers sell PC games at 50-60% discount to the distributor. That means they get between 40 and 50% of retail and the developer gets 10-35% of that.

If you can get the money then an alternative route would be to negotiate a "co-publishing" deal. You fund development and the publisher/distributor fund the sale/marketing. The percentage is bigger 25-50% BUT getting such a deal really does require that the product is good and that the publisher/distributor can see that you will be producing a consistant flow of products.

If this is your first product then you need to aware that you are unlikely to make more than the lowest figures quoted because you are unlikely to produce a triple A game on the first attempt. I have worked with a lot of established developers and in almost every case their first game could only be counted a B+ because of the mistakes due to lack of experience.

Dan Marchant
Obscure Productions
Game Development & Design consultant

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