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Originally Posted by Kikuchiyo
Not sure what you are having trouble understanding with that first sentence. Companys that sell their games through Steam tend to see a 70% profit vs 30% profit for box copies. Sorry for the miswording it has been corrected]
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Please define profit, but in any case, the % are wrong.
I think I have seen more profit and loss statements of video games (products) than you do. Unless you have worked for a major editor or studio, that is.
My source is my job experience in the video game industry
Quote:
Originally Posted by Kikuchiyo
No it technically is more profitable to offer a game solely through a DD than it is to offer a boxed copy. Less overhead = less cost to publisher.
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There are many cases here, and not always less overheads:
- the company distributes online by its own means (no steam): has to buy servers, pay for bandwith etc... compared to manufacturing costs. Manufacturing costs are very low and essentially variable. Servers are fixed costs (could be variable if externalized). If you distribute a lot online, then fixed costs can be offset well.
Main drawback of boxes, again, are the unsold inventory: in some countries, they can be send back by retailers; in most, unsold copies will see price decline rapidly, and those unsold to retailers will have to be destroyed (while manufacturing costs have been incurred)
- the company distributes onlina via steam: they pay a service, steam charges for it, depending on the level of service & risk ; see below
Quote:
Originally Posted by Kikuchiyo
I'd like to see some citation on that Steam charging 80% to a developer to use Steam. I find that highly unlikely, and even less likely that a indie publisher would accept such a steep cost to get their game on the market. I am actually using estimates made by market analysts, and have never seen anything that suggests that Valve takes such a huge chunk of anyone's profits.]
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If you read french, buy the PC Magazine Canard PC and read their article about steam. Will look it for you and find the game they mentionned (said the studio got 10% on reatail price - have to take out VAT to calculate each chnk, but that would be around 85% for stema, 15% for the studio
Also, do not forget that Steam acts 2 ways:
- online distributor, for instance for some THQ, Ubi etc... games: in that case, they take the equivalent of a retailer's chunk (20 to 30%)
- publisher AND retailer: when an indie game for instance is distributed via steam: in that case, they take the equivalent of a retailer (20-30%) plus a chunk as publisher. And that can go high depending on the contract (40-60%).
Main difference is , afaik, Steam doesn't prefinance a lot of games the way editors do; so their contracts with studios are quite different, and studios get money on each unit sold. On the other hand they get no guaranteed minimum (as is the case in most editor-studio deals; that's an advance on royalties system)
The % given by Forbes are for publishers, not studios. And frankly, these are not at all the figures I've looked at (retailers take 20 to 30% max, including returns etc...). Gross margin includes manufacturing costs (Net revenues - Manufacturing costs, that's all)
If they got 30%, they would all be bankrupt.
As I said, average is above 50% (60%) on a full year and there are not enough online copies (at 70%) to offest the larger number of boxes sold (at 30% according to Forbes). I call BS on that one. Probably a question of wording:
EA gross Margin (p107): from 60% in 2006 to 49% in 2010 with an increase of online distribution ...)
http://files.shareholder.com/downloa..._Arts-2010.pdf
Ubi gross margin:
http://www.ubisoftgroup.com/gallery_.../1042/2360.xls
around 60% on a full year (59% to 66%)
To reach a 60% gross margin with the % (30% - 70%) given by forbes would mean that Ubi sells 3 times more games through steam than through retailers. and that is just plain wrong
Steam is certainly a great platform and a good publisher for small studios, but asserting that these studios always get more than if they'd taken another (mainstream) editor is wrong. Some get more, some get less.
If you don't need to prefinance your game, best deal can be steam (but hey, you can negociate with other editor)
If you need to prefinance your game, today, I'm not certai at all that Steam is helpful.
And you have to take into account that advance on royalties paid by an editor in the % of profit you mentionned in the first place....