Adam Creighton's logo Adam Creighton
Other Blogs:
American McGee
Beautiful Pixels
Hideo Kojima
Hitachi Wasabe's Xbox 360

Xbox 360 Marketplace Updates: (

Subscribe to RSS headline updates from:
Powered by FeedBurner

Adam Creighton, Computer and Video Gaming (Subscribe)

Wednesday, October 28, 2009

Muddying who gets what piece of the pie

So, my previous post, "Cost of games, slice of the pie, and business opportunities", has caused a bit of stir -- most of which, despite my urgings, haven't made it into the comments of that post.

To summarize that last post, I wrote brief thoughts about what percentage of a given game's sales go to which groups. For discussion purposes, I used numbers from Dave Thomas ("The Crispy Gamer") / Jesse Divnich (EEDAR), which suggest the following breakout from a title's sale:
  • $12 (20%) goes to "Retail"
  • $5 (8%) goes to "Marketing"
  • $10 (17%) goes to "Cost of Goods"
  • $33 (55%) goes to the "Publisher"
These numbers and that post are helpful as groundwork for some follow-on posts I want to do. These work as placeholder numbers (and maybe they're totally fine), but they don't feel like they address some very diverse business scenarios.

The "bit of a stir" I reference above is from the mix of comments I received, largely on the extreme ends:
  1. "Spot on -- nice job!" (or, conversely "Too accurate, please do not share")
  2. "Not even close to accurate"
I wonder how closely these numbers match what people actively experienced in the industry have seen throughout their career. I say "actively", because I think folks need to have a historical sense to dissect these figures, and they need to be in the industry now -- because it's changed in the last 2-3 years.

As I said before, I'm personally not crazy about the numbers as actionable, mainly because I'm concerned they're too averaged to be individually applicable, and/or are not representative enough -- and I'm looking to refine them.

Obviously, there are several levers /complicating factors that start significantly shifting percentages, and therefore opportunities.

For example:
  • How do these numbers compare across console versus PC titles?
  • Do the percentages stay intact between a $60 MSP 360 or PS3 title, compared to a $50 Wii title?
  • Where do the first-parties (Microsoft, Sony, Nintendo) get their piece of the pie -- from the "Publisher" slice? Is it spread throughout?
  • What happens to the percentages in a $30 "budget" title?
  • Where are the cost savings and additional expenses in a digital distribution only model (Publishers, for example, are (arguably) largely in the risk management / brokering business, so how do the financial risk model change when that entity isn't involved)?
  • What about royalty models?
  • Are first- or third-party marketing development / discretionary funds "on top of" the "Marketing" budget?
  • How do the numbers change (or do they) based on geography, or cross-geography development and publishing?
I'm very interested in identifying financial risk and revenue opportunity by further refining these numbers.

Feel free to respond directly to me, or as a comment to this or the initial blog post.


Share: Digg! |! | Reddit! | TinyUrl | Twitter

Contact Adam

SOURCES:,,,, IGN, GameInformer, Official XBox Magazine, CNN,, and others.


Post a Comment

<< Home

View Adam Creighton's profile on LinkedIn

(More from ...)

(More from ...)

(More from ...)

(More from ...)

(More from ...)

Powered by Blogger