EDIT WALL OF CHINA INCOMING- LONG NON-READABLE RANT
EDIT
In the pricing of a normal £40 xbox game I think it goes like this.
£15 is spilt between the publisher and the developer.
£7.5 to the platform it is on. Xbox/PS3 royalty fees.
£2.5 goes towards production and shipping costs.
£10 goes towards the retailer roughly.
£5 goes towards un-sold games/returns.
The retailer value does value greatly though. Conflicting sources of between £10 a game to £2.50. That is shared between the people who publish the game and shop-keepers.
So this £10 fee to unlock a second hand game is just a way that publishers can take a profit from more games, yet ignore the costs of retailing, shipping and production costs. £10 is pretty much what they make from a game anyway. Considering most games when sold second hand are when the game isn't as popular.
By this time the fee for shipping/production is still present. The Publishers must still make a taking.
The Shops must make a taking still.
But the Unsold stock fee/royalties?
Games follow this price range. ~£40, £35, £30, £25, £20, £15 ,£10, £7.50 to £5 being the bare minimum per game.
We can assume that the unsold stock fee, would be removed from the rrp after a while, so that the unsold stock, becomes sold. Makes no sense to keep it there. But that won't account for anything more then a £5 drop out of a £40 game to £35.
The publisher after a while, may take a decreased profit from the game. So that may lead to drops of an extra £5. So that would give the £30 games you would see for sale.
It would be worth noting that when large games are released, price drops of up to £10 are made. Presumably these are taken out of the retailers profit altogether in order to remain competitive. Sometimes even at a loss.
So what produces a £25 game? Often seen after a year or so after being released. Or two weeks of a really shitty game.
We are left with:
Royalties: £7.5
Shipping/Production:£2.5
Publisher/dev fees?=£10
Retailer fees?=£10
The retailer is unlikely to drop to less then/= to £5 based on some offers I have seen in game and likewise stores.(1) {I do know large stores make losses or even just pennies on games sometimes.}. We can assume that shipping and production remains constant, but that the retailers would drop up to £4 (£2.50 in my model since it is unlikely for the developer to take the same cut at the same time).
Sadly, Microsoft does not like to talk about the royalty fees publicly. But it seems to be done on a per disc basis, based on the rage game having to be compressed to two discs. Since Microsoft and the PS3 make no money from selling the console, a loss even, they have to make money through royalties. Which means that the royalties are unlikely to decrease, but make be a proportion of the sales value.
So A £25 game consists of.
£5 royalties.
£2.50 Production
£10 Dev fees
£7.50 retailer fees
£20 game then? heh.
£4 royalties
£2.50 production
£6.50 to developers of the game.
£7 retailer fees.
£15 game?
£3.50 royalties
£2.50 production
£4 to developers
£5 to retailers.
£10 game?
£2.50 royalties.
£2.50 production costs
£2.50 to developers
£2.50 to retailers.
£7.50 game.
£1.00 in royalties.
£2.50 to production costs.
£2 to devs
£2 to retailers.
£5 game.
£2.50 in productions costs.
£1.50 to developers
£1 to retailers.
These numbers have limited factual basis bar then what I could make out from the clouded facts on the Internet.
I did not know for example, that exclusive games often have royalties removed from the cost. Which is a huge bonus for developers.
Also, with todays budgets, most games have to sell well over 500000 copies to turn a small profit or to even break even.
But with digital downloads on the pc in comparison, you can easily see that they have no royalties. No/limited production costs. Which splits the £30 price tag for a game like civilisations 5 of £30 between just retailer and developer.
The retailer in this case, could easily take up to £20 per copy, with steam making £10. This shows how steam can easily surpass the normal street stores.
When it comes to Xbox games (ps3/nintendo) they have to do more then to just break even. They have to provide a sustainable profit. They see that every seconds hand game is a lost sale. Even at low prices of £1 a game, it is still a loss. If they can provide a £10 buy in that provides content then they stand to gain so much more. Piracy is an issue which different game makers and publishers think about with vast changing opinions. Ubisoft believe piracy is killing its games and so has waged a invasive war which has backfired. Other companies are lenient. However none are complacent and it has worked fine like Stardock.
Nintendo on the other hand saw vast amount of games being pirated and sold. Which can be seen as a direct attack on the publishers.
The thing we all have to remember is that people have worked very hard on these games to produce them, and they are only trying to make a living. Some companies like Activision are very greedy with their games. Others like stardock and steam, are not.
Very few companies live long producing purely Griefers games and hoping to cash in on a fad. Movie orientated games and alike have increased in quality, and decreased in quantity.
You can always rent games from your local library or rental shop. Far cheaper then buying it, you get to enjoy the game and you pay for whatever enjoyment you got. Some of that money, makes it way back to the developers. Some.
(1)When a game isn't as popular any more, the price decreases. Where does that decrease come from?
Since a fair few shops can give you up to a £10 discount on two games of £20 then they must stand to make more money from that arrangement. Clearing stock? They wouldn't give it away with no profit for them. So we must assume that the profit on a £20 out of date game is greater then £5.
At the end of it, I found this which highlights the costs of a game.
http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames_slide_2.html?boxes=custom&thisSpeed=20000