I’ve seen some debate about some of my posts on the publishing side of the business and I noticed that a lot of people don’t understand the economics behind a game. Sadly, that includes a lot of developers too.
I’ll keep the overview very short but I think it might be helpful to have some numbers in place for future reference when I’ll discuss some of the finer aspects of royalty report manipulation I’ve seen.
So if you want to know how much you pay to who when buying a game, read on.
On a 39,95 game in Germany, this is a typical breakdown found in royalty reports (numbers rounded)
- The state (VAT 19%): -7,5€
- Retail: -10€
- Inflated publisher costs: -5€ (Logistics, sales and payment conditions)
- Cost of goods: -1,5€
- Net revenue: 15,95€
So if you sell 100K units in Germany, your net revenue in theory is about 1,6M€. For the record, most games do not sell 100K units in Germany.
On a 39,95 game on a digital platform, assuming a typical 30% fee for the platform, in
Germany:
- The state (VAT 19%): -7,5€
- The platform (30%): -9,7€
- Net revenue: 22,75€
So if you sell 100K units in Germany digitally, your net revenue in theory is about 2,2M€. For the record, this is still quite rare.
So now you know 🙂
Before you start running off creating your own studio based on this numbers, let me warn you that you’ll never see such net revenue. The why of that I’ll leave for another day. It’s quite a complex story unfortunately.