read your post again and tell me that you arent arguing against royalty fees. Sony charging 30% makes sense because they include the royalty cut in there. if they were asking for a 10-20% royalty cut after the 30% digital sale cut then im with you.
sorry but what you are saying is making no sense to me
I read several estimates last gen, and this is typically how each sale breaks down:
20% retailer cut
10% platform royalty cut
5% Distribution and packaging
Pachter said something about returns but i dont think that applies anymore because retailers simply sell the games at reduced pries.
What Sony and MS are doing is that they are merging together the retailer cut and the platform royalty cut. i am not discussing why royalty cuts are a thing. just trying to make sense of your post is giving me a headache. so lets just get past that. i think 20% cut for ANY digital store is hilariously high because their operating costs are much lower when compared to gamestop which has to have brick and mortar stores everywhere. 10% makes more sense to me, but i dont know what their operating costs are for hosting servers and paying network engineers who cost more than your average gamestop employee. though i highly doubt they have tens of thousands of engineers dedicated to the digital store.
Epic has shown that they can make a profit with just a 12% cut and i believe them. I know Sony has said that they dont want to undercut the retailers at launch so as to not steal any sales from them. i wouldnt be surprised if they are sticking with 20% digital cut and 10% royalty fee to keep retailers happy for now. i think in a digital only future, they will do a 20% cut and call it a day.
I readed my post. I stand by what I said: Justifying a digital cut with "selling hardware" isn't making any slight of sense.
Also your data is wrong:
25% is the retailer's margin ($15 at $60, $5 at $20). 20% is the licensing fee + cost of goods from Microsoft/Sony/Nintendo for making a retail game ($12, and from previous conversations with industry figures, this is static regardless what you're charging). By comparison, it's a flat 30% with...
www.resetera.com
That's 25% for the distribution and 20% for the platform holder.
45% in total.
Also, I'll explain to you why you're being clueless about how storefront cuts work.
First of all, you're wrong on one thing:
"Epic has shown they can make a profit with just a 12% cut".
With their 12% cut, Epic has demonstrated two things:
- It's not enough to the point if a payment processor is a bit too high (7%) they have to charge the customer for it.
- It's the reason why Epic Store is lacking a lot of features, because they run on razor thin margins.
- It's working so well for Epic that for an entire month, they took a 10 dollars hit for every sale because they cant get customers.
How much do you think operating servers cost ? How much do you think operating dedicated multiplayer servers costs ? How much do you think developping and maintaining an SDK API for an entire ecosystem costs ? Are digital stores making a profit ? Sure they do. But that's how you grow a platform. With profits. If you want them to run on razor thin margins, that means the customer will pay the price and you'll see no features.
As for 30% being too high, I'll let you read this:
latimesblogs.latimes.com
