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Revenues, Profits and Losses for AAA Games

immsun

Banned
Jan 24, 2018
1,246
Sony just announced the list of titles who are past 10 millions. We have had Monster sales of GTA5,RDR2 and Minecraft,etc.

Question is how much moolah does these AAA games bring? Adding the cost of marketing and those extra months to get the near perfect experience. How much profits do these AAA games make?

Are all these tough dev cycles and crunches sustainable for all studios?

Failures like Order,ME,Fallout,etc, how much money do they really loose?

Would love to discuss these aspects of Gaming Industry.
 
Sheepinator

Sheepinator

Member
Jul 25, 2018
28,029
Development and marketing budgets, and their profits and the average selling price of the units sold, tends to be kept private for individual games. This industry veteran below collected some data from colleagues etc. and wrote a big article on it.

EA's R&D budget is similar to a decade ago, but they release about 1/3rd as many games, suggesting costs have tripled. If you were to remove Ultimate Team earnings from their numbers, their profit margins would collapse. Take Two releases fewer games than a few gens ago too, as does Activision. Many other publishers went bankrupt about a decade ago or left AAA because it was getting too expensive and too risky.

Note that first party platform holders make far more money per unit sold too. When Sony sells their own game on PSN they get 100% of the revenue. When a third party publisher sells on PSN they get 70%.

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https://www.raphkoster.com/2018/01/17/the-cost-of-games/
 
OP
OP

immsun

Banned
Jan 24, 2018
1,246
So is it safe to assume that if Sony sells 10 million copies of a game then they are making about 500-600 million revenue on that game?
 
machinaea

machinaea

Game Producer
Verified
Oct 29, 2017
221
immsun said:
So is it safe to assume that if Sony sells 10 million copies of a game then they are making about 500-600 million revenue on that game?
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Depends on the timeline; in this case God of War has already been for sale for -50% off but also there are editions that are more expensive, most likely in this case the final figure (revenue) is probably at least a bit less than that even accounting for the more expensive SKU.
 
Eoin

Eoin

Member
Oct 27, 2017
7,103
immsun said:
So is it safe to assume that if Sony sells 10 million copies of a game then they are making about 500-600 million revenue on that game?
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No.

There's other factors to consider, including:

- retailers will take a cut of each retail copy. Sony are not getting US$60 for a game sold at retail for US$60, and the retailer's cut is not negligibly small
- games are sold at different prices across the world. Any attempt to put a single dollar price on each sale is a US-centric oversimplification
- games go on sale
- games can have multiple editions, including more expensive ones
- games get bundled with consoles (and sometimes with other games)

There's too many variables for any one rule of thumb to work well.
 
Sheepinator

Sheepinator

Member
Jul 25, 2018
28,029
immsun said:
So is it safe to assume that if Sony sells 10 million copies of a game then they are making about 500-600 million revenue on that game?
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Not even close. They'll get about 70% from retail sales after retailer cut and cost of goods. Retail sales are probably about 55% of the total sold, digital 45%. That's 0.7*0.55 + 0.45 = 83.5% of average selling price as revenue to Sony. It's been as cheap as $22 on PSN, so what is the average selling price of 10M units? Say it's $50. That's a wild guess, pick your own number, whatever, but it's definitely going to be lower than $60. That works out to about $42 revenue per unit sold on average. That assume worldwide pricing (before taxes, VAT) is comparable too.

https://psprices.com/region-us/game/1382035/god-of-war
 
OP
OP

immsun

Banned
Jan 24, 2018
1,246
Sheepinator said:
Not even close. They'll get about 70% from retail sales after retailer cut and cost of goods. Retail sales are probably about 55% of the total sold, digital 45%. That's 0.7*0.55 + 0.45 = 83.5% of average selling price as revenue to Sony. It's been as cheap as $22 on PSN, so what is the average selling price of 10M units? Say it's $50. That's a wild guess, pick your own number, whatever, but it's definitely going to be lower than $60. That works out to about $42 revenue per unit sold on average. That assume worldwide pricing (before taxes, VAT) is comparable too.

https://psprices.com/region-us/game/1382035/god-of-war
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Indeed there are lot of factors to consider. It is quite tricky to get an estimate of how to get a somewhat respectible figures for a game.

With Digital now involved heavily, it adds more layers to calculation.
 
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