Adam Creighton, Computer and Video Gaming: Muddying who gets what piece of the pie

$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:

"Spot on -- nice job!" (or, conversely "Too accurate, please do not share")
"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.

Adam Creighton, Computer and Video Gaming (Subscribe)

Wednesday, October 28, 2009

Muddying who gets what piece of the pie

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