What Your $60 Really Buys

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Seven dollars of a $60 video game purchase covers expenses for games never even sold. That's according to a breakdown of retail game cost by an on-demand games service.

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OnLive, of Palo Alto, Calif., says that $7 covers, on average, "returns." That's the cost associated with returning unsold inventory - essentially, sales that don't meet expectations. By this analysis it is equivalent to the royalty paid to the platform holder - Nintendo, Microsoft or Sony.

By far the largest portion is to the publisher, nearly half of it. As it should be. But 25 percent of a game's cost is the profit to the seller. That is a very nice margin, and it - plus the fudge factor on the returns, hint at how discounts on some new games can be justified even at release.

Anatomy of a $60 Video Game [Los Angeles Times]

DISCUSSION

By
Ken

Go Digital and the retailer margin dips to nil, distribution costs go way down, returns become null and void in costs, and royalties would change.

You all were paying $45~60 for Batman AA. The cheapest I saw it hit was close to $35.

I got it for $25 on PC through Steam.

That's the same tale told of many titles like Borderlands, L4D2, Bioshock 2, and more.

For Box Hording folk, Digital = cranky pants. For Gamers who want games and experiences, digital distribution = Money saved! :)