Comment by mister_tee | Hacker News Reader

Comment by mister_tee | Hacker News Reader

Parent Full thread

in response to the video's message - I get that $60 in 2006 inflated to $80 today. And that development costs have gone up rapidly (so have sales IIRC but I know that's not evenly-distributed).

Might the move to digital distribution, even if not complete yet, already be giving publishers substantially increased profits per unit sold?

A decade ago, an article suggested publishers made $27 on a $60 physical game, and the platform holder a $7 royalty[1]. With digital, retailers lose out and no longer get a cut, cost of goods is reduced, and returns go away.

With a $60 digital game, don't Sony/Microsoft/Nintendo/Steam all charge a 30% platform fee for infrastructure/store costs and their profit? They'd take $18 (+157%) and leave $42 for the publisher (+55%) (edit:math). Is that the extent of the pie or is it divided more?

Multiplayer still requires a $60/year fee on console systems too, correct? And all the extra and ongoing costs mentioned in the parent post are unlikely to go away with increased base price, right? I don't mean to be skeptical but feel we're going to see some price increases (beyond gaming too) just because businesses can.

[1] https://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/...

Most of what used to go to the retailer apparently goes to the console maker now ($7/60 vs $18/60), so the studio hasn't really gotten much of a benefit from digital.

Multiplayer fee does not go to the game maker either.

And costs are astronomically higher. A mid-market AA game with a studio of 80-100 people will cost in the order of 15-20 million USD a year to produce. Art is enormously expensive in 3D, even outsourced. My numbers are a few years old, so it's probably worse now.

It's ludicrous to assume that in the cut-throat gaming market (unless it's the 1000th iteration of a franchise) game developers are looking to increase the price "just because they can". They actually can't because gamers have shown themselves to be incredibly hostile to price increases.

The main reason there are no more mid-market games (i.e. between AAA franchises and indie small-scales) is that it is absolutely not profitable or sustainable. You can put all your money and energy into a game, but unless it's a huge hit, you will never recover the cost. It is just not worth it to most of us these days to even try.

> Most of what used to go to the retailer apparently goes to the console maker now ($7/60 vs $18/60), so the studio hasn't really gotten much of a benefit from digital.

There isn't any less microtransactions and loot boxes on PC, even with PC-only games, where you can sell directly to customers without any store or platform cut - and most big publishers do just that. All these additional money grabs have one reason only: because they can get away with it and make more profit. If selling games for more than $60 was more profitable they would do that too.

> And costs are astronomically higher.

Only because AAA publishers choose to chase photorealistic graphics. Why? So that they can appeal to more customers, making them more money. Yet again and again there are games (mostly from independent studios) that proove that graphics are not the most important thing to many players.

> It's ludicrous to assume that in the cut-throat gaming market (unless it's the 1000th iteration of a franchise) game developers are looking to increase the price "just because they can".

It's ludicrous to believe AAA publishers' claims that games are not profitable when their CEOs can pull in $150 mil [0]

> The main reason there are no more mid-market games (i.e. between AAA franchises and indie small-scales) is that it is absolutely not profitable or sustainable.

There are mid-market games, they are just not as profitable as AAA franchises so most big pusblishers avoid them.

[0] https://www.marketwatch.com/story/activision-blizzard-pulls-...

Meanwhile, $20M is peanuts for movie that only charges $10/ticket

I think the economics of this are radically different. The movies that get released in theatres have already gone through A Great Filter - they’ve either been selected or made from the get go to movie theaters. When you have a film going to theatres you already have a lot of spend behind it, a marketing campaign etc. Sadly the most reliable correlation for whether a movie makes profit is how much you spent on marketing (and no I am not kidding).

Lots of movies, in fact the vast majority of them don’t get to go to theaters. It used to be that this meant VHS or dvd release, now it means streaming, sometimes even just YouTube or Vimeo release. If you go to any film festival circuit I no your life you will see upwards of 1000+ films in a year. But not that many of them will go to theaters anywhere in the world.

Basically the 20$M films you talk about have some reasonable chance of sucess. Gaming is a bit more of a free for all, having steam, early access, GOG. You have a Wild West capitalism type of ultra competitive env. When you launch a film in theatres, that is not what’s happening at all - you’ve already gotten a booking at the natural moated monopoly of Very Large Screens, a limited amount of which you have in the world.

Basically I would estimate that the chance to launch a game and have VERY slim returns is far higher than a film.

In fact, you see the same problem in movies where you either have big tentpole blockbusters or smaller low-budget movies ( like Blumhouse or A24 releases) or indies. There aren't many mid-budget (I guess that's around 50-75 million USD ??) movies made any more.

Yes, you do have breakout hits in that space once in a while, but not enough for studios to risk them without big name stars. Or more commonly actors who fund their own productions.

In both industries the case can be made that the market has made the choice and whiners should STFU. But then we should also make peace with what's lost in return.

As much as people say that there is no organic way to find films at this point in time. There is nothing like Early Access for films or TV. You need the backing of a large organisation to make a film - they’re just too expensive. So interestingly games have both a lower start cost, a better alt-funding infrastructure and more opportunities for competition through an open storefront like Steam.

There is nothing similar in Film today - people don’t open the Vimeo paid section daily looking for new stuff to watch, neither does Vimeo allow for “fund this project” drives. I have hopes crypto DAOs will emerge to solve this issue.

> Might the move to digital distribution, even if not complete yet, already be giving publishers substantially increased profits per unit sold?

There is also no more used market with digital only. I can’t sell a game when I’m done with it, and I can’t buy it for 1/2 or 1/6th of the price if I’m waiting long enough after release.

Reply on news.ycombinator.com