Vault Dweller
Commissar, Red Star Studio
- Joined
- Jan 7, 2003
- Messages
- 28,035
Here is how it works:Ladonna said:Wow....
Anyone have figures on Gothic 3 sales? I find it hard to believe that it made no money. Surely the German audience alone would have made up the development costs?
"To help everyone better understand, I will explain Publisher funding vs. Developer return process. I'm going to simplify it a lot, but this is more or less how it works.... and it's really quite amazing...
After they agree to fund your game for 6 million, you begin production. They give you 500k a month upon receiving, reviewing, and approving your milestone. They are basically checking every month to make sure the game is actually being made and going in a good direction Fair enough. To keep things easy, let's say the game ships on time and they've given you a clean 6 million bucks.
Ready?.... You get 10% of the royalties of the game! So like if the game sells 1 million units at Electronics Boutique for 50 bucks a piece, you get 5 million dollars coming back at you right?!??!
WRONG
EB bought the game for 40 dollars and sells it for 50. Now the publisher takes away their expenses of producing the full color manual and the pretty box and such which we'll say is 10 bucks (usually more like 7, but let's keep the math easy). So now we are down to 30 bucks, and you get 10% of that... 3 bucks.... but WAIT!!! Your 3 dollars doesn't go into your pocket, your 3 bucks goes to pay back the publisher what you borrowed to make the game. They did give you 6 million dollars. So before the developer see's a check in the mail, you would have to sell 2 million units!!!!! So before the developer gets a check, the publisher gets 30 million dollars coming in."
http://www.rpgcodex.com/content.php?id=130