Q
Anonymous asked:
Quick question. I often hear people say "digital games should be cheaper than physical games because you aren't getting a tangible item." Do you guys actually factor the cost of cart/disc, case, and paperwork printing into the *MSRP* of a game?
A
You’re asking about a business term called COGS (Cost Of Goods Sold). It does factor in, but not exactly in the way you’re probably thinking. Game prices don’t really fluctuate all that much - most games cost around $60. That price might go up or down in increments of $5-10, but that’s basically our target price. COGS absolutely factors into our metric, but because customers tend to balk at (especially upward) prices changes, the determination is about whether the game gets made at all. If the executives don’t think a pitched game will be able to sell enough copies to be sufficiently profitable with the given costs of development, marketing, and distribution, the pitch won’t get the green light.
I’ll reference Mark Darrah’s retrospective on Sonic: Dark Brotherhood for this next bit. As an example, the cost of old DS cartridges ranged from $3.50 each to $10.50 each and how that cost had a huge effect on the feasibility of a game that was expected at a $40 retail price. Factor in additional percentages being taken out like platform, retailer cut, licensing, etc. and the cost difference between a $3.50 cartridge and a $10.50 cartridge can easily become a dealbreaker for a particular pitch.
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hyperewok1 said: let’s be real, the fact that games are still 60 bucks is the savings from less physical product costs
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askagamedev posted this Quick question. I often hear people say "digital games should be cheaper than physical games because you aren't getting...