Going gold?

[Heliocon]

Originally Posted by Vevster

That's what I said (I think) about gross revenue

As for "the only time" etc...) please, expalin me what would be the difference between gross revenue and net revenue in your explication....

Gross revenue = price at which the game is sold to the retailer. In some countries, you sell them at retail price (minus VAT) and you emit a credit note for a rebate (the retailer margin) at the same time or after + other credit notes for returns, price protection (when the price of a product already sold to the retailer is lowered) etc...

In other countries, the original invoice is at the retail price (minus VAT) - retailer margin.

But in any case, that invoice could not take into account returns (they come later), price protection (they come later), back end rebates (when a -5 USD -for instance- sticker is applied to the product for a limited period of time ) or period end rebates (calculated on total volume done with retailer for instance):
all these are removed from gross revenue to make net revenues


Gross revenue = original invoice
- Credit notes (returns, BER etc...)
= Net revenues


Please look at EA & Ubi financial: they show only Net Revenues (which is the net they get from sales to retailers). I can guarantee you that they do have in their accounting the difference between gross revenue & net revenues. (That is if you finally admit the possibility that I do have some experience in that industry)






Again, I know quite well what net profit is, thanks.

Sorry put Forbes doesn't talk about net profit but about gross margin. You quoted the article, please check it.
Gross margin is defined clearly. I quoted the definition and it is also writtent in both Ubi & EA financials.

As I said several times I disagree with what Forbes write because:
- either the term "gross margin" is wrong in their article
- the % if they do talk about gross margin is wrong

Either case, they are wrong somewhere (it's just an article, some people, even from Forbes can make mistake)


As for the cash advance, many companies would not have survived without. If they do ask for these advance, there is a reason; if they could do it differently, they would.
I'm just saying that you have to take these advance in the calculation of revenue given to the dev (and frankly, in most articles, these are forgotten).

O ffs, why do I have to finally admit you have experience in "the industry", whats your evidence for that? Guess what? I am in economics and your use of definitions is consistantly wrong.

Gross profit margin can be used to demonstrate the amount of $ the retailer or distributer takes from the sale (markup) vs the original purchasing price. So below is an example.

Also the % net profit has NOTHING to do with amount of copies sold or the copies cost when sold online vs retail. You are completely confusing yourself and I suggest you stop digging the hole about now... The % profit margin represents the net profit of sales for that product, for example if a game sells at $50 in retail, I might make only lets say $10 because $20 went to production and distribution costs and I sold the original game to the retailer at $30. Thats a 33% net profit margin for me and a 66% for the retailer. Basically your gross profit becomes closer to your end net profit, as on the steam sale your net and gross profit are the same, but the retail sale gross margin is lower because it requires a mark up for the retailer to make $. If on the other hand I sell a copy through steam at $50, and steam takes $10 on each $50 sale then that leaves me with a 80% gross profit margin due to the fact that there is no shipping or production costs that would not factor into gross but DO factor into net profit. As these factors no longer matter on steam my net profit more closely follows my gross profit which means the dev/pub gets more $.



Also the EA and Ubisoft financial statements cover a large range of things such as paying for adverts and salaries and everything else for many many games. Your analysis of the statements is not at all indicitive or even related to the argument of profit in retail vs digital distribution. Basically it would be like comparing a whole hedgefunds portfolio and then from there jumping to assumptions about individual stocks.

[Vevster]

Originally Posted by Heliocon

O ffs, why do I have to finally admit you have experience in "the industry", whats your evidence for that? Guess what? I am in economics and your use of definitions is consistantly wrong.

Well I provided links for definition; have you? Do I have to belive you're in economics? Your confusion about gross margin, net profit and everything else doesn't help

Please provide your own definition of gross margin; nothing else, as it is the direct quote from the Forbes article; you know, the one you linked.

Originally Posted by Heliocon

Also the % net profit has NOTHING to do with amount of copies sold or the copies cost when sold online vs retail. You are completely confusing yourself and I suggest you stop digging the hole about now...

Guess who is confiused.
I didn't talk about net profit. You did.

Originally Posted by Heliocon

The % profit margin represents the net profit of sales for that product, for example if a game sells at $50 in retail, I might make only lets say $20 because $20 went to production and distribution costs and I sold the original game to the retailer at $40. Thats a 50% profit margin for me and a 20% for the retailer. If on the other hand I sell a copy through steam at $50, and steam takes $10 on each $50 sale then that leaves me with a 80% gross profit margin due to the fact that there is no shipping or production costs that would not factor into gross but DO factor into net profit.

Yes, but did you note that Forbes talk about GROSS MARGIN not about net profit?
I have provided a definition for Gross margin, and linked 2 financials showing it, clearly as Net revenues (sales) - Cost of goods and showing that R&D is not included in that...Please look at those

In your example:
I sold the game to the retailer at 40$
Cost of goods (manufacturing etc...) is 10$ (believe me that would be one hell of a cost of goods. A DVD cost 2$ to make or less...

Gross margin = 30$
= 75% of revenues

From that you'll take out all the other operating expenses (Marketing, R&D, wages , overheads)
= Operating result

etc...
Please look at the financials I linked if you don't belive me
For EA Gross Profit = Gross Margin for Ubi

Net revenue .
Cost of goods sold .
Gross profit

Operating expenses:
Marketing and sales .
General and administrative
Research and development
Restructuring charges
Amortization of intangibles
Acquisition-related contingent consideration
Goodwill impairment
Certain abandoned acquisition-related costs
Acquired in-process technology
Total operating expenses

Originally Posted by Heliocon

Also the EA and Ubisoft financial statements cover a large range of things such as paying for adverts and salaries and everything else for many many games. Your analysis of the statements is not at all indicitive or even related to the argument of profit in retail vs digital distribution.

Everything you mention (adverts and salaries etc..) is not included in the Gross margin. Please look at the financials.

You keep talking about net profit when the quote is gross margin. If you are in economics and do not see the difference, please study harder.

Start with looking at the links I provided.


Some videos are out, finally better things to do than this

[ElAurens]

Isn't the internet grand Vev?

[Vevster]

Originally Posted by ElAurens

Isn't the internet grand Vev?

It is

But I'm guessing it's just a question of words.
Putting things in tables would clear most of the misunderstandings. That usually works with fiance guys.

That and belief that even Forbes cannot do a simple wording mistake in an article.

We all know that experts never do mistakes, just have to look at the banks & the housing market....

Anyway, better things to do, hope what I did today (not here) was useful , will tell you about it in some time.

Your CE still looks good for the moment

[Kikuchiyo]

Originally Posted by Vevster

It is

But I'm guessing it's just a question of words.
Putting things in tables would clear most of the misunderstandings. That usually works with fiance guys.

That and belief that even Forbes cannot do a simple wording mistake in an article.

We all know that experts never do mistakes, just have to look at the banks & the housing market....

Anyway, better things to do, hope what I did today (not here) was useful , will tell you about it in some time.

Your CE still looks good for the moment

I think the misunderstanding is coming from you interpreting a developer's gross margin with a publisher's gross margin. You're figures aren't incorrect you are just confusing a publisher's gross margin with the developer's gross margin which is what the Forbes article was talking about. An outside developer's gross margin from a retail box sale is about half of the product's gross margin of profit. DD cuts out that sharing of the gross margin profit with the publisher.

[Vevster]

Originally Posted by Kikuchiyo

I think the misunderstanding is coming from you interpreting a developer's gross margin with a publisher's gross margin. You're figures aren't incorrect you are just confusing a publisher's gross margin with the developer's gross margin which is what the Forbes article was talking about. An outside developer's gross margin from a retail box sale is about half of the product's gross margin of profit. DD cuts out that sharing of the gross margin profit with the publisher.

Sorry, you're saying Forbes is talking about developpers Gross Margin?


Exact quote from the Forbes article
http://www.forbes.com/forbes/2011/02...-mayhem_2.html

Second page

"Steam's appeal to publishers is in giving them the opportunity to sell directly, cutting out the profits extracted by distributors. Publishers earn a gross margin of around 70% on Steam, compared with 30% via retail stores"

Am I still the one interpreting what is written in Forbes' article?

[Heliocon]

Originally Posted by Vevster

Sorry, you're saying Forbes is talking about developpers Gross Margin?


Exact quote from the Forbes article
http://www.forbes.com/forbes/2011/02...-mayhem_2.html

Second page

"Steam's appeal to publishers is in giving them the opportunity to sell directly, cutting out the profits extracted by distributors. Publishers earn a gross margin of around 70% on Steam, compared with 30% via retail stores"

Am I still the one interpreting what is written in Forbes' article?

*facepalm*

You talkeds about EA and Ubisoft financial statements which are net profit and NOT gross profit or related to a specific title and therefore its apples and oranges.

Forbes talked about gross margin, you said there numbers are wrong yet have no provided evidence or made a coherent and cogent argument as to why they are wrong.

Use your head - the gross margin taken in by selling on steam for publishers vs retail IS THE SAME AS IF IT WAS A DEV. The difference is if you have a publisher, which sells the game on steam - the publisher gets a slice of the profits that the devs would otherwise get if they sold on steam without a publisher. Therefore it DOES NOT MATTER that is a publisher making more profit buy selling on steam in this example, as it is illustrating the potential profit through retail channels. In addition their gross margin is HIGHER because steam sales take a lower % of total sales price for themselves then a retail shop would, thats not even counting other factors that would further reduce net profit. Also the publishers gross margin in this case does not take into account the $ that will be given to the devs.

Also incase you dont know you use the $ sign before you state the number like this: $10. Its not 10$ - maybe you should of studied more in primary school (so dont tell me to study harder). Your equations are also writen wrong.

You just seem to be parroting the same stuff over and over again which in no way supports your argument.

[Kikuchiyo]

Originally Posted by Vevster

Sorry, you're saying Forbes is talking about developpers Gross Margin?


Exact quote from the Forbes article
http://www.forbes.com/forbes/2011/02...-mayhem_2.html

Second page

"Steam's appeal to publishers is in giving them the opportunity to sell directly, cutting out the profits extracted by distributors. Publishers earn a gross margin of around 70% on Steam, compared with 30% via retail stores"

Am I still the one interpreting what is written in Forbes' article?

Ugh you are being pedantic here. What is true for publishers would clearly be true for developers as well. Cutting out a middle man increases profits.