Going gold?

[Vevster]

Originally Posted by Heliocon

*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.

Err, if you had looked at the financials, you would see "Gross margin".
That is for games. Sure, not for specific titles, all games.
What do you think you find in the Gross margin shown on these financials? Revenues from sales of oranges?

Forbes doesn't talk about specific titles either.

Did you look at the financials? Or do you just conclude that all they give is net profit?

Originally Posted by Heliocon

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. .

You're funny. That's exactly the point: you say the gross margin is highr because steam takes a lower % of sales than a retail shop:

I'm telling you it is not always the case, and it is certainly not what Forbes announces as demonstrated by the financials I gave.

Then you talk about net profit (irrelevant in the discussion)

And finally a gem :

Originally Posted by Heliocon

Also the publishers gross margin in this case does not take into account the $ that will be given to the devs.

Err, did you look at the defintion? That's a given, gross margin never takes into account amount given to the dev.
So I don't even see why you're mentionning that.


Also, note that Kikuchiyo said that Forbes is talking about the developpers's margin, not the publisher, while you're saying those are the same. apparently, he did not understood Forbes article the same way you did.

I am telling you that Steam does not apply the same % for everyone (dev / publisher), it varies for each game. You say otherwise, but you have not provided much proof, while requesting a lot from me.

As for the rest of your diatribe, well, if that is the forte of your argument, that shows a lot .


I didn't study in the US or UK, english is not my native language, but I should have paid more attention to how I write on a forum as someone (or a nobody) on the internet is ready to jump on a $ sign not well placed.


By the way, in correct english, I think one should write "dollar amount" and not "$ amount", as you did. Missed some classes, didn't you?


See, easy game.


Anyway, last post for me on the subjet.
Discussing percentages is funny, but only for a while. You will not convince me, I will not convince you. And it does not really matter.

Enjoy your week end, economics, Steam, the friday update and the various games you might play.

[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.

[Vevster]

Originally Posted by Kikuchiyo

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.

OK, here we go again .You cannot even admit you have been wrong on your previous statement?

Wow, you're the one who said:

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.

So it seems you thought there clearly is a difference. If not, why make this post?
This post is clearly in contradiction with the quote from Forbes. That is easy for all to see, but hey, I am pedantic...

Also:
If you are a publisher you are not cutting a middle man by using Steam. You are replacing a retailer by Steam.


End of story, you guys can now play with yourselves.

[Kikuchiyo]

Originally Posted by Vevster

OK, here we go again .You cannot even admit you have been wrong on your previous statement?

Wow, you're the one who said:



So it seems you thought there clearly is a difference. If not, why make this post?
This post is clearly in contradiction with the quote from Forbes. That is easy for all to see, but hey, I am pedantic...

Also:
If you are a publisher you are not cutting a middle man by using Steam. You are replacing a retailer by Steam.

End of story, you guys can now play with yourselves.

And if you are a developer you can cut out the publisher. Yes, perhaps I wrote things incorrectly or misinterpreted somethings.

Now, can you not admit that if a publisher's profits increase then so would the developer's? (aka you're being pedantic)

Seems you are conceding that profits increase using a DD over a retail box version which is what this whole discussion was about.

[Heliocon]

Originally Posted by Vevster

OK, here we go again .You cannot even admit you have been wrong on your previous statement?

Wow, you're the one who said:



So it seems you thought there clearly is a difference. If not, why make this post?
This post is clearly in contradiction with the quote from Forbes. That is easy for all to see, but hey, I am pedantic...

Also:
If you are a publisher you are not cutting a middle man by using Steam. You are replacing a retailer by Steam.


End of story, you guys can now play with yourselves.

Hey, quit being a jack ass. I made the $ comment because you said I should study harder, which is hard to take serious when you are talking about money and dont know even know where the $ sign goes.

In any case the discussion/argument was about using a publisher versus NO publisher. I stated they could choose their publisher, and that they could choose NOT to use one and instead go straight to steam as the retailer and make a LARGER profit then if they published with ubisoft and then sold on steam. You said that was not true, and still have not provided ANY evidence that says steam charges variable rates for different games (excluding use of valve's engine).
So in conclusion you should stop acting like an idiot, you yourself said that gross margin on steam using those numbers does not count devs, but publishers - therefore if there is NO publisher that gross profit goes directly to the devs and does not get split/reduced by the publisher taking the cash. Especially on a platform like steam where the publisher does little if not nothing for promotion or sales.

[Heliocon]

Originally Posted by Vevster

Please define profit, but in any case, the % are wrong.
I think I have seen more profit and loss statements of video games (products) than you do. Unless you have worked for a major editor or studio, that is.
My source is my job experience in the video game industry




There are many cases here, and not always less overheads:
- the company distributes online by its own means (no steam): has to buy servers, pay for bandwith etc... compared to manufacturing costs. Manufacturing costs are very low and essentially variable. Servers are fixed costs (could be variable if externalized). If you distribute a lot online, then fixed costs can be offset well.
Main drawback of boxes, again, are the unsold inventory: in some countries, they can be send back by retailers; in most, unsold copies will see price decline rapidly, and those unsold to retailers will have to be destroyed (while manufacturing costs have been incurred)
- the company distributes onlina via steam: they pay a service, steam charges for it, depending on the level of service & risk ; see below




If you read french, buy the PC Magazine Canard PC and read their article about steam. Will look it for you and find the game they mentionned (said the studio got 10% on reatail price - have to take out VAT to calculate each chnk, but that would be around 85% for stema, 15% for the studio

Also, do not forget that Steam acts 2 ways:
- online distributor, for instance for some THQ, Ubi etc... games: in that case, they take the equivalent of a retailer's chunk (20 to 30%)
- publisher AND retailer: when an indie game for instance is distributed via steam: in that case, they take the equivalent of a retailer (20-30%) plus a chunk as publisher. And that can go high depending on the contract (40-60%).
Main difference is , afaik, Steam doesn't prefinance a lot of games the way editors do; so their contracts with studios are quite different, and studios get money on each unit sold. On the other hand they get no guaranteed minimum (as is the case in most editor-studio deals; that's an advance on royalties system)

The % given by Forbes are for publishers, not studios. And frankly, these are not at all the figures I've looked at (retailers take 20 to 30% max, including returns etc...). Gross margin includes manufacturing costs (Net revenues - Manufacturing costs, that's all)
If they got 30%, they would all be bankrupt.
As I said, average is above 50% (60%) on a full year and there are not enough online copies (at 70%) to offest the larger number of boxes sold (at 30% according to Forbes). I call BS on that one. Probably a question of wording:

EA gross Margin (p107): from 60% in 2006 to 49% in 2010 with an increase of online distribution ...)
http://files.shareholder.com/downloa..._Arts-2010.pdf

Ubi gross margin:
http://www.ubisoftgroup.com/gallery_.../1042/2360.xls
around 60% on a full year (59% to 66%)

To reach a 60% gross margin with the % (30% - 70%) given by forbes would mean that Ubi sells 3 times more games through steam than through retailers. and that is just plain wrong


Steam is certainly a great platform and a good publisher for small studios, but asserting that these studios always get more than if they'd taken another (mainstream) editor is wrong. Some get more, some get less.

If you don't need to prefinance your game, best deal can be steam (but hey, you can negociate with other editor)
If you need to prefinance your game, today, I'm not certai at all that Steam is helpful.
And you have to take into account that advance on royalties paid by an editor in the % of profit you mentionned in the first place....

Going back and quoting your statements earlier that you made. Because you contradict yourself/dont know what you are talking about. Quoting you "As I said, average is above 50% (60%) on a full year and there are not enough online copies (at 70%) to offest the larger number of boxes sold (at 30% according to Forbes). I call BS on that one. Probably a question of wording:"
- This is what I addressed earlier - you are comparing profit from retail store sales to steams sales on the basis of number of units shipped, NOT % profit margin which is what the 30% vs 70% is. Thats a gross profit margin, not % of end gross profit.

"Also, do not forget that Steam acts 2 ways:
- online distributor, for instance for some THQ, Ubi etc... games: in that case, they take the equivalent of a retailer's chunk (20 to 30%)
- publisher AND retailer: when an indie game for instance is distributed via steam: in that case, they take the equivalent of a retailer (20-30%) plus a chunk as publisher. And that can go high depending on the contract (40-60%)."

- Thats a lie, Steam DOES NOT publish anyone elses games but Valve's (the company that owns/created Steam. Your numbers are not true, Steam never acts as a publisher, just a distributer. The only time it may act as a publisher is posting advertisements in the console which is advertisement and not "publishing". Steam does however charge royalties for using the Source engine but that is a different matter.

"The % given by Forbes are for publishers, not studios. And frankly, these are not at all the figures I've looked at (retailers take 20 to 30% max, including returns etc...). Gross margin includes manufacturing costs (Net revenues - Manufacturing costs, that's all)
If they got 30%, they would all be bankrupt."

-Gross margin does not include manufacturing costs. You are now contradicting yourself in later posts. Also you are interchanging and confusing terms and numbers. Again like I hae tried to point out earlier, you are confusing yourself. Also again the point is wrong anyway because if I make 30% gross profit per sale and my other costs are only 5% of the products cost then I can easily cover my expenses.

-The EA and Ubi financial reports you gave do not include any accurate data that is relevant to your argument. Their gross sales profit is a conglomerate from many products, many distribution methods and many regions. It does not support the argument you are making. Also EA is a developer AND publisher, while Ubisoft is a publisher. The argument is over publisher vs no publisher and its effects on the development studios end profits if publishing on steam. Again you did not show developer figures. Also your assesment of a decline in profit due to digital sales as you said in your post is idiotic. First these profits include CONSOLE game sales aswell, second there is currently a recession and that reduces sale quantities among other things. Basically your full of it.

[Heliocon]

Originally Posted by Vevster

I don't quite understand your first sentence "Steam sales cost the company(s) offering games through them a higher margin of profit "

Do you mean Steam takes a higher cut? That would be exact but contradictory to what you write further


Steam, as a publisher often take a higher % than a retailer. That's because they act both as publisher & retailer for some games. They can take as much as 80% of price for some indie games....They take the risk with infrastructure as a retailer takes the risk with shelf space.

So when you say "it is technically more profitable to offer your games solely through steam than through Steam and B&M stores. " I'll answer "it depends, and sometimes it's quite the opposite". Each case is different; too many parameters to sum up.

Some people do not like DLing games, via Steam or else.

Best thing today is to offer both DL & boxes, gives a broader audience. That's why publishers like Ubi also offer games on steam.

Where does this 80% come from? Where did you find this number? What games? Source games? Or are you making this up (more likely)?
Steam does not need to invest in infastructure, they rent out servers in regions, the servers are owned by a third party but are updated by valve and operate 24/7 serving content. Valve rents them, so there is no investment (more bs you are making up). This is easy to find info if you look on Steam's website and go to their collaboration/buisness section where they talk about hosting requirments.

[Avimimus]

Originally Posted by mazex

OK - lets all be negative about this too!

+1

[Avimimus]

Originally Posted by machoo

I'll just get the game when it comes out but I wont bother looking at video. I like to just live under a rock - have no expectations , and find out little things myself. It's always better this way.

Wisdom. It took me seven years of Il-2 news to figure that out...

[Heliocon]

Originally Posted by Avimimus

Wisdom. It took me seven years of Il-2 news to figure that out...

Lol well amen to that, I would say I am going to do this - but I would probably be back the next day... So I will save myself the post