Hidden away in an investor call, and cunningly spotted NeoGAF, is a report from Ubisoft that explains just how much of your cash the publisher gets when you buy a game.
Using an example of a $100 sale the representative explains that for a physical product the store would get around $25, whilst Ubisoft would get $75 but would have to pay for distribution, manufacturing etc., thus reducing their gross profit down to $55.
When it comes to digital downloads, for the same $100 the store front (PlayStation Store, Xbox Live etc) takes a little more, around $30, but then Ubisoft keep the rest, $70, and with no discs to print they keep the whole $70 as gross profit.
As I explained in my Five Questions You Should Never Have To Ask In 2016 feature, Digital store prices are kept the same RRP as bricks and mortar stores so as not to annoy GAME, HMV etc. That works hugely in publishers favour, as you can see they make 15% more on digital games vs boxed products.
camdaz
55 and 70% is a lot more than I thought it would be.
Forrest_01
“That works hugely in publishers favour, as you can see they make 15% more on digital games vs boxed products.”
It does, but I suspect only for those lazy people that can’t be arsed to make it to a shop (or place an order online), or people that just generally prefer games on their HDD.
For those that are a bit more savvy with their money & shop around instead of going for instant gratification (which I think is more the majority rather than the minority), they lose out a bit.
Why not come to an agreement with the likes of Game, HMV etc & take a bit of a hit on the overall profits for an increase in sales? I know many a person that would buy from the store if it was that bit cheaper than they could pick it up in a shop.
That said, I think I have literally answered my own question there. :D
I know for most though, it comes down to a simple price comparison between the two options & with that in mind, digital distribution (through the PS store at least) will never be as successful as it could be.
gernboes
That ma ybe tru in the UK, butfor example where i live (austria) and many other countries (i normally go to some game shops or so when im abroad because im interested in the proces elsewhere and always looking for bargains) the proce drops in retail shops is much much smaller or even nonexistant. Here, you often have to pay full price a year after release or longer. Some games just never get discounted. Whereas in the PSN Store you can rely on almost all games being reduced 30-50% in the first half year. Not permanently maybe, but in the many sales they do lately.
I do compare prices, ot only with brick and mortar shops, but also online retailers. When i was compiling my chistmas wishlist, and my list for my birthday at the end of january, i deliberately put not a single game on it, because i could have gotten every single one i wanted cheaper online.
Of course, there is the used game market, but i would guess thats also much smaller than in the UK, and because there is no pressure from discounted proces in the shops, even used games sell sometimes for more than digital…
gernboes
yeah, should have proof read that one…
Andrewww
That’s why I usually order games from the UK, living in Switzerland, as they are much cheaper over there, even when postage fees are added. On top of that, I get the language version I prefer.
DR-DAVROS
Why order from say psn store than a bricks and mortar shop.
1 reason if you have 2 ps4’s one activated under your account and the other not you can then play the game on both saving you the cost of buying two disk versions. Then add in some cheap psn cards and your outlay is reduced even further.
Not lazy but sensible.
Have fun
Forrest_01
Why would I have two PS4’s? I only have one set of hands!!
Not planning on turning into Vishnu (or Asura if you prefer a more gaming related reference) any time soon! :D
Avenger
So, what do Ubisoft need the retailers for???
Tuffcub
Because the majority of people still prefer boxed games.
Amphlett
One example is when young Dave asks mom for a new game for his birthday, mom will inevitably go to GAME (in the UK).
Avenger
NOOOO! There are boxed games about! I didn’t know that at all. To think Ubisoft are so caring about retailers that they kindly make sure digital prices are not cheaper so as not to annoy retailers. I mean cheaper digital games would seriously damage retail sales when the majority prefer boxed games, and Ubisoft are so kind they wouldn’t be in for the extreme digital prices for the profit. Oh wait.
I do, however, feel sorry for the unwitting parent who gets mugged and beaten by GAME’s prices.
Forrest_01
Bloody young Dave. Old Dave should really keep that guy in check! ;)
Kennykazey
55% is a lot more than I expected. But that’s Ubisoft themselves. Let’s say you’re a dev who’s signed with a publisher, you’d not be getting much of the physical cake.
I think Stewart Gilray of Just Add Water once said they made at least twice as much per digital sales. (on PlayStation Nations podcast a few years back)
Starman
Remember that “profit” is actually paying for the development costs which they’ve been paying for the last couple of years of so with no return.
Dazbobaby
Are Unisoft talking about RRP or profit after discounting?
Most retail games are between £40-£45
25% profit from a £55 RRP is £13-£14
so a £45 sale with a £10 discount reduces retail profit to a meagre £3-£4