Questions about Business Model

[Orchomene]

Having been working as a project leader in a service development company, I can give you a rough estimate in this activity sector about the ratio between production and structure costs : for a small company, this ranges from 20% to 50% additional cost for non productive work (that's management, marketing, pay, HR, electricity, hardware and so on). In big companies, it goes quickly to 100%

In the end, in a business without any advertisement on a product (even if there is some for recruitment and company image) you need to consider the production cost of a project and double it to get the real cost.

Of course, if you say that a product has a cost of 2 millions, that means you take account of the non production costs. For the simple reason that non production costs need a way to get financed.

And quality, translations, maintenance... All of this is into the productive part.

[Zephyr Falcon]

Something else to consider is that PE wont have to pay for any sort of IP. I think the cost of licencing an IP is almost always paid by the publisher, but it's still a cost factor in the final development cost.

Also no one mentioned that the net profit per sold game unit will be far better for the developer:

A 60$ console game is typicaly* split like this:

Console Maker: 20% or 12$

Publisher: 30% or 18$

Marketing: 15% or 9$

Retailer: 20% or 12$

Developer: 15% or 9$

 

If OE sells the game for a discount price of 40$ and pay 30% to retailers etc. (I'm not sure about steams cut, but et's say it's 30%) then every copy sold would give OE three times as much as a copy of Fallout: New Vegas sold.

 

*I read that on the internet. I guess it makes sense, but it might not be universal truth.

[RobDinsmore]

Thanks for the great replies.

 

If the Witcher 2 realy cost "only" 8M to develop then this project should be doable on the 2.5 by swapping 3D/combat work for scenario. Also it seems like a game like the Witcher 2 could be funded in part by Kickstarter.