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Embracer says its ‘crazy’ outlay on platform fees exceeds its spend on game development
(www.videogameschronicle.com)
this post was submitted on 22 Sep 2023
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Wait... that math does not possibly check out. In the worst case scenario (Steam), they pay 30% of the revenue from the game in platform fees. If they spend less than that for settlement, simple math tells us that there is at least 41% of the revenue basically unaccounted for.
There's a bit of overhead in every company, like HR, IT and facilities, so maybe these don't count for "development cost" (which makes no sense tbh, that's not how project budgets work). Marketing can eat a ton of money, too, but the numbers still seem bafflingly high.
What? It just means that they spend less than 30% on development. That doesn't sound too far off, as a lot of the money probably goes to marketing, management, administration or (gasp) profits.
And marketing is a huge part of stupid MTX games, you gotta attract the suckers to your game after all.
It seems like it can make sense. Platform fees aren't an initial outlay, they're effectively a cut of profits based on sales.
For the sake of argument using fake numbers, if a studio spends $1m making a game, and then they put it on Steam and it does $10m in sales, then Steam's cut of that at 30% will be $3m
So, spending more on store fees than development seems possible - especially if your game is selling really well
The percent isn't fixed at 30%, though. Big sellers lower the cut, and Steam takes literally zero from keys they sell elsewhere.
It's 30% up to $1m I believe but sure, there are complications. It's just example numbers to illustrate the point.
Unless I live under a rock I don't see the point of spending a lot on marketing ads for games. Two big examples of games that sold extremely well that I never saw an ad for were elden ring and boulders gate three. If you just make a good game word of mouth will tell how good the game is not an ad on TV.