Why Gears of War costs $60
by Brandon Pollet · 12/20/2006 (11:01 pm) · 30 comments
This is an interesting breakdown, from Forbes originally, of why next-gen games cost $60 bucks a pop. I thought it might be of interest to the crowd.
-* From 1up.com *-
Here's the skinny, as far as Forbes' article breaks it down:
ON A $60 GAME OF GEARS:
* 25% (aka $15) goes to pay the art and design guys.
* 20% ($12) goes to pay the programmers and the engineers.
* 20% (also $12) goes to your friendly neighborhood retailer. EB / GameStop, whoever.
* 11.5% ($7) goes to a "Console Owner Fee" - ie. whichever one of the Big Boys made your hardware (Sony, MS, Nintendo.)
* 7% ($4) goes to marketing, and puts Mad World and Marcus Fenix on MTV.
* 5% ($3) goes to "market development" -- paying for cardboard Standees of the Gears Crew and elbowing other games out of the way for shelf space at your local retailer.
* 5% ($3) goes to actually manufacturing and packaging the disc.
* 5% ($3) is spent paying the Man for IP licenses or maybe hiring some big name voice actors. If your game isn't an original IP, here's where you get dinged by Marvel, Disney, or Ray Liotta's agent.
* 1.5% (just $1) goes into the publisher's pocket.
* 1.5% (also $1) goes into the distributor's pocket.
* 0.3% (about 20 cents) goes into corporate costs. Management, overhead, lawyers, etc.
* 0.05% (less than 3 cents) go into the cost of paying for the Developer's Hardware. Who knew an SDKs can cost tens of thousands of dollars?
And there you go. $60 of Gears, a la carte.
I think it's interesting that the Art guys take a larger cut than the programmers, but that also factors in Cliffy B's cut and I'm sure he gets a sizeable one ;)
And here's my picture... since we have to have one!
-* From 1up.com *-
Here's the skinny, as far as Forbes' article breaks it down:
ON A $60 GAME OF GEARS:
* 25% (aka $15) goes to pay the art and design guys.
* 20% ($12) goes to pay the programmers and the engineers.
* 20% (also $12) goes to your friendly neighborhood retailer. EB / GameStop, whoever.
* 11.5% ($7) goes to a "Console Owner Fee" - ie. whichever one of the Big Boys made your hardware (Sony, MS, Nintendo.)
* 7% ($4) goes to marketing, and puts Mad World and Marcus Fenix on MTV.
* 5% ($3) goes to "market development" -- paying for cardboard Standees of the Gears Crew and elbowing other games out of the way for shelf space at your local retailer.
* 5% ($3) goes to actually manufacturing and packaging the disc.
* 5% ($3) is spent paying the Man for IP licenses or maybe hiring some big name voice actors. If your game isn't an original IP, here's where you get dinged by Marvel, Disney, or Ray Liotta's agent.
* 1.5% (just $1) goes into the publisher's pocket.
* 1.5% (also $1) goes into the distributor's pocket.
* 0.3% (about 20 cents) goes into corporate costs. Management, overhead, lawyers, etc.
* 0.05% (less than 3 cents) go into the cost of paying for the Developer's Hardware. Who knew an SDKs can cost tens of thousands of dollars?
And there you go. $60 of Gears, a la carte.
I think it's interesting that the Art guys take a larger cut than the programmers, but that also factors in Cliffy B's cut and I'm sure he gets a sizeable one ;)
And here's my picture... since we have to have one!
#2
It's not that they get paid more, it's that there are more of them doing the work, and the total amount of work is more than the work needed from developers.
In most of your relationships, the "publisher" gets a TON more than what you see listed, so the total numbers seem very shaky to me.
12/21/2006 (12:05 am)
While I can't say yes or no to the total breakdown numbers (it seems very off to me as well given what I know are industry standard profit sharing agreements), the "artists" are going to make more than "the developers" as teams...because for any major AAA production title, the resource cost of the art assets is substantially higher than the code.It's not that they get paid more, it's that there are more of them doing the work, and the total amount of work is more than the work needed from developers.
In most of your relationships, the "publisher" gets a TON more than what you see listed, so the total numbers seem very shaky to me.
#4
As far as the Art vs Programming, yea, it's kind of interesting, but I think it's reflective of the size of the task, certainly not the salaries of the individual grunts :( I've always been kind of apalled that artists make so little relative to developers actually, especially given the impact that their contribution has on the final product.
12/21/2006 (12:15 am)
Here's what's wrong with this analysis: most of those costs are fixed (salaried employees) and are independent of how many copies of the game are actually sold. So breaking it down to a percentage of the MSRP is obviously making some assumption about the number of copies sold. Sell more or less, and those numbers will change radically.As far as the Art vs Programming, yea, it's kind of interesting, but I think it's reflective of the size of the task, certainly not the salaries of the individual grunts :( I've always been kind of apalled that artists make so little relative to developers actually, especially given the impact that their contribution has on the final product.
#5
$12 a game x 2 million units sold = $24M
Even if you assume a high number of programmers .... lets say 40 (Epic had 70 total employees as of March) that would average to $600K each for the duration of the project. Lets say Gears was 3 years of development with all 40 programmers on it (Sweeney says it was 2 years... but whatever).... so that's a salary of $200K per year... i don't think so.
The reality is that the publisher and retailer still get a big chunk of the box cost. Also not all the money goes into employees pockets. As a company Epic still has to keep some money in the bank for future development.
These numbers are a fantasy.
12/21/2006 (12:35 am)
These numbers are completely bogus. Let's just take the programmers...$12 a game x 2 million units sold = $24M
Even if you assume a high number of programmers .... lets say 40 (Epic had 70 total employees as of March) that would average to $600K each for the duration of the project. Lets say Gears was 3 years of development with all 40 programmers on it (Sweeney says it was 2 years... but whatever).... so that's a salary of $200K per year... i don't think so.
The reality is that the publisher and retailer still get a big chunk of the box cost. Also not all the money goes into employees pockets. As a company Epic still has to keep some money in the bank for future development.
These numbers are a fantasy.
#6
No wonder distributors and publishers never make any money. Artists and programmers are making millions while publishers are making a pittance!
EDIT:
Poor EA. Always getting such a bad rap!
12/21/2006 (12:35 am)
Quote:* 1.5% (just $1) goes into the publisher's pocket.
* 1.5% (also $1) goes into the distributor's pocket.
No wonder distributors and publishers never make any money. Artists and programmers are making millions while publishers are making a pittance!
EDIT:
Poor EA. Always getting such a bad rap!
#7
12/21/2006 (12:49 am)
Gears of War costs 60$ because people will pay 60$ to buy it... 
#8
The proportion of artist to coder is correct only in the sense that art is always the long pole in the tent, aka, you typically have a much higher number of artist on a AAA project than you do coders. And generally speaking, the amount of work they do in greater numbers last for a longer portion of the development cycle.
Where development budgets are concerned, it ain't the guys that are in the trenches who design and develop the game at the cost of time with family, health, and happiness, that make the big cash. Its the VIPs at the upper end of the food chain.
12/21/2006 (1:01 am)
Stephen is right, those numbers are simply B.S.The proportion of artist to coder is correct only in the sense that art is always the long pole in the tent, aka, you typically have a much higher number of artist on a AAA project than you do coders. And generally speaking, the amount of work they do in greater numbers last for a longer portion of the development cycle.
Where development budgets are concerned, it ain't the guys that are in the trenches who design and develop the game at the cost of time with family, health, and happiness, that make the big cash. Its the VIPs at the upper end of the food chain.
#9
12/21/2006 (1:43 am)
I remember a few Sega games costing $70 waay back in the eighties...[crap just dated myself]
#11
12/21/2006 (2:38 am)
Oh, and a side note - prices on video games have ALWAYS fluctuated. 3DO system for 700.00? NeoGeo games for 100.00-200.00? A crappy computer for 1500-2000? An Atari Jaguar game for 80.00(I think it was the Jaguar...)? A PS2 game for 50.00? And finally...A PS3 game for 59.99.
#12
Also, Nintendo's games are still $50 so I wonder how they will break down.
$12? Those retailers are taking way too big of a cut if you ask me. No wonder there's a Gamestop splurge spammed on every god damn corner in all of San Diego. If only $4 goes to something as big as marketing, and only $1 goes to the publisher, retailers can live with $5 to hand you a box and say "that'll be $60".
This online distribution thing is starting to look better and better everyday.
-Ajari-
12/21/2006 (2:42 am)
Quote:I think it's interesting that the Art guys take a larger cut than the programmersI'm sure the term "artist" isn't dedicated to just those of us with a pencil, Photoshop, and Maya. I'm sure they clumped team leads, managers, producers, and maybe even the janitor in there as well.
Also, Nintendo's games are still $50 so I wonder how they will break down.
$12? Those retailers are taking way too big of a cut if you ask me. No wonder there's a Gamestop splurge spammed on every god damn corner in all of San Diego. If only $4 goes to something as big as marketing, and only $1 goes to the publisher, retailers can live with $5 to hand you a box and say "that'll be $60".
This online distribution thing is starting to look better and better everyday.
-Ajari-
#13
12/21/2006 (4:39 am)
Cliffy B is a man?
#14
It's the same reason as why a guy can get a pair of jeans for half the price of a woman. Women will pay top doallr for clothes most guys won't so they have to price it where the guys will pay.
But this will never change because there's so many die hard gamers who buy a dozen games a year at 60 bucks a pop without blinking that every new system will have even more expensive games.
12/21/2006 (5:20 am)
I agree partially with the person who said it's that much because people will pay it, console systems have hit so big with college and older now that they know people can afford 60 bucks a game easy, and people definetly will pay it, if gamers didn't make such a big show of being important by being one of the first people to own a game it could help. Look at the crowds that sat outside for days just to get the chance to be a first person to get a ps3 (even if you say well most of them are just going to sell them on ebay well look at how much peopel are willign to pay on ebay instead then) that screams out how badly people will shell out money to get the equipment they're obviously going to shell out 60 bucks to buy a game. It's the same reason as why a guy can get a pair of jeans for half the price of a woman. Women will pay top doallr for clothes most guys won't so they have to price it where the guys will pay.
But this will never change because there's so many die hard gamers who buy a dozen games a year at 60 bucks a pop without blinking that every new system will have even more expensive games.
#15
Painting a satirical picture here - ~%10 goes to the store, ~%90 to the publisher, and the Publisher tosses scraps to the developers when they sit on command or do a really cute trick.
Personally, myself, I don't buy games if their over $30 AUD anymore, I just can't justify the money for rehashed shooters with rig-exploding graphics, yet-another-racing-game or even-shinier-rpg. A really good adventure game, though, can be hard to find where I am and are well worth my $40.
12/21/2006 (7:13 am)
I'd say Gears of War is $60 Because it's shiny.Painting a satirical picture here - ~%10 goes to the store, ~%90 to the publisher, and the Publisher tosses scraps to the developers when they sit on command or do a really cute trick.
Personally, myself, I don't buy games if their over $30 AUD anymore, I just can't justify the money for rehashed shooters with rig-exploding graphics, yet-another-racing-game or even-shinier-rpg. A really good adventure game, though, can be hard to find where I am and are well worth my $40.
#16
12/21/2006 (7:58 am)
Now I'm always surprised people complain about a $60 game. When I was a kid, I had a super nintendo, and I seem to recall new games cost around $80. I know the manufacturing costs were higher, but point is my $60 that went to Gears of War was well worth it more than the $80 that went to Royal Rumble WWF Wrestling. :)
#17
12/21/2006 (8:58 am)
lol Josh, could be TGEA :)
#18
12/21/2006 (9:16 am)
Who the hell is forbes? because he's a lunatic.
#19
(just for the fun of it: is the MACINTOSH version OUT?)
STef
12/21/2006 (1:01 pm)
Well, just a question: how good is Gears of War? anyone played the game?(just for the fun of it: is the MACINTOSH version OUT?
STef
#20
just like Chris said above... they charge $60 for it, because people are so willing to pay $60 bucks for it...
keep this up and soon you'll see the prices edging up to $69.95... then 79.95... and before you know it the $99.95 dollar mark will be here...
i dunno if the figures are accurate, close to accurate, totally off in deep space, or what... the only figures i don't see there are my figures... property tax, increased almost 15% this year, cost of gas and heating oil, price of food stuff, auto insurance costs... cost of electricity to keep the lil hummer hummin' so i could run Gears...
Forbes didn't seem to be the least bit interested in my financial breakdown (literally as well as figuratively)... and neither do the publishers who market these games at these prices...
in all fairness though, besides the fact that it does look so damn good, this is a free market economy over here... so i vote not to pay absurdly high prices for this thing...
... for as long as i can resist :)
now if only the rest of the people out there would just hold back until these publishers come to their senses... we'd see a more sensible pricing on stuff like this...
just like the price of gas... stop buying it for one day... if everyone stopped buying gas for one day, you'd be amazed at what it would cost the next morning... they can't keep those tankers waiting offshore, the stores can't keep paying rent to keep those boxes stored in the warehouses...
hey... i haven't even started whining yet!!!
:)
--Mike
12/21/2006 (2:44 pm)
on looks alone i'd be tempted to pay the $60 to license the game... but fortunately common sense and an inate cheapness about me stops me from swiping the plastic...just like Chris said above... they charge $60 for it, because people are so willing to pay $60 bucks for it...
keep this up and soon you'll see the prices edging up to $69.95... then 79.95... and before you know it the $99.95 dollar mark will be here...
i dunno if the figures are accurate, close to accurate, totally off in deep space, or what... the only figures i don't see there are my figures... property tax, increased almost 15% this year, cost of gas and heating oil, price of food stuff, auto insurance costs... cost of electricity to keep the lil hummer hummin' so i could run Gears...
Forbes didn't seem to be the least bit interested in my financial breakdown (literally as well as figuratively)... and neither do the publishers who market these games at these prices...
in all fairness though, besides the fact that it does look so damn good, this is a free market economy over here... so i vote not to pay absurdly high prices for this thing...
... for as long as i can resist :)
now if only the rest of the people out there would just hold back until these publishers come to their senses... we'd see a more sensible pricing on stuff like this...
just like the price of gas... stop buying it for one day... if everyone stopped buying gas for one day, you'd be amazed at what it would cost the next morning... they can't keep those tankers waiting offshore, the stores can't keep paying rent to keep those boxes stored in the warehouses...
hey... i haven't even started whining yet!!!
:)
--Mike
Torque Owner Peter Dwyer
This is based on gears 2 million in sales.
It would be impossible to ever break even, yet namco have already stated that they need 500k sales on each title to go in to profit. Reality then is that the breakdown is more along the lines of 15 - 20 odd dollars to the Developer, needs to cover those art and programmer costs. About a 5 note to the publisher. about a 5 note to the hardware dudes. Rest is retail mark-up. so like around 20-30 to the retailer!
This gives the retail shops a good leeway for sales, bargain bin etc. etc. and that's assuming a no returns policy on stock that doesn't sell.