Nov 24, 2017 - The WAN Show Document

[Egg-Roll]

10 hours ago, Razor512 said:

 

What about when EA sells a game through origin, or Ubsoft selling a game through uplay? If they own the entire distribution chain, then they will keep all of the profit.

Even if steam takes 30% (though they do have agreements where they take less from major publishers), it would be less than what the publisher would lose by going through a physical retail distribution system where you have multiple middle men taking a large cut of the profits.

 

Compared to the past, game companies effectively went from taking probably around $20 per game sale, to taking the full $60 as the gross income for the game sale.

 

As for digital distribution, as you go up in scale, you are able to significantly reduce the cost of distribution. For example, instead of paying for a VPS, on a large scale, it is cheaper to buy a 100 gigabit connection, and run your own server farm.

 

Beyond that, for a corporation, there is no concept of "enough" money, their goal is to always charge as much as the market can handle, and on top of that, loot boxes will still be used. The goal of loot boxes is to have a never ending payment system with no upper limit. For example http://www.eurogamer.net/articles/2017-10-23-manveer-heir-bioware-mass-effect-ea-monetisation

 

With there being some people who are willing to dump thousands of dollars into microtransaction and loot boxes on top of a full priced game, they will not pass up that opportunity, They will charge a ton for the game, and keep the loot boxes just in case a few "whales" and others who do not understand the value of money also purchase the game where they can extract more money from them.

... Do you really want me to explain this to you? Yes? Ok...

 

First i'm going to agree with you the limitless amounts of money is the goal of every company not just games. If Linus could pull in google's quarterly doing one thing easily you think he would? Sure, but what if it demoralizes his clientele like EA and the we paid $60-80 for a game and now this BS group? Not likely because he has morals, and the lack of shareholders. But as i said loot boxes and even DLC's are just afterthoughts initial income of said game and it's future success is very much like the movie industries. GTA V is a prime example at this where RSG made i think either all or more of their money back in the first few days then sales started declining, the money in game they are just misc ends that if they dont sell who really cares, you just turn off the servers as you've already made your profits. This is why EA gladly pulled them from the game, they've already made their money.

 

Now as for the whole they do everything themselves stuff. Sure, whatever floats your boat. EA is just EA, EA is like Alphabet is to Google, nothing more than a head figure for owning stuff, in other words "EA" is a management company.

https://en.wikipedia.org/wiki/Electronic_Arts

Every location has its own name, odd, if it was just EA it would be EA - location branch, but they are not branches, they are subsidiaries. This means every location has a budget and an expectation, or get shut down.

 

Basically a financial layout "could" look something like this.

Division A Produces game under "contract" (contract means completion timeline story line etc) with EA as distribution

EA Contracts out Division B for distribution (origin)

Origin has all server upkeep costs etc, sells products and so on, acting as a "store".

 

Easy right? Nope.

Division A (let's say DICE) has 2 locations they have to pay for both, this means their overhead is higher. So they "sell" the distribution rights to EA for say $30 per copy

EA then contracts out Origin to sell the game, lets say Battlefield 4, along with contracting companies to produce all physical items for consoles and those who dont want to download the game.

we all know the physical path.

For Origin they sell the game at $50 (the same as retail)

This means:

EA as a company makes $0.50 per copy by simply being the "middleman"

DICE makes $30 per copy but cant report a profit till they break even.

Origin has the server infrastructure and costs associated to it, this includes server upgrades and depending on contracts could charge out time to EA for maintenance due to a flood in traffic. So say Origin makes $5 per copy.

Total profit: $5.50

Real profit: likely $25 the $20 was burned threw meaningless nonsense.

 

A KISS way of looking at things is how Linus runs here, just better and on a smaller scale.

Linus Media Group

who owns and runs everything.

Floatplane is a subsidiary (i think) like LTT that isn't really associated with the group on a complete financial bases, the reason is they want it to be a viable company that can sustain on its own.

In other words LMG Alphabet Ubisoft EA all have the same basic layout, one main company and many subs. Now I'm not sure how Linus has gone about with here in company registration sense but the likelihood of every location of EA having it's own company registration is high. Why? Taxes. If the DICE LA reports a loss that's a Tax claim, It's all one big game to them.

 

How to put it nicely...

https://tvo.org/video/documentaries/the-great-canadian-tax-dodge

 

So do games lose money? Yes, Do the Game companies lose money? No. Who loses money? The Tax Man, and yes thats a bad thing, unless you like your system crumbling in debt under you.

[Justin_]

Uah...  Is this it?

[DoctorWho1975]

Why do you support Ajit Pai? *ducks*

[Grimy]

wow, what a bunch of bullshit, first of all, games are not more expensive to make, secondly, profits are higher than ever before, thirdly, the paid games that do have MT, paid dlc and lootboxes are the ones that are sure to make a huge profit without them, like LOTR, Battlefront and so on...and if ninja studios can make profit by selling their game for 30USD,and they broke even a month ago, six months ahead of schedule, everyone else can just fuck off, including alot of indies that ask 20-30usd for something that 2-5 people worked on for 2 years...