Where the $60 for new games goes

Justin Murray
J. Murray|12.20.06

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Where the $60 for new games goes

With the 20% price hike in PS3 and Xbox 360 games, gamers wonder exactly where it all goes. We hear it is because of the increase in production costs, but we still would like to know the breakdown of where our triplet of $20 bills gets sent. Now, Forbes has given us the skinny on the whole deal, explaining why games like Gears of War are priced at $60.

According to Forbes, $27 of the $60 taking its leave from your wallet goes toward the actual making of the game; $15 goes toward art and graphics while $12 goes toward gameplay mechanics. Other major price aspects are the 25% retail markup ($12 from a wholesale $48 per game) and console owner fee of $7 (Forbes says the PS3 is higher). All in all, the parties involved (retail and publisher) only get $1 for every game sold (publishers can boost it up to $3 per game if they sell advertising in the manual or as a pack-in pamphlet). This is, of course, before all those costs are paid up; after that, they can still make a nice profit at a $20 price point.

The article, accompanied by a nifty slide show presentation, is an interesting look into the world of the new current generation. Still, it doesn't exactly explain why we got the 20% boost other than the "increased production costs". Are programmers getting paid more, working more, need more to finish the game, etc? In either case, the breakdown is an interesting glimpse of the inner workings of a game companies pricing decisions.

[Thanks, Scooby Doo]

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