[casual_games] "Off The Top" -- Bandwidth Costs and Transaction Fees?

[Jamie Carlson]

I read the comment below from Brian Robbins a few days ago... but the 
significance of it did not hit home until I started talking with 
various publishers this week.

>1 - Many distributors/portals have very large deductions for
>bandwidth, marketing, etc off of the price a consumer pays. The
>developer royalty comes after these deductions.

How can the portals justify this?  (bandwidth costs especially!)

I understand that the small conversion rates entail that there are 50 
times as many downloads of a particular game than there are 
conversions for those downloads (if we use a 2% conversion rate as an 
example), and that those "failed conversions" costs money in terms of 
bandwidth costs... but that should be inherent to the business of 
"being a portal", should it not?

I also understand that each of the portals bring with them an 
extensive "customer base" which are loyal solely to their site, etc. etc...
But again, is that all that developers are paying for when they 
enlist the services of a Portal/Distributor?  (access to your customers?)

Additionally, it appears as though "Transaction Fees" are taken "off 
the top" as well (credit card processing fees, etc)... again, isn't 
that what portals do (fulfill orders and process transactions)?

Coming from the retail world, I am always baffled by the costs which 
come "off the top" such as:

         (20% distribution fees)
         - because the publisher shouldn't be forced to shoulder the burden of
         actually paying a distributor to actually "ship" your 
product to the retailers... Gosh no!

         (5% to 10% co-op fees)
         - because the publisher is always "on the lookout" for 
various collaborations
         with retailers to achieve prominent placement and promotion 
of your product.
         ... oh, and they certainly *shouldn't* have to pay for that either.

         (Refunds and Returns)
         - the Retailers don't want to take the risk on some product 
that isn't going to sell.
         So they want the option (from the publisher) to return those 
unsold units to the
         publisher/distributor (as well as the returned units from 
the customer).
         ... The publisher isn't going to shoulder those expenses, so 
"off the top" those
         charges come.. Again, so where is the risk for the retailer 
and publisher here?


This is what has pushed much of the "Conventional Retail PC Game" 
developers to seek refuge in digital distribution such as Steam, 
TotalGaming.net, and Direct2Drive (and to additional markets such as 
Downloadable Casual Games)...

But then when I see things like "Bandwidth Costs" and "Transaction 
Fees" taken off the top for Casual Game developers it makes me wonder 
how a developer is ever supposed to get a respectable revenue 
share... in any market?!

I'm still excited about this market and I think it can certainly be 
profitable for many developers, but it is my NO MEANS a refuge for 
any professional developer who is seeking reasonable revenue shares 
on a $20 purchase (and that's with ZERO dollars for "cost of goods" 
since its a digital delivery).

For perspective... in the retail space, a wholesale price is often in 
the $28 to $32 range, so it's not as though the developer's share is 
a heckuva lot bigger than it is in this space... After all of the 
deductions (cost of goods, distribution fees, co-op fees, refends and 
returns) are taken "off the top", of course.  :(

Thanks for listening to my rant,
- Jamie

P.S. As a side note... the Casual Gaming space is vastly more 
FRIENDLY and FORTHCOMING than the retail publishing world, so I just 
wanted to give some "props" to the few publishers that I've spoken 
with thus far... I have a very strong feeling, that most of "you 
guys" (i.e. publishers/distributors) are really nice people to work 
with (and that's encouraging).

I just don't want this market to fall into the same pitfalls in re: 
to Developer Relations and Revenue Sharing that has plagued the 
retail space for years.... it's a business, sure. But it should be a 
sustainable one too!

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   Jamie Carlson
   Producer / Designer
   http://www.sonalystscombatsims.com
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