[casual_games] "Off The Top" -- Bandwidth Costs and Transaction
Download Free Games
games at download-free-games.com
Fri Oct 13 14:13:01 EDT 2006
Different portals handle their fee structures differently. Bandwidth,
returns, chargebacks etc. are only a 1% deduction here. Total costs of
sales including DRM, ecommerce, support, bandwidth, returns, etc. totals
14%. I split the remaining 86% net 50-50. Bandwidth can be a real
concern depending on your hosting arrangement, file size, and traffic.
Jamie Carlson wrote:
> 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.
> 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
> with retailers to achieve prominent placement and promotion of
> your product.
> ... oh, and they certainly *shouldn't* have to pay for that
> (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
> ... 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!
> Jamie Carlson
> Producer / Designer
> Casual_Games mailing list
> Casual_Games at igda.org
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