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

[Download Free Games]

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. 
> 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!
>
> ------------------------------------------------------------------
>   Jamie Carlson
>   Producer / Designer
>   http://www.sonalystscombatsims.com
> ------------------------------------------------------------------
>
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