Simon Carless Says XBLA/PSN Games Too Cheap

By: Derek Yu

On: February 4th, 2008


Simon Carless has written a really good article on GameSetWatch where he argues that downloadable games on XBLA and PSN are too cheap to sustain themselves as a viable business model.

The problem, as I see it, is that setting a $10 precedent for what are often complex, multi-mode, multi-level games presumes that you can pretty easily get to 100,000 units sold – given that you only get 70% of revenues and that most games probably cost in the low to mid hundreds of thousands of dollars if you’re actually using hired staff that you pay and take a year to a year and half to make it including (lengthy!) approval processes. Given the amount of games flooding onto the service, I’m not sure that’s quite so easy now. And it’s just going to get harder.

Also, keep in mind that in 2006, Garage Games’ Jeff Tunnell revealed that “The publicly available information on this is that the distribution fees for bringing a game to XBLA is 35 to 70 percent, depending upon participation by [Microsoft]” (via Gamespot). In other words, Tunnell implied that the “70% of revenues” is actually a ceiling… and one that you get only when you are doing the most work.

But yes, good analysis, and a must-read for anyone who’s interested in developing for consoles.

(Thanks, Alec!)

  • Farbs

    Alec and Derek somehow missed this bit:

    By far the best example of taking a stand on pricing on PC is Bit-Blot’s 2007 IGF Grand Prize winner Aquaria, a complex story-based action title which can nonetheless be compared to a number of XBLA games, which the developers are selling for $30 on their website – meaning that they get 100% of the money when you buy it, actually. So just 10,000 sales for them would be the equivalent of selling nearly 50,000 copies of your game at $10 on Xbox Live Arcade. The Aquaria folks have die-hard fans who will pay that fair amount. And $30 implies value, and less disposability. In fact, you may play the game longer if you shelled out a little more for it. You see where we’re going here?


  • GirlFlash

    the trouble is that I know very many people who play games as a pasttime, but just arent into indie gaming. if games are more than they are prepared to fork out on an impulse buy (say a pizza or going to the movies), they arent going to buy the game without having played it first.

    arguably the developers always deserve more money, but in many cases the stuff I find on PSN is out of my price range anyway, and lower prices would mean I spent more (its how my mind works) but wether that means more for the developers or not I dont know, I’m not so hot at economics.

  • Zeno

    Well, I’m too damn poor for an XBox360 or a PS3, but there’s only one game I’d ever buy on XBLA, and it rhymes with Shmastlevania.

  • juice

    I think the key points the article is highlighting are:
    1) The original high-revenue games had relatively little competition. This is no longer the case – the XBL games roster is growing faster than the size of the market.

    2) The original high-revenue games were relatively small and simple (e.g. compare Geometry Wars or Sonic 2 to Rez or Castlevania) and/or involved established IP and code. Now that bigger and more complex games are coming out, the overheads of producing them are far higher.

    This isn’t a bad thing – and an easy fix for 2) is for people (and/or Microsoft) to focus on small, low-cost games. However, I suspect a lot of developers are about to get burned figuring this out…

  • Darius K.

    Tunnell is right, the 70% is definitely a ceiling, at least on XBLA.

  • Mr E

    >”By far the best example of taking a stand on pricing on PC is Bit-Blot’s 2007 IGF Grand Prize winner Aquaria, a complex story-based action title which can nonetheless be compared to a number of XBLA games, which the developers are selling for $30 on their website – meaning that they get 100% of the money when you buy it,”

    In my case, they got $60 because I reformatted my hard drive after I bought it, and my burn of the set up file I made was unreadable because… well the money you save on discount blanks is quickly surpassed by the data you lose.

  • Patrick

    I hope WiiWare is more reasonable.

  • D

    I don’t know about most people, but as for myself, I’d be a lot more hesitant about dropping $30 on a game rather than $10. The bottom line is: people are greedy. When we purchase a game, we usually don’t do it with the developers’ welfare in mind.

    The precedent has already been set, and it’s been wired into our minds that for each bump in price, the game must have higher quality and replayability. If you charge more than $10 now, it had better be the best damn game there.

    Simon seems to speculate a lot on how much these games might have made. But it was ultimately the authors’ decisions to release on XBLA or whatever. Apparently having a wider audience was worth paying the extra fees and percentages of sales.

  • Tommunism

    Rumor is that that 70% is dropping by quite a bit for XBLA. I have no idea what PSN or WiiWare charge…but with that percentage dropping, it’s becoming pretty pointless to release on JUST XBLA. Plus, XBLA is saturated with crap. I’m holding out hope that Braid does well on the platform, but sales of games seem to be getting lower as I think more and more people are associating XBLA with crappy remakes and horrible games. *COUGH* YARIS RACING *COUGH* it’s a free game…but really…can you put a price on your time? I’ll never get those 5 minutes back.

  • Ilia Chentsov

    The morale of the story is: Make games quickly and single-handedly.

  • Tommunism


    That’s fine and dandy, but people making these games need to be able to survive and continue to develop these games, so price does matter.

  • Dom Camus

    At the risk of losing all my credibility as a liberal, isn’t this something market forces will sort out?

    If it isn’t profitable to develop games at a certain price point for a certain platform then they won’t be sold at that price.

    I think the underlying problem here is that game development simply is a very expensive business. It’s hard to develop games profitably. We all enjoyed looking at XBLA and thinking “Ah, a viable route to a big market at last!”. This kind of pricing crisis is just our reality check.

  • gnome

    Another reason for indie developers to stick with the PC methinks…

  • MrBig

    Please read in full if you’re going to respond to this comment, otherwise, don’t bother :) – okay, here we go…

    The problem isn’t the fact that gamers are paying only $10 dollars for a game on either Xbox 360 or the PS3’s online market. The problem is Microsoft and Sony aren’t fronting enough money for these developers to make their games and furthermore they should be giving 95% of all profit made by these games to the Developers (on top of initial development funding). This could be handled easily. For example, you want to make a game for XBLA you make a small demo first, show it to Microsoft reps and they make an offer up front to put towards development giving the developers both incentive and a salary that they can survive off of for the duration of the projected development time. It’s up to the developer to try forecast how long development will take (hey, that’s life) and obviously the companies could lay down deadlines. Upon completion they too would test the game and then put it up on XBLA without all of the delays we’re seeing right now.

    I think we can all agree that 1 or 2 games added to the Marketplace a week is very lame and that there is plenty of room for more than half a dozen games each week. These dipstick companies have all kinds of money yet don’t see that they should be promoting their services more aggressively by meeting demand and working with both the developer and the consumer… but they’re A-Holes.

    The price is right for the average gamer at $10 dollars a pop for the arcade content. Anything more and people either won’t pay to play these titles or the handful that do will slowly dwindle in numbers because people already know what value is in regards to gaming. I don’t think it’s fair to expect people to pay $30 dollars for a digital download game (on the XBLA or PS3Online marketplace) when they could easily search ebay for a mainstream game which would also include a case and manual for anywhere between $10 – $30 dollars. Hell, we’re already paying a “High-Def” tax on brand new Next Gen games so lets keep the price reasonable for consumers and instead focus on these wealthy companies to help support and promote gaming the way they are supposed to.

    The expectations of these XBLA and PS3Online Developers has to be directed towards Microsoft and Sony for additional funding. They’re the ones with all the money after all. Expecting big bucks from 10,000 gamers for a digital game on a “Console” isn’t the way you want to go, not unless you want people to resent what you’re doing. Expecting to charge people $10.00 for a decent XBLA game is both fair and decent. It’s not the customers fault that Microsoft and Sony take so much of the profits even though the developers of these titles are helping to promote their inconsistent online services which suffer from constant interruption due to intermittent technical issues.

    Here’s a thought, stop developing for these exclusive titles for Microsoft and Sony and watch how people become more and more pissed off at the lousy content that’s being released within their online marketplace.

    It’ll take a little bit of time but people WILL get sick of all of the regurgitated crap that Microsoft is releasing on their XBLA marketplace.


  • Tommunism


    Well said and I think the whole “people WILL get sick of all the regugitated crap” is already happening and I think it’s giving Live a bad name. I think this can turn around if they stop playing it safe with remakes and start branching out to original non-shitty titles. I’m holding out some hope for Sony as they seem to have a better number of games to number of quality games ratio on PSN. I really hope Live can get out of the funk it’s currently in with some good titles like Braid and Castle Crashers coming out.

  • MrBig


    Yep, I can’t wait for those titles as well.. but at the current rate of only 1 or 2 XBLA titles per week we’ll be waiting another year before those games hit XBLA… nevermind The Dishwasher which is also supposed to be coming out on XBLA. Microsoft has dropped the ball in a big way. PSN does show more hope in terms of gaming quality and exclusive releases… Lastly there’s Nintendo who, put simply, know their audience very well AND at least have some respect for them unlike Microsoft. I own all of these “next gen” systems and I’d have to say that the most impressive so far has been the Wii (in regards to content and innovation – even with re-releases of old Nintendo games, it’s just a great idea but on top of that they have a considerable line-up of exclusive digitally downloaded games coming in the future). PSN is showing some progress and if they pull through or more importantly, follow through, they’ll have a lot to offer in the coming year or so. I’m very dissapointed in Microsoft and XBLA thus far though… I was very pleased with Castlevania: SOTN as far as the re-releases are concerned, but there are far to few exclusive titles to actually give a shit about the future of XBLA since we’re seeing 1 – 2 shitty titles per week.

    So with that said I am very anxious for Castle Crashers, Braid, and The Dishwasher, but if I have to wait through 100 more shitty titles just to get 3 good ones I think my money will already be spent by that time on other good exclusive titles through Wii Connect and PSN… Dah well.

  • jeb

    Is it just me… or isn’t 70% a good rate to get published on XBLA? If Microsoft said that we’d get 70%, I would read the contract again to check for the “and your soul” part.

    Most online portals don’t even give the developers 50%, so complaining about 70% sounds really whiny.

  • juice

    @MrBig and “two releases a week”

    The big issue here is market saturation. The more games there are, the greater the competition between them for the customer’s money: a user can only play one game at a time! Increasing the rate at which games are added will make this significantly worse.

    (it also doesn’t help that the UI for XBL and managing games is crap – presumably because it needs to support low-res non-HDTV displays. Scrolling through the list of available games has become something of a chore)

    Microsoft may need to tighten up on quality control – maybe some sort of “demo” area where the general public can play unreleased games and vote on which ones they’d like to see commercially published – let the market decide what’s worth releasing. However, this would require greater risk and financial commitment from developers, which takes us back to two points: should Microsoft fund XBL game development (and what happens to the financial model then?) and should XBL developers get a bigger cut of profits (or at least be able to charge more for their games)?

  • juice

    Oh, and @Jeb:

    Portals may give less of a percentage, but they also generally have less stringent quality control and are more flexible when it comes to pricing, as the article points out.

    For XBL, you have to find up to $50’000 up-front to get your game tested and deployed: at $10 a unit and 70% revenue, you need approx 7’500 sales just to cover this cost before you even cover the cost of development – and then you can start thinking about profit and funding the next cycle of game development…

    Meanwhile, on the portal, at $10 a unit and 50% revenue, at 7’500 sales you’ve already got up to $35’000 to cover development costs (depending on what quality management costs the portal has)! For a small developer, that can make a huge difference.

  • MrBig

    Actually jeb,

    If what you are saying was correct then at the very least the devs would be getting a full $10.00 per game purchased since the “average” game goes for $19.95 – $24.95 on those download portals and at 50% that’s roughly $10 – $13 dollars per purchase (that’s assuming what you’re saying is correct).

    Unfortunately that’s not the argument regarding the Console Marketplaces and you’ve missed the point of the discussion. If you read carefully 70% for these developers of exclusive marketplace arcade titles is the ceiling, meaning they more than likely will not receive more than 70% of the revenues but more often than not they are probably receiving less. Revenues made by these developers are inconsistent and the percentage actually ranges from a low 35% (hmmm… what’s 35% of $10.00… think about it) but can go as high as 70% – roughly $7.00 per purchase.

    So the problem isn’t just the percentage that developers receive it’s the fact that a company like Microsoft is so god-damn greedy that these small developers can’t live off of the revenues after spending 6 months (if not more in some cases) after working on a title (an exclusive title in particular).

    So the argument is whether or not to charge more for these downloads. But, that isn’t the answer and I think the correct answer is explained simply enough in a couple of my previous posts.

    I don’t think you’re a big fan of reading though since you sort of missed the entire point of the discussion and decided to jump the gun. ;-) But if you are interested in what this discussion is about just back track a little and read through the entire article and the comments that followed.


  • tales of pails

    Actually, those percentages are a lot lower now.

  • JS

    I make a living selling game on a “portal” (of sort), and I am not sure about that article. First, it doesn’t gives any more data other than the dubious 70% we always see everywhere and other unofficial sale numbers, and it doesn’t compare the cost of dev’ing those games (indie vs “professional”, or just even indie vs indie). Sure MS could give indie 95%, but if they did, they should charge them for billing, customer invoicing, returns and complaints, ad space in XBLA, bandwidth for the initial purchase, bandwidth for any patch released… And if they start doing that, the playing field will not be fair for Indie dev.

    As such the article seems like not much more than the opinion piece that it is.
    That said, in my case, we get 50% of the sales, but the portal I deal with is no XBLA, so I make around 15-20k per games over a year.

    Would I want to get 70%? Heck yes! But lets face it, how much would I make if I worked for a commercial dev house? Would I get 20$K/game? I wouldn’t even get a fraction of that. (nor would Derek if Aquaria was published by EA)

    And what about flat pricing? For an Indie developer, is it better for all the games on a portal to be the same price, or for some to be higher because they are perceived as being better or more anticipated by someone who is not me? Would anyone realize that the latest Cake Mania clone is 10$ more because of the name, not the quality or gameplay?

    I realize that raising the price of every games at the same time would palliate to that, but once there is *real* money to be made with this, Indie dev will be phased out to make place to large dev houses, that have a catalog of retro and IP larger than all the indie games out there put together, and they are just hitching to sell copies of Street Fighter Super Turbo HD++ for 20$. Sure a remake of a NES game will never sell for 20$ if the prices are variable, but you’ll just start seeing “retro packs” like on the DS. Once again, the status quo with large companies will be broken.

    Yes, multi level/multi mode games should be worth more than 10$, but those games were made that big by the developer. If a casual puzzle game sells as much and for the same price as the latest 30 hours non-linear 2D platformer romp in HD, maybe the dev should have spent it’s time trying to publish it on the PSP/DS rather than on XBLA…

    Judging by the amount of bugs in Puzzle Quest on the DS, they might even save on QA time!