Electronic Gaming Monthly in May 1996 had an article. Who You Pay To Play, which broke down where the money goes on each game you purchase.

Keep in mind that 70 dollars in 1996 had the same buying power as 102.74 current dollars and that 60 dollars in 1996 had the same buying power as 88.06 current dollars.

Some Excerpts from the story:

A $70 [SNES] Cart: Where the Money Goes

$7: Developer, with $1.05 profit per game, $1.75 operating costs minus salaries, $4.20 Staffing/ Royalties.

$36: Publisher, with $10 hardware licensing fee to Nintendo, $5 on other licenses (if applicable), $12 in components 16 MB chips, $2 for packaging and instructions, $4 on advertising and promotions, $3 profit per game.

$9: Distributor, with $1 profit, $1.80 in marketing and $6.20 in distirbution/ shipping costs.

$18: Retailer.

A $60 [PlayStation] CD: Where the Money Goes

Which basically breaks down the same, less the extra cost of the memory in the carts and reduced shipping and manufacturing costs.

Now that's not the full story of course, it was plenty easy to find cheaper games at the time, indeed in the back of the magazine there are discounters who sell most Playstation games for $49.99 and SNES games from $14.99 (Zombies Ate My Neighbors) to and average of around $50. Chrono Trigger is listed at $70, Zelda: LTTP (Late to the party?) is $25.99.

Virtua Boy games were $37 each., Saturn and Jaguar $50 on average.

So no real point, just wanted to memorialize this somewhere.  I do remember pretty much always paying $50 new for PS and $60 new for N64.  That's why the Dreamcast was so great, as most games for that were (incredibly) $39.99.

"it was plenty easy to find cheaper games at the time"

The same percentages should still apply, no? Actually, I suppose licensing fees and packaging costs wouldn't change, but you can easily work out the more malleable numbers from that base.

Also: why no profit margin listed for the retailer? Don't they have to pay for the game that they're going to sell?

aspro said:

^I don't think they broke down where the retailer spends his/ her profits because it was not germane.

Rather than where they spend their profits, what I'm really wondering (and this is probably a pretty stupid, basic retail question that everyone already knows the answer to, so excuse my ignorance) how much they would have to pay for a $70 dollar game. Or if the distributor just ships it to them at no cost and waits for the royalties once the game has been sold, so to speak? The $18 figure implies that they'd be paying $52 per $70 unit, I suppose.

aspro said:

I get what you are saying. Yeah...

Yeah they pay $52, or just a random trailing off yeah? Still, I'm left wondering if they pay up front or only after selling the unit...and do they pay the distributor directly, and the distributor sends it off to the multiple parties involved, or is that the publisher's job? The extended bureaucracy of the whole proccess is intriguing...

And what happens if one involved party ceases to exist; do the other parties involved receive increased profits? What happens if the party that was designated with profit distribution is kaput; who handles that then. The possibilities and questions are endless.