Revenue sharing models refer to the various ways in which game developers and publishers split the income generated from game sales and related monetization strategies. These models play a crucial role in the financial dynamics of the gaming industry, influencing partnerships and development decisions.
Types of Revenue Sharing Models
- Retail Distribution Model - Publishers fund development and marketing, taking a larger share of revenue (typically 70-85%), while developers receive a smaller percentage (15-30%).
- Digital Distribution Model - Platforms like Steam or Epic Games Store typically take 30% of revenue, leaving 70% for developers/publishers.
- Mobile App Store Model - Similar to digital distribution, with app stores (Google Play, Apple App Store) usually taking 30% of revenue.
- Crowdfunding Model - Developers raise funds directly from consumers, potentially keeping 100% of subsequent sales revenue.
- Self-Publishing Model - Developers handle publishing themselves, potentially keeping all revenue but bearing all costs and risks.
- Subscription-Based Model - Revenue is shared based on metrics like player engagement time in services like Xbox Game Pass.
Value to the Industry
Revenue sharing models are vital for several reasons:
- Risk Mitigation: Publishers can spread risk across multiple projects.
- Developer Incentivization: Fair models encourage developers to create high-quality games.
- Market Access: Smaller developers can access larger markets through publisher partnerships.
- Innovation: Different models support various types of games and business strategies.
Considerations
Factors influencing revenue sharing agreements include:
- Development Costs: Higher costs often result in larger publisher shares.
- Marketing Budget: Extensive marketing efforts may increase the publisher’s revenue share.
- IP Ownership: Ownership of the intellectual property can significantly affect revenue distribution.
- Platform Fees: Distribution platform fees must be factored into revenue sharing calculations.
Impact on Game Development
Revenue sharing models can significantly influence game development:
- Game Design: Monetization strategies often shape core game design decisions.
- Development Timeline: Revenue expectations can impact development schedules and resources.
- Sequel and DLC Planning: Revenue sharing agreements often include terms for potential sequels or downloadable content.