Posted on May 23, 2007, Ron Whitaker XBox 360 Game Prices Jump Up Through Microtransactions
Michael Pachter, an analyst for Wedbush Morgan, estimates Microsoft charges a royalty rate of 30 percent for the average download. That means that, for a $10 download, Microsoft gets $3, while the publisher pockets $7. In fact, Pachter estimates the total value of the downloadable content market at $200 million. Now, that may not seem like much compared to the industry’s $19 billion in sales, but consider this: What are those downloads costing Microsoft? “It’s like building an extra room in a house,” Pachter said. “It’s nowhere near the cost of building the house.” Tony Key, vice-president of marketing for Ubisoft, said, “The (downloadable maps) are very profitable for us.”
So, the next time you fire up the marketplace, give a thought to all the devs who are hoisting umbrella drinks thanks to your dollar.