We here at Elite Game Developers got the chance to work on a premium PC games sales projection spreadsheet with Jussi Autio, Co-Founder and Creative Director of Resistance Games. Jussi approached us with the idea of providing his knowledge on projecting sales in PC games so that the fans of Elite Game Developers could benefit from Jussi’s extensive understanding.
There are four areas in the spreadsheet.
Green area. Basic math about the base game sales. Shows expected income with given conditions. Top most part shows the main things fast and you need to edit just the details rights.
Blue area. This part is about potential DLCs. The only thing to edit are the two first figures, but they are set to what we believe to be relatively “standard” case if there ever is one. If you have plans for less or more DLCs just add more and copy the formulas or forcibly change the text to ‘No’ in “DLC X will be made”.
Yellow area. This does the same math as the green area, but for the DLCs. Most likely you will sign separate deal with your publisher or make separate commitment in self-publishing deal to make DLCs. The formulas assume they are done if DLC would make a profit.
White area. The scenarios. These are used to calculate expected income for your project. If real-life had save & load and you did your game 1000 times – some becoming hits and others failing – this calculates what you could expect. You will have to do the manual labour to move numbers you get to green area with given sales and put them to the scenarios.
The business model
When you’re working in premium PC games, many unique aspects need to be taken into consideration. The business model of premium PC games has many revenue share caveats, and future revenue can be secured with additional content being sold at a premium cost.
Let’s first cover the costs side of things.
Price of the game In the spreadsheet example, the game has been priced at $40. This price is what the customer will pay for the game, and this is the money that will show up as the developer’s net revenue from the game.
VAT Different VAT rates may apply geographically, but the spreadsheet uses a rate of 6% as a baseline and average. This rate is deducted from the net revenue before anybody gets a share of the revenue.
Engine and platform cut The developer is starting the development of their game, and they want to project sales that will happen once the game goes out on Steam. As they are working on these projections, they can take a few things from granted: the platform cut and the revenue share with the game engine provider. Steam takes a 30% cut from the revenue, and an engine provider like Unreal will receive a 5% cut. The platform and engine will earn their revenue share from the net revenue after VAT has been removed.
Publisher business terms: Often, publishers have different business terms. In the spreadsheet, we are only looking at two requirements that affect how much money the developer will see from their game. All of the calculations for the publisher’s revenues will happen after the VAT, engine, and platform cuts have been calculated and deducted.
1) The recoup of the publisher’s development costs. These can be R&D payments that the developer received from the publisher and extra costs like marketing, PR, etc. The recoup means that the publisher first wants to get their investments back from the revenue before the developer receives their share.
2) The publisher/developer revenue share agreement. A common revenue share is an even split of 50% going to the publisher and 50% going to the developer.
Here’s an example:
- The game sells 100,000 copies at $40 per box, makes $4m.
- VAT of 6% = $3,760,000 left
- Unreal cut of 5% = $188,000
- Steam cut of 30% = $1,128,000
- Now we have $3,760,000 – $1,316,00 = $2,444,000
- Publisher is recouping $200,000
- Now we have $2,444,000 – $200,000 = $2,244,000
- Publisher 50% = $1,122,000
- Developer 50% = $1,122,000
There’s one essential aspect to Premium PC games sales which we need to look at. It’s a component that helps developers keep their game in the market and make money in the future. This component is called the DLC.
DLCs (Downloadable Content) are additional gaming content that has been created for a previously released game. The DLC is distributed through the same storefront (i.e., Steam). Downloadable content can be of several types, ranging from new game modes, extensive storyline extensions, aesthetic outfits for characters. DLCs are expansion packs, and the developer can make lots of money by keeping the game alive and selling these DLCs for years to come.
In the spreadsheet, we look at several possible DLCs that will get created. The math isn’t that different from selling the original game, but the spreadsheet uses a few industry averages for calculating the sales rate for DLCs.
How many players, who bought the original game, will buy a DLC? Jussi Autio points out that this can vary between 20% to 45%, with 35% being a somewhat good average. This value is called an Attach Rate. With each new DLC, the attach rate is about 90% from the previous. Meaning that if a game sold 100k copies, DLC #1 will sell 35k copies, DLC #2 will sell 31,5k, DLC #3 will sell 28,35k, etc.
More information on the template can be found inside the template itself.
Here is the recording from the webinar with Jussi.
Before you start playing around with the spreadsheet, please take a look at this video for further instructions.