To kind of inject my opinion into the center of EchoRedux & HeyCori's little back and forth spat here, I don't think a car is a good/fair analogy to compare against devs deserving residuals on used games - it's an entirely different business model. This is going to be a long post, so FYI.
A ton of that cost, and high markup beyond the low manufacturing cost is made at purchase - a consumer is putting up a huge amount of cash for a vehicle all at once.
And the maintenance, and the warranty. Auto manufacturers have costs after the new car is driven off the lot. They still have costs even when the car is resold and thus "used". Ever heard of those 10 year warranties? Yes, they apply to all owners of the vehicle up to 10 years. There are clear costs to those warranties until they are up. I see nothing but parallels to the gaming industry with online play. The dev's are supporting the servers for new discs, and the people who still own those discs for a certain amount of time.
The physical cost of the disc that a game is on, in volume, is probably pennies - though I suppose you could argue that compared to low costs of auto manufacturing it's similar. A video game development studio incurs costs from licensing game engines, investing in new technologies, game development over a period of years (per game title, for many games), etc. Well technically, to be fair, a publisher will generally take care of licensing costs and such, but it's still part of the overall cost of a game. The publisher that finances the developers has a variety of costs and things to watch out for. As an example, if the developers assure the publisher that a game will be ready by X date, and the publishers market the crap out of it (as they need to, for future sales), the developers might run into a bunch of bugs or development issues that delay the game, resulting in a bunch of pissed off people who generally kind of "move on". Excitement dissipates, sales aren't as spectacular as they could have been, etc etc.
Yet, there's research and development costs on cars too. Patents, intellectual property, design, all of those represent a tangible cost, yet are intangible materials in the actual manufacturing of the car. We don't see that millions poured in on the research of a small air conditioning unit that produces massive cooling through 12 vents in the car, we just see the hundreds that it actually cost to physically produce when it's installed. Hey, there are other costs such as advertising, distribution (you know what it costs to ship a car cross country?), selling fees, not to mention the dealerships need to make their money too. Oh, and dealerships are rarely owned by the manufacturers, almost all are independently owned, obtaining a franchising license to sell a certain make. Car production can be delayed too. Heck, the 2013 Lincoln MKZ was pushed back 3 months from the expected launch date. You think the dealerships didn't hurt by only having 3 Lincoln models?
There is no "extended warranty" on a game, no money to be made on financing. I suppose you could equate bonus features on a car to DLC, but I would argue that DLC costs more to produce and market than a Bluetooth/technology package on a car. And takes away time from working on the next title to keep the development company afloat.
An extended warranty represents
a cost for the manufacturer. Paying for servers is the same thing,
a cost for the dev's. Car manufacturers don't make any money on financing unless they do the financing themselves. There's money to be made on financing a game purchase, it's called using a credit card. Hey, the gaming industry can finance your purchase of video games by offering an EA branded credit card! Just a way for the industry to innovate by offering credit. Give people a 5% discount on the purchase of games and charge 25% APR on the balance!
When you say a Bluetooth/technology package, do you mean having an aftermarket installation? This would have been covered in a new car and someone buying it used would still have the benefit. If the person buying the used car had one installed, I doubt the car manufacturer would make a sale since I don't typically see the car manufacturers making those products.
So... $60 (or maybe around $50 wholesale) for millions in development cost, and that $60 has to cover everything. Well, multiplied by a TON of gamers.
And? Car companies have a wholesale price, and a retail, and the covers everything too.
There are also around 24 auto manufacturers in the entire US right now (according to Wikipedia). There are 79 game developers in my city alone (Austin, TX - according to gamedevmap.com. Unsure of accuracy). Not all devs spend double digit millions on games, but every single one of them is subject to the intricacies of putting their games on the market. They all have short windows to capture gamer's short and fickle attention spans. They all need to get their game in as many stores as possible, and find a way to make it interesting enough so that Gamestop Employee #5254 doesn't steer an interested gamer over to the new Call of Duty instead. Profit margins are spread thinly throughout all of these development studios, hundreds of them. Not a fair comparison, you might say? Then check out the list of game publishers in the US, and forget about individual developers. There are a lot according to Wikipedia, though I'm not going to bother counting how many. It's more than 24. Okay, scratch that, I don't want to look like a fool here, there are about 83 actively independent US game publishing companies, and that is not counting those that are a subsidiary of a larger publishing company. All of those are developing using in-house studios, or financing the development of games with game development companies.
Both cars companies and developers face fiercely competitive markets. There's obviously a lower barrier to enter the gaming market. But if devs aren't making money, that means they over saturated their industry and the laws of economics would say that they should go out of business.
Walk into a Honda dealership for a new car, and only Honda makes the profit on your new car. Walk into a Gamestop, and there are hundreds of other game development studios vying for your attention... and it's kind of hard to get a free test drive out of a game, so some people only go with a Gamestop employee recommendation or pretty box art and sometimes a solid marketing pitch on the back of the game box.
Uhm, the dealership gets a cut, the salesman gets a cut, their repair shop can expect future business, so no, many people are profiting on a new car. On a used car, just like a used game, if you're paying someone for maintanence, that's their business, and the manufacturer doesn't get their cut. Spending "$2 at Hastings" just like with a car, you are paying money for repairs, and that money doesn't go to the manufacturers.
To summarize my comparison, an auto manufacturer is not subject to the same types of struggles that the game industry is when it comes to selling their product.
Uhm, they are.
However, games do not get residuals and do not have any secondary source of revenue.
This point kind of makes your comparisons between video games and movies weaker than the comparisons between cars and video games.
The publishers and developers quite literally only get income once. They basically are forced to sell in supremely large quantities to make up for everything in guaranteed sales, and hope that DLC can help keep continued sales up (word of mouth, more PR about an extension to a popular game, etc).
Actually, like movies, video games can make money when they're reintroduced to new mediums. Like how movies get money when a cable network buys the rights to play it, or money from DVD sales, an Xbox game can be reported into an Xbox 360 and an Xbox One game. I'd pay again to get Morrowind on an Xbone.
I think game developers have it rough. Heh, and despite the high rate of employment rotation and pressure, I still somehow want to break in to the games industry for a career.
Hence the over saturation. I'd say follow your passion but you're looking at likely being unemployed with it.
Facebook
Twitter
Instagram