The document outlines the key players in the video game industry structure, including developers, publishers, distributors, retailers, platforms, and consumers. It then provides an example of how revenue from a £39.99 game is typically distributed, with the largest shares going to publishers (30%), retailers (27%), and developers (17.5%). The document notes that vertically integrated companies, which control multiple stages of development and distribution, have more control over the process and can retain a larger portion of profits.

1. GAMES
INDUSTRY
STRUCTURE
Developer
Consumer
Retailer
Distributor
Platform
Publisher
The people who
make the game
Responsible for
the marketing
and promotion of
the game
Sorts out the
logistics and
delivery of the
game to retail
and/or consumers
The console/
machine/format
you play your
game on
The ‘audience’ -
or the people who
buy the games.
The outlet where
consumers
exchange money
for the product
FOR EXAMPLE:
Big budget ‘Triple A’ game
The developer is
Infinity Ward - a studio
owned by Activision.
The distribution was
handled by Activision-
Blizzard Distribution.
This means the
publisher - Activision
- is a VERTICALLY
INTEGRATED
COMPANY*
*Definition: The integrating of successive stages in the production and marketing process under the ownership or control of a single management organization.
Where the money goes
For a game that costs £39.99 in the shops
If they are independent it all
depends on the deal with the
Publisher - could £3 per game or
25% of what the publisher makes
minus deductibles
£12.00 (30%)
goes to the
Publisher
£0.65 (2%) goes
to the distributors
£8.00 (20%)
license fee goes
to the platform
owner (eg. Sony,
Microsoft, Nintendo)
£10.50 (27%)
goes to the
retailer
Consumer pays
£39.99 upfront in
exchange for the
game
£7 (17.5% )goes
in VAT
£1.35 (4%)
goes to cover
Marketing (which
is usually done by the
Publisher)
Look at the flow of
cash to the right -
the advantages of
being a VERTICALLY
INTEGRATED
COMPANY is that
company can have
more control over
the process from
development to
consumer and also
take a larger share of
the money
NBThese
percentages are
averages - for
each game the
figures could
be different
depending on
deals made,
distribution
methods,
marketing
strategies etc