5 ms·

I think most people understand that the parent could be describing credit card markets, and I don't think that anyone is trying to make the case that credit car

I think most people understand that the parent could be describing credit card markets, and I don't think that anyone is trying to make the case that credit card companies don't also take anti-competitive actions. But the typical credit card fee is ~3%, which is literally an order of magnitude less, and Visa/Mastercard/etc also don't prohibit their merchants from accepting other forms of payment.

scarface74 6y ago
What’s the typical markup between wholesale and retail? How much does every single digital store charge - including the console makers?
- donmcronald 6y ago
  You seem to know a lot about it. How do the fees / costs work in the console market?
  - scarface74 6y ago
    Microsoft charges 30% for Xbox games. The link also mentions Windows store fees that are a lot cheaper. https://9to5mac.com/2019/03/06/microsoft-store-revenue-share/ https://9to5mac.com/2019/03/06/microsoft-store-revenue-share... As far as physical stores, the publisher gets $27 out of the $60 for a typical game. The console maker gets $7 out of the $60. I’ve seen this sane chart other places. https://www.quora.com/How-much-do-game-companies-make-from-each-game-they-sell-if-each-game-costs-60-dollars https://www.quora.com/How-much-do-game-companies-make-from-e...
    - donmcronald 6y ago
      If MS charges 30% for doing almost nothing but putting an XBox game in the store, that's also a scam. I don't know enough about it to know if they provide other services like matchmaking, etc. for that. The rest of those seem reasonable to me. The publisher is basically your marketing budget, right? Retailers' shelf space has a cost and is limited physically. They could be using the same space to sell literally anything, so I think whatever the price of that ends up being it's probably a result of competition across a ton of industries. The licensing fee is ok too IMO since the console makers take a huge risk producing and selling the consoles as cheaply as possible. It also sounds like a well known, flat fee, not a cut of ongoing revenue. The problem for me is when digital stores with a tiny marginal cost of distribution think it's reasonable for them to capture a huge portion of lifetime revenue. They're not doing that much. It's bad value and the only reason they can make it work is because they're in a position that lets them act like an extortionist. It's the cut of every single transaction for the lifetime of a customer that people think is unfair. Ex: $27 to a publisher is fine if it's a one time fee and they're providing $27 of value by advertising etc.. They could never ask for 40% of revenue for all future transactions like DLC and microtransactions because there's enough competition that no one would use them and they'd go out of business.
      - scarface74 6y ago
        Do you feel SASS companies are also unethical because the marginal cost of a customer is 0? And then the publishers also have to pay MS for DLC. I think MS still charges for delivering patches through MS Live. They might have dropped it.
        nrmitchi 6y ago
        I'm not going to touch the space about MS, Xbox, or the like because I have 0 insight into that space, but I will point out that the marginal cost of a customer in many SaaS companies is most definitely not 0.
        tonyarkles 6y ago
        For anyone who is doubting that assertion, it’s all about the costs that scale with the number of customers you have. Beyond the hosting and server costs, there’s support costs. There’s customer acquisition costs (eg click-throughs on ads scale with the number of people click the ads). For more expensive/enterprise SaaS, there’s the account managers and sales team. You can grow your customer base dramatically with a smallish team of engineers/recurring engineering costs, but many of the costs surrounding them still grow in a linear way.
        scarface74 6y ago
        And Apple also has to host your app and your assets, provide storage through things like CloudKit, provide services through GameCenter, customer support and refunds, centralized notification system etc.
_jal 6y ago
They do, in fact, make agreements with merchants to lock out other forms of payment. It isn't universal, true. They also contractually forbid merchants from taking actions that could make the fee more apparent to consumers, which drives up prices for non-credit customers, although there isn't a direct analog for Apple I can think of.
- kelnos 6y ago
  > They also contractually forbid merchants from taking actions that could make the fee more apparent to consumers Has this changed over time, though? I often see a lot of brick-and-mortar merchants advertising different prices for cash/debit vs. credit. I probably see it most often at gas stations, but I see it in regular retail stores and restaurants sometimes as well. I moved to a new house earlier this year and even the movers offered a lower price for cash.
  - odshoifsdhfs 6y ago
    A lot of the 'discount' for cash is not really because of the credit card fees but if only 10% of the folks that pay cash don't ask for a receipt, they are pocketing serious money that isn't taxed (at least it is in my country)
  - mdlman 6y ago
    Definitely. In the U.S. at least, there were literally laws in place prohibiting merchants from mentioning credit card surcharges or changing prices accordingly, although details varied by state. Supreme Court ruled against one a few years ago on a free speech basis [1]. Now more, if not all, are being challenged. [1] https://www.lexology.com/library/detail.aspx?g=c1069ffd-dafb-48a1-af14-b75c908244bf https://www.lexology.com/library/detail.aspx?g=c1069ffd-dafb... (hopefully the link works)

scarface74 6y ago

What’s the typical markup between wholesale and retail? How much does every single digital store charge - including the console makers?

donmcronald 6y ago
You seem to know a lot about it. How do the fees / costs work in the console market?
- scarface74 6y ago
  Microsoft charges 30% for Xbox games. The link also mentions Windows store fees that are a lot cheaper. https://9to5mac.com/2019/03/06/microsoft-store-revenue-share/ https://9to5mac.com/2019/03/06/microsoft-store-revenue-share... As far as physical stores, the publisher gets $27 out of the $60 for a typical game. The console maker gets $7 out of the $60. I’ve seen this sane chart other places. https://www.quora.com/How-much-do-game-companies-make-from-each-game-they-sell-if-each-game-costs-60-dollars https://www.quora.com/How-much-do-game-companies-make-from-e...
  - donmcronald 6y ago
    If MS charges 30% for doing almost nothing but putting an XBox game in the store, that's also a scam. I don't know enough about it to know if they provide other services like matchmaking, etc. for that. The rest of those seem reasonable to me. The publisher is basically your marketing budget, right? Retailers' shelf space has a cost and is limited physically. They could be using the same space to sell literally anything, so I think whatever the price of that ends up being it's probably a result of competition across a ton of industries. The licensing fee is ok too IMO since the console makers take a huge risk producing and selling the consoles as cheaply as possible. It also sounds like a well known, flat fee, not a cut of ongoing revenue. The problem for me is when digital stores with a tiny marginal cost of distribution think it's reasonable for them to capture a huge portion of lifetime revenue. They're not doing that much. It's bad value and the only reason they can make it work is because they're in a position that lets them act like an extortionist. It's the cut of every single transaction for the lifetime of a customer that people think is unfair. Ex: $27 to a publisher is fine if it's a one time fee and they're providing $27 of value by advertising etc.. They could never ask for 40% of revenue for all future transactions like DLC and microtransactions because there's enough competition that no one would use them and they'd go out of business.
    - scarface74 6y ago
      Do you feel SASS companies are also unethical because the marginal cost of a customer is 0? And then the publishers also have to pay MS for DLC. I think MS still charges for delivering patches through MS Live. They might have dropped it.
      - nrmitchi 6y ago
        I'm not going to touch the space about MS, Xbox, or the like because I have 0 insight into that space, but I will point out that the marginal cost of a customer in many SaaS companies is most definitely not 0.
        tonyarkles 6y ago
        For anyone who is doubting that assertion, it’s all about the costs that scale with the number of customers you have. Beyond the hosting and server costs, there’s support costs. There’s customer acquisition costs (eg click-throughs on ads scale with the number of people click the ads). For more expensive/enterprise SaaS, there’s the account managers and sales team. You can grow your customer base dramatically with a smallish team of engineers/recurring engineering costs, but many of the costs surrounding them still grow in a linear way.
        scarface74 6y ago
        And Apple also has to host your app and your assets, provide storage through things like CloudKit, provide services through GameCenter, customer support and refunds, centralized notification system etc.

_jal 6y ago

They do, in fact, make agreements with merchants to lock out other forms of payment. It isn't universal, true. They also contractually forbid merchants from taking actions that could make the fee more apparent to consumers, which drives up prices for non-credit customers, although there isn't a direct analog for Apple I can think of.

kelnos 6y ago
> They also contractually forbid merchants from taking actions that could make the fee more apparent to consumers Has this changed over time, though? I often see a lot of brick-and-mortar merchants advertising different prices for cash/debit vs. credit. I probably see it most often at gas stations, but I see it in regular retail stores and restaurants sometimes as well. I moved to a new house earlier this year and even the movers offered a lower price for cash.
- odshoifsdhfs 6y ago
  A lot of the 'discount' for cash is not really because of the credit card fees but if only 10% of the folks that pay cash don't ask for a receipt, they are pocketing serious money that isn't taxed (at least it is in my country)
- mdlman 6y ago
  Definitely. In the U.S. at least, there were literally laws in place prohibiting merchants from mentioning credit card surcharges or changing prices accordingly, although details varied by state. Supreme Court ruled against one a few years ago on a free speech basis [1]. Now more, if not all, are being challenged. [1] https://www.lexology.com/library/detail.aspx?g=c1069ffd-dafb-48a1-af14-b75c908244bf https://www.lexology.com/library/detail.aspx?g=c1069ffd-dafb... (hopefully the link works)