Online vs. Retail Distribution. How Developers Get Paid: The Retail Market for Games  Laramée distinguishes between cost-based deals and royalty-based. - ppt download

How Developers Get Paid: The Retail Market for Games  Cost-based deals:  The publisher calls for proposals. E.g the publisher wants a fighting game for PS3 by Q3.  The developer evaluates the cost of the order.  The publisher and developer agrees on a profit margin for the developer.  The developer must create the game for the fixed amount that was agreed upon.
The developer sells through its own site and pays only the cut to the transaction company.  Online intermediary model. The developer uses a third party site to host and manage distribution of the game.  Combined models. E.g. Steam or Xbox Live..

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