Harry-
Revenues are not retail prices, but wholesale prices that THQ charges its customers (Toys R Us, Software ETC, EB, Best Buy, etc.). Generally THQ's wholesale prices are $40-60 for N64, $25-40 for PSX, $15-20 for GB, and $25-35 for PC. The wholesale price is the retailer's cost of sales. If EB buys a unit of Nitro from THQ for $40, and it sells it for $49, its gross profit is $9. Sometimes the retailer will sell the game for the same price (or lower) than its wholesale price, taking a loss on each unit. According to some of the retailers I've spoken to, they seldom make much money on the games when they are first released. By offering Nitro for $40 (breakeven), the retailer can bring more consumers into the store (due to the relatively low sales price), and it can often sell other games to the same consumers. Therefore, THQ could make a lot of money from selling Nitro to retailers, retailers could make no money from selling Nitro to consumers, but they could make money from selling other titles (selling Ghost In the Shell for $40, when THQ's wholesale price might be $30).
Todd |
