Who Actually Gets Paid When You Buy A New Video Game

Mario Kart World will be priced at the standard A$119.95 in Australia. How much of that gets to those who have years of experience in generating it? Far fewer than most people think, as the amount of money is split between the tax authorities, retail stores, publishers, and others before it reaches its destination. 

The beer industry works much like this as well, with taxes, distribution costs, retailer profit, and production cost all leading to the bottom line for breweries for each and every sale. Split also varies under different formats, funding models and the terms and conditions of bonuses. Seeing where a purchase goes and how it’s done, and when you pay those claims.

Five Reasons the Studio Sees So Little

To sum up: The people who make a game are generally in line at the end. 5 separate claims are resolved in advance of a developer earning a dollar from a copy:

• GST: 10.9% of the shelf price (or approximately A10.90onagameofA119.95) is paid to the Australian Taxation Office.

• The store: A digital storefront typically will retain 30% of every sale (Epic will take 12%).
• The retailer receives about 30% of the boxed copy, and pays the retailer’s manufacturing and licensing costs.
• Recoupment: Publishers recoup development advances, which are typically at a higher rate than royalties, before they start earning royalties.
• What remains of that is used for everything else such as engine royalties, marketing, localisation and porting.
• It’s as important as the size of the cut, as the order is. The payday for a studio paid by royalties is not dependent on how many copies of their game are sold: if two games were sold in the same number of copies, their paydays could be very different.

The Store Takes Its Cut First

A digital sale is the first business to claim its cut of the profits, which is the store in this instance. Steam’s revenue share is based on a scale that was introduced by the company in late 2018, where 30% of a game’s revenue is kept up to US10million,25%uptoUS50 million and 20% above that. The PlayStation, Xbox, and Nintendo storefronts are approximately 30% as well.

Epic has been playing on price, at a 12% rate, and it has been allowing developers to retain 100% of the net revenues on the first US$1 million in product sales each year since June 2025. A small studio can make or break at that one point, however, as few blockbusters do. Casino games follow a similar chain, because the studios behind slots and live tables are usually paid a share of what their titles earn for the sites that host them. At an online casino such as wanted win casino, the cuts a player can actually see are payment fees on deposits and withdrawals, and the conversion charge applied when a balance is not held in Australian dollars.

Physical Copies Cost More to Sell

Boxed games add more hands to the chain. Tokyo-based games analyst Serkan Toto published a widely cited estimate of how a US$70 game splits in each format, leaving out sales tax and noting that the figures vary by market. His estimates make the gap between formats plain:

Sony pointed to changing player habits when it announced in July 2026 that it will stop producing physical discs for new PlayStation games from January 2028, yet the margin difference is hard to ignore. A boxed copy splits the price with manufacturers, distributors, and shops, while a download sends nearly all of it to the platform and publisher.

Recoupment Comes Before Royalties

The developer might not be done yet, even after the store and retailer have been paid. Independent studios frequently produce a book with money from a publisher, and the money isn’t a gift, but a prepayment on future sales. Most of the money that comes in goes directly to the publisher until it is earned back.

Advances Are Loans Against Future Sales

For instance, Raw Fury, an indie publisher, makes back a studio’s investment plus a 15% markup at a 100% split before it starts to split revenue. It only counts the money you make, so fees on the platform aren’t included in the count until you get them. Others tone down the model, such as the publishers’ 80%-developer’s 20%-per-first-dollar arrangement. That small percentage can help sustain a game’s studio throughout the months before the game pays off on its advance.

When the Split Finally Starts

The industry analysis, which rates the split as a bit more generous than average, is the following: Raw Fury is split 50/50 after the recoupment. According to games law firm Voyer Law, they retain approximately 55% on all deals with advances ranging from US100,000toUS500,000, and around 71% of deals in which they don’t receive an advance at all.

The compromise is simple for most studios: the higher the advance, the less money pressure they will experience while developing, but also, the less they will get of the profits in the future. Start-up and expansion costs are similar for independent breweries as they evaluate funding of new equipment or expansions, and weigh short-term financial benefits against long-term consequences.

Engines, Marketing and Other Hands

Plenty of companies take a slice without ever appearing near the top of the credits. Epic charges a 5% royalty on gross revenue above the first US$1 million for games built in Unreal Engine, cut to 3.5% from January 2025 for titles that launch on the Epic Games Store alongside rival stores.

Marketing, localisation and porting are usually deducted from net revenue before a royalty split. A trailer campaign or a Switch port can therefore shrink the pool the developer shares in, even when it lifts sales. At the largest companies, the picture changes again, since many big studios are owned by their publishers and their teams are paid salaries instead of royalties. For those developers, the price of a single copy matters far less than the budget and the bonus scheme.

Bonuses That Hinge on Review Scores

Bonus clauses can turn a review score into a pay cheque. In 2012, Fallout: New Vegas designer Chris Avellone said Obsidian Entertainment missed its bonus from publisher Bethesda because the game’s Metacritic score landed at 84, one point below the 85 the contract required. Under that deal, a single point on an aggregated score decided whether bonus royalties were paid at all.

The game was hardly a flop, with reports at the time putting shipments at around five million copies and revenue near US$300 million by the end of 2010. The case became a common reference point for developers who argue that pay should follow sales, not an aggregated review score.

The Case for the Platform’s Cut

Platforms assert that their sales are worth more than their shelf space. A store fee is to cover the cost of paying, refunds, download bandwidth, regional pricing,g and bringing players to a game, which they need to find in the first place. Console manufacturers will throw in another point since often consoles are sold at a slim profit margin at the beginning of a generation and made good for through software. In the case of most large publishers, the 30% standard is still negotiable, as seen from the examples of Epic’s lower fee and Steam’s tiered rates.

The best way to look at it is that the cut is a cost to reach and provide services — and the actual debate is about the value of that reach to a game that already attracts its own audience.

The final profit share can be influenced by distribution deals. Distribution deals can impact the final profit share.

How Distribution Deals Affect the Final Profit Share

Earners of a game typically don’t get paid until after taxes, platform fees, retailer cut,t and full repayment of the advance. The total is influenced more by what the retail price is than by the various ways the product will be distributed, the platform contracts and agreements, and the contract terms set in place long before the product is released. These financial pressures are not unique to independent breweries either, as distribution deals and retailers’ profit margins can make a huge difference as to how much money is left at the bar when a beer gets to the customer.

Playing via digital purchase and a lower cut at a store tends to lead to a lower cut down the road for players who wish to see a greater portion of the money earn its way to a studio. If you’re losing control of your spending, you can get free, confidential support from Gambling Help Online, from anyone whose card shows in the Game Stores or Betting Sites.

FAQ

How much of a game’s price goes to the developer?

It varies widely, but after tax, store fees and publisher recoupment, an independent developer may receive well under half of the sale price. Developers at large publishers are usually salaried instead.

Does buying a physical copy support developers more?

Usually not, because a boxed copy shares the price with a retailer, a manufacturer,  and a platform licence fee. Digital copies typically leave the publisher with more per sale, which flows through to royalty deals.

Why do Steam and console stores take 30%?

The fee pays for payment processing, refunds, bandwidth, and the audience a store brings. Steam lowers its rate to 25% and then 20% once a game passes US$10 million and US$50 million in revenue.

Is GST included in Australian game prices?

Yes, advertised prices in Australia include 10% GST, so roughly one-eleventh of the shelf price goes to the tax office. The same applies to digital purchases from overseas stores.