Making Money on Xbox Live Arcade

Jeff Tunnel, a game maker who worked on Marble Blast Ultra and a writer for MakingItBigInGames.com has posted an excellent analysis about the profitability of games being designed for Xbox Live Arcade. Click here to read it. In the article he uses his own MBU game as an example, letting readers know that it cost in the upper reaches of the typical $100,000 to $300,000 development range for games of this type.

So, 120,000 units * $10 per unit = $1.2MM. That is a nice number for an Indie, but that is not the whole story. Remember, Microsoft should make something for making this cool distribution channel available, and they do take a cut. The publicly available information on this is that the distribution fees for bringing a game to XBLA is 35-70% depending upon participation by MS, i.e. the publisher gets 30-65% of the money collected for game sales. This is very much in line with what the casual portals are charging, so I think it is safe to say the numbers are probably close. Let’s say you are a publisher or a developer that is able to fund your own development, so, a $10 game (800 Gamer Points) would net you $6.50, or 120,000 units * $6.50 per unit = $780,000.

His article goes on to expand on some of the concepts that I was speaking about back in August when I wrote "The Numbers Behind Live Arcade" and he correctly points out that I didn't get the methodology behind those numbers 100% accurate. Regardless, his is a great read and goes to show that the naysayers dissing the feasibility of using Microsoft's XNA toolkit to make a profit on Xbox Live Arcade.