Indeed the publisher model for games was copied straight from Hollywood's playbook, so this link is right on the money.
In general, the accounting system works great if the distributor is also the developer (because tax) but really badly if the developer is external (because "net" is a fiction).
This is also why powerful people negotiate for a percentage of gross vs. net.
It's also how record labels do their accounting (and why most musicians make more money from touring than LP/CD/... sales).
Based on my experience (I was involved in several contract negotiations with major game publishers), of the $40 that the publisher is paid by the retailer for a $60 AAA title before it starts getting discounted, at most $14* goes to the developer (and that assumes you deliver boxed media with instructions, etc.) -- if not the publisher will be happy to deduct those costs from your $14. This is assuming the developer created the entire product on their own dime. If the publisher does QA and packaging, that's coming out of your $14.
* Probably more if you're a Brand Name. I imagine that if you've got brand recognition then, like Alec Guinness in Star Wars, you can negotiate a percentage of gross, and it's a whole different ballgame.
David Prowse has apparently been told that Return of The Jedi has still not made a profit, so he has yet to see any residual payments from it.
“I get these occasional letters from Lucasfilm saying that we regret to inform you that as Return of the Jedi has never gone into profit, we’ve got nothing to send you. Now here we’re talking about one of the biggest releases of all time,” said Prowse. “I don’t want to look like I’m bitching about it,” he said, “but on the other hand, if there’s a pot of gold somewhere that I ought to be having a share of, I would like to see it.”
This is pretty horrific given that we're talking about a guaranteed money-making threequel.
I imagine that, as someone whose face is never visible, Prowse was in an unusually poor negotiating positionand that the more recognizable leads got better deals. Alec Guinness (who got 2% of the gross of the first movie, claimed to have argued in favor of killing off his character to avoid speaking any more terrible lines, and only agreed to do the sequels if he didn't have to promote them) reportedly bought his own island with part of the proceeds (probably in an effort to avoid Star Wars fans).
In general, the accounting system works great if the distributor is also the developer (because tax) but really badly if the developer is external (because "net" is a fiction).
This is also why powerful people negotiate for a percentage of gross vs. net.
It's also how record labels do their accounting (and why most musicians make more money from touring than LP/CD/... sales).
Based on my experience (I was involved in several contract negotiations with major game publishers), of the $40 that the publisher is paid by the retailer for a $60 AAA title before it starts getting discounted, at most $14* goes to the developer (and that assumes you deliver boxed media with instructions, etc.) -- if not the publisher will be happy to deduct those costs from your $14. This is assuming the developer created the entire product on their own dime. If the publisher does QA and packaging, that's coming out of your $14.
* Probably more if you're a Brand Name. I imagine that if you've got brand recognition then, like Alec Guinness in Star Wars, you can negotiate a percentage of gross, and it's a whole different ballgame.