Profits, Losses, and Misconceptions.

This will be a simple explanation of how money flows in the business of video games.

DEVELOPERS DO NOT GET ANY OF THE PROFITS.

Sorry for insulting your intelligence, if you already knew this.

A publishing company will receive the profits of the product they publish, whether its a book, a movie, or a video game. Their job entails that they hire writers, game developers, or movie producers to produce movies. They set up meetings, plan deadlines, plan the amount of money needed to carry out these plans. The people they find to actually DO the project get paid upfront, usually as a one time contract based salary (read: you get the money when the job is done) In the gaming market, this usually equates to the developers getting a generic salary during the time of the development, and rarely are any developers kept on the team after the game itself has been made. Majority of the work is like building a house, you hire contractors, they get paid while they are doing the job, and when the job is done, they are no longer needed and so they move onto the next project. The heads of the company doing the development often receive incentives for an exceptional product, a good reference would be the details leaked over the Infinity Ward lawsuit.

Absolutely none of this should be confusing.

 I will not go into the way publishers give "incentives" to video game websites to paint various games in a better light. Those are pretty much self explanatory , just go to any video game website and see how they get special limited edition games, controllers, consoles, viral marketing toys/gimmicky prizes. I will not mention any websites or their full page "special" ads they get.