Hey, Sonic Generations was a good game and I’ll defend it to the death.

Typically the budget for production on any product is eaten away by what’s referred to as operating expenses instead of costs of goods sold. The 40% is likely for administrative salaries, advertising, licensing, legal representation, accounting fees, etc. The 60% he refers to is what’s actually allocated to the direct…

ks takes their cut (5-7% including cc fee)
taxes (as much as 15%)
so now you’re at 80% of total
fulfillment of nongame stuff (5%)
fraud, chargebacks, failed payments (2.5%)
initial marketing staff and assets (7%)
now you’re at 65%
misc shit like legal, rent, etc. (5%)