Net profit (net income) is the residual amount remaining after subtracting all costs—cost of goods sold, operating expenses, depreciation and amortization, interest, taxes, and other expenses—from an entity's total revenues and gains for a given accounting period.
Definition
Net profit is the money left over after every expense has been deducted from revenue. It is computed as the residual of all revenues and gains less all expenses and losses for a period, and can also be described as the net increase in shareholders' equity that results from a company's operations. In accounting it is often called net income.
Context within gaming
In the gaming industry—spanning game development studios, publishers, live-service platforms and esports organisations—net profit measures whether a title or operation ultimately pays off. Revenue from game sales, in-app purchases, microtransactions, subscriptions, advertising and prize pools must first cover development costs, server and infrastructure fees, staff salaries, marketing, interest on financing and taxes before any net profit remains.
Example
Consider a studio that earns $10 million in revenue from a game over an accounting period. After deducting the cost of goods sold, development and operating expenses, depreciation and amortization, interest and taxes totaling $7.5 million, the net profit is $2.5 million.
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