Article on high def development costs raking the industry

[Squilliam]

Valve and Epic aren't good examples for "the industry". You should be able to run a good business creating and selling videogames without having a side business of digital distribution or middleware.

Its just my impression that developers who have the greatest % of experienced staff members are some of the most successful developers out there. They seem to be able to release better quality software which resonates with the userbases of the console and PC markets and are rewarded with much higher sales.

 

[ninzel]

I still think it has more directly to do with the increased expectations that better looking games bring regardless of specific resolution. Greater expectations in terms of production values overall.
It's more the " cinematic" movie like direction games are going that requires more expensive talent. Better composed and performed music,sound effects,voice acting.
Mo capping for more realistic animation to go along with the more realistic lighting and textures. Better writing,directing,producing etc.

 

[Silent_Buddha]

You'll also notice many of the "successful" smaller entities aren't publicly traded companies. Thus they don't have to worry about pleasing share holders and are free to do whatever they wish even if the prospect of a large profit year on year isn't good.

Must publicly traded companies for example wouldn't want to see multiple years of negative or flat growth while a game is being developed in order to see the (hopefully) large windfall in 3-4 years when the game is released. Thus they HAVE to release multiple games each year unlike Id, Epic, et al...

The drawback, of course, is that if your game isn't well received after all that time, your company may be toast. That's one reason teams like ID, Epic, etc tend to stay with what got them to where they are rather than experimenting with new genres that may not recoup the dev costs.

Regards,
SB

 

[Cheezdoodles]

You'll also notice many of the "successful" smaller entities aren't publicly traded companies. Thus they don't have to worry about pleasing share holders and are free to do whatever they wish even if the prospect of a large profit year on year isn't good.

Must publicly traded companies for example wouldn't want to see multiple years of negative or flat growth while a game is being developed in order to see the (hopefully) large windfall in 3-4 years when the game is released. Thus they HAVE to release multiple games each year unlike Id, Epic, et al...

The drawback, of course, is that if your game isn't well received after all that time, your company may be toast. That's one reason teams like ID, Epic, etc tend to stay with what got them to where they are rather than experimenting with new genres that may not recoup the dev costs.

Regards,
SB

Um... While shareholders indeed want to maximize wealth, the stock price of any given firm is the markeds estimate of discounted NPV of all future cashflows of the firm.

Therefore its largely irrelevant if the company has a business cycle where there are many years of heavy investments and losses for the prospect of future income. In fact, even thought a company is posting heavy losses, does not even have to imply that the shareholders are loosing. As long as the losses are less than expected, or as long as the losses are tied to investments that the marked thinks will bring enough return in the future, stock price will go up. (Indeed, some shareholders like dividends, but this is also allready discounted into the stock price..). The only losses shareholders "care" about are unexpected losses.

The risk involved with the company's business cycle is allready included in the stock price (simply by discounting the expected future NPV by a factor that represents risks in addition to cost of capital)..

Shareholders only care about maximizing wealth, this however does not imply that they need the profits to come now. Future potential profits are just as important (ofcourse discounted for time value of money).

What your saying does not make sense, the reason why the publicly traded companies release many more games have nothing to do with shareholders interest, it has everything to do with the size of the company, publicly traded companies (atleast any liquid Publicly traded company) are far larger than the small dev houses like Id and Epic.

This determines how many games they output, simply because the larger the number of developers you got working for you, the more games you can make in the same time scale.

It has nothing to do with shareholders interest.

 

[pc999]

Personally I think that the main problem came from gamers (specially hardercore ones), they got used that every new game, will be better than every already released game in every way, and as such they demand new gamesto have better gfx,voicing, animation, audio, story....

Now there is only one way of getting better, that is spending more (contract more/better guys, create/licencing more tech).

Portal is a good example, a great game and only brings two things, a "free" update to the HL2 engine (that it really dont need) and the Portal tech.

Wii does have a big advantage, first its tech hits the wall a lot sonner, second most of it users dont expect every new game to be better in everything (just like one doenst expect every new movie to be better in everything, just some like SW).

Probably some day this will change, due to diminushed returns, new kinds of games, industry changes, industry production models changes ... But I guess it will take a time.

 

[wco81]

Hasn't there been other periods of consolidation and studios going under (and new studios to emerge later)?

It may be more exacerbated because of the economic and financial situation now, but is it completely new?

Anyways, I heard that some guy who worked at Sun made iShoot, an iPhone game selling for $3 or $4 and he was making $37k a day.

You have to be lucky as well as good in a crowded field but it looks like one-man shops are a possibility, at least in the short term, especially with everyone else opening up an App. store of some kind. Probably scant consolation for developers losing their jobs ...

 

[fearsomepirate]

Wii does have a big advantage, first its tech hits the wall a lot sonner, second most of it users dont expect every new game to be better in everything (just like one doenst expect every new movie to be better in everything, just some like SW).

I don't think the controller technology has hit a wall yet. Users seem to expect newer games to have better controls than the launch titles, too.

 

[pc999]

I don't think the controller technology has hit a wall yet. Users seem to expect newer games to have better controls than the launch titles, too.

I didnt mean the controler tech but mainly content creation, althought some other tech can be quite expensive (even UE3 or others, compared to older versions like UE2.5).

From what we heard none had ever complained from being hard to dev tech for the controler, I wonder if later (and with things like WiiMotionPlus) that will change. I think it will once you move from the most basic designs, but it is just one wall.

 

[Cheezdoodles]

Personally I think that the main problem came from gamers (specially hardercore ones), they got used that every new game, will be better than every already released game in every way, and as such they demand new gamesto have better gfx,voicing, animation, audio, story....

I dont understand how you can even consider this a problem, its the same with every product in the world that is not consumable. Its not a problem, its simple logic:

Unless the new product offerings are better than the current product you own, you have absolutely no incentive to buy it. This should be obvious to anyone.

You would not buy a new TV unless the new one offered some advantages\gains compared to your old TV.

Same things applies to games, if a new game doesn't offer a better experience than what you currently own, why the hell would you buy it?

Now there is only one way of getting better, that is spending more (contract more/better guys, create/licencing more tech).
.

This in incorrect. You are forgetting that for each game a developer makes, he learns something, and since you can "allways" reuse the assets\code from the old games that you have made, there is absolutely nothing suggesting that you have to spend more in order to make a better game.

Lets take Gears of War for example. The costs of developing GoW where high, new engine, new platform etc. Gears of War 2, is without doubt a better game technically than Gears of war 1, however, its very unlikely that it costed more than GoW1.

Why?

Because when Epic began making GoW2, they did not have to start from scratch. They allready had a complete engine, assets etc. Aside from creating new assets for new levels etc, they can simply reuse or tweak what they have allready created in GoW1. The budget for GoW2, thus could smaller than GoW1, simply because a lot of stuff that they use where allready inplace, that just needed some tweaks.

So unless every developer in the world would delete all that they had created upon finishing each game, they certainly do not have to spend more in order to create a better game next time around. (Althought, in some cases ofcourse, the results from starting from scratch might outweigh the savings in costs). Unless the dev changes hardware platform, its absolutely no necessity that the next game will be more expensive to create than the previous one, even if its better.

 

[deathindustrial]

Isn't the overall cost of game lopsided towards art assets as opposed to the engine itself? Not sure how much credence to give Forbes but this was the first graph I came across and at least gives a ballpark to start from:

http://arstechnica.com/gaming/news/2006/12/8479.ars

Take a game like Fallout 3. The engine is very similar to that used by Oblivion but with a completely new set of assets. Would the savings on the code side of things from re-using the existing codebase really have offset the costs of creating completely new art assets (including voice work and story based elements)?

Cheers

 

[Mobius1aic]

Much like Valve's Source Engine, the Gamebryo tech is a single main component that's readily upgradeable for future games, therefore they're not creating a whole new set of tools, hence lower cost. I think this seems to work out well for Capcom with their MT framework too. It seems that there is less emphasis on tech and more on substance in this form of working to create games.

 

[pc999]

I dont understand how you can even consider this a problem, its the same with every product in the world that is not consumable. Its not a problem, its simple logic:

Unless the new product offerings are better than the current product you own, you have absolutely no incentive to buy it. This should be obvious to anyone.

You would not buy a new TV unless the new one offered some advantages\gains compared to your old TV.

Same things applies to games, if a new game doesn't offer a better experience than what you currently own, why the hell would you buy it?

What is a better experience on a game?
What is a advantage in a no quantifiable thing like a gaming experience?

Anyway I do agree that one will noly get something new if he does see something that interest him, and that will probably be or something new or something "better" + more of the same. But it is very diferent having something(s) new/better from having everything new/better.

For example I would take Portal with HL1 gfx over GoW2 anyday, althought as a informed consumer I do know that it doesnt cost near as much to make those two diferent games.

People expect every new game to re invent the wheel, plus the motor, plus the direction sytem, plus the GPS, plus... They expect every new game to be produced as a blockbuster, but only a few can be such things.

Anyway given the price of games I do agree that people should expect that much, games are way way to expensive.

This in incorrect. You are forgetting that for each game a developer makes, he learns something, and since you can "allways" reuse the assets\code from the old games that you have made, there is absolutely nothing suggesting that you have to spend more in order to make a better game.

Lets take Gears of War for example. The costs of developing GoW where high, new engine, new platform etc. Gears of War 2, is without doubt a better game technically than Gears of war 1, however, its very unlikely that it costed more than GoW1.

Why?

Because when Epic began making GoW2, they did not have to start from scratch. They allready had a complete engine, assets etc. Aside from creating new assets for new levels etc, they can simply reuse or tweak what they have allready created in GoW1. The budget for GoW2, thus could smaller than GoW1, simply because a lot of stuff that they use where allready inplace, that just needed some tweaks.

So unless every developer in the world would delete all that they had created upon finishing each game, they certainly do not have to spend more in order to create a better game next time around. (Althought, in some cases ofcourse, the results from starting from scratch might outweigh the savings in costs). Unless the dev changes hardware platform, its absolutely no necessity that the next game will be more expensive to create than the previous one, even if its better.

Can you provide me a source? Because it is the first time that I heard of a (game or no gaming) sequel to cost less (or, at least, having a lower investiment) than the original.

Plus tweaking something in art, specially if it is already good, can be as hard (or even harder) as create something new. Also at some point you star fighting the HW to get the extra performance.

 

[aselto]

It doesn't matter how cheap development is for the Wii, if a dev/pub can't make games thats going to resonate with the Wii crowd, that dev/pub is just as capable of losing money in the Wii market as it is in the 360/PS3.

Third party pubs flock to the 360 and PS3 because its a proven enviroment. Its not a gaurantee you'll make money in the 360 and PS3 market, but that market will eat up the type of products (if they are good and well marketed) that most pubs are used to delivering.

Nintendo is dominating the software market of the Wii with software where the games themselves can be easily replicated but the success of those games can not. You can bet pubs want to take advantage of the huge potential of the Wii's userbase, but the question isn't "should we enter the market?" but "how do we enter the market and have success?".

Nintendo having a very strong presence on the market doesn't hamper 3rd party sales all that much. It's currently the biggest market for 3rd party publishers in terms of unit sales and revenues in the US, so I imagine with more actual effort put into new Wii games and everexpanding Wii market it will be more and more favorable for companies to support the console, even if you can be big and profitable making games on HD platforms only. You can be successful on Wii and probably in several different ways - cloning Nintendo's casual efforts, come up with your own "casual" idea (Guitar Hero etc.) or with a "hardcore" game as well.

If I were a shareholder at a big publisher I would be very pissed if my company ignored Wii for the sake of it.

Nintendo is like the gov't of China while the 360/PS3 is more like the US or more westernized countries. One likes to have iron like control over its economy, while reluctantly lessenen it grip to encourage growth, while the other is built on the concept of free enterprise and private ownership as they see them as keys to a healthy economy.

That's not true. Nintendo doesn't discourage anyone from their platforms, though I can't say they try hard attracting them either.

 

[fearsomepirate]

From what we heard none had ever complained from being hard to dev tech for the controler,

There were a lot of articles early on saying how it was actually rather difficult to turn the accelerometer into useful data. And we had a lot of complaints from users early on as well that showed that making good controls with the new device was non-trivial. See: Wii Boxing, Red Steel.

Also, note that "better" does not necessarily mean "higher-cost production values." It means simply "more entertaining." Not all people thirst for more beautiful cutscenes.

 

[Cheezdoodles]

Can you provide me a source? Because it is the first time that I heard of a (game or no gaming) sequel to cost less (or, at least, having a lower investiment) than the original.
.

I have no source. It should be obvious to anyone that a sequel has a much lower investment as long as you can reuse enough from the previous title. Just ask any dev here, dunno why this logic is hard to follow.

 

[dobwal]

Nintendo having a very strong presence on the market doesn't hamper 3rd party sales all that much. It's currently the biggest market for 3rd party publishers in terms of unit sales and revenues in the US, so I imagine with more actual effort put into new Wii games and everexpanding Wii market it will be more and more favorable for companies to support the console, even if you can be big and profitable making games on HD platforms only. You can be successful on Wii and probably in several different ways - cloning Nintendo's casual efforts, come up with your own "casual" idea (Guitar Hero etc.) or with a "hardcore" game as well.

If I were a shareholder at a big publisher I would be very pissed if my company ignored Wii for the sake of it.

That's not true. Nintendo doesn't discourage anyone from their platforms, though I can't say they try hard attracting them either.

Interesting.

When I look at EA, Take2 and Activision, three of the biggest third party publishers in the console market, I don't really see the Wii as the biggest revenue generator for third party publishers.

From EA latest quarterly report (covers holiday season 08) the 360 generated 265 million worldwide and the PS3 generated 217 million, while the Wii generated 172 million. The HD market generated roughly 61% of EA console revenues, while the Wii generated 21% and the rest generated by PS2 sales (137 million).

From Activision latest quarterly report (covers July-Sept 08, couldn't find a report for last quarter) the 360 generated 72 million worldwide and the PS3 generated 60 million, while the Wii generated 83 million. The HD market generated roughly 48% of Activision console revenues, while the Wii generated 30% and the rest generated by PS2 sales (57 million).

From Take 2 latest annuals report (covers Nov 07-Oct 08, couldn't find a report for last quarter) the 360 generated 487 million worldwide and the PS3 generated 413 million, while the Wii generated 112 million. The HD market generated roughly 73% of Take 2 console publishing revenues, while the Wii generated 9% and the rest generated by PS2, PSP, PC, GC, DS, GB and Xbox1 sales (216 million).

 

[pc999]

There were a lot of articles early on saying how it was actually rather difficult to turn the accelerometer into useful data. And we had a lot of complaints from users early on as well that showed that making good controls with the new device was non-trivial. See: Wii Boxing, Red Steel.

Those are first gen problems, no, I mean I really dont hear anymore dev reasing problems about program for the controller, unlike "HD content" and multicore.

Also, note that "better" does not necessarily mean "higher-cost production values." It means simply "more entertaining." Not all people thirst for more beautiful cutscenes.

Just to point that evolving a control schem will probably mean invest more in its solution.

I have no source. It should be obvious to anyone that a sequel has a much lower investment as long as you can reuse enough from the previous title. Just ask any dev here, dunno why this logic is hard to follow.

That logic is flawless, if the premisses are correct.

Anyway it is quite commun to reuse material, with small to moderate improvments, from one game to make other, they used to call (that also advert and price as) an expansion (unless it is a fifa like game).

I dont know GoW2, more than a few videos, so I will not comment on it, but if you try to extract much more performance, and have new "themes" (textures models...) and update the old ones to match the new ones there is a lot of work, they usually do it in sequels.

 

[whome0]

Nice article about the GameStop business analyze. Just yesterday watched David Jaffe interview and one topic was a used games sale. Althought we as consumers can do whatever we want with (physical) products, but I do understand reactions how studios see a used-market money going somewhere else.

In Depth: The State Of GameStop, Part One

GameStop's total revenue climbed to $8.8 billion in the fiscal year ending 31 January 2009, up from $7.1 billion in the previous fiscal year, an increase of 24%. GameStop's revenue for the past year was 2.8 times the size of its revenue just three years ago. (Note: Unless otherwise noted, the figures here are for GameStop's global business, not just its business in the United States.)

GameStop breaks its sales out in four large segments: new hardware, new software, used product, and other.

Depending on the year, 37 percent to 42 percent of GameStop's revenue comes from sales of new software...The next largest segment of GameStop's revenue is often used product. The used market accounts for 22% to 28% of GameStop's revenue, depending on the year.

(Gross profit margin: sales$-cost$/sales$) This figure hammers home just how lucrative used product sales are for GameStop. On average, they get 48¢ of gross profit for each dollar of used product revenue.

For each dollar of sales in the so-called Other category, which includes high-margin accessories, GameStop gets to keep almost 34¢. Further down are gross profit margins of 21¢ on new software and a mere 6¢ on new hardware.