Article : Only 30% of games even break even!

A publisher with it's own distribution might get $35. Everybody else gets less. Independent studios typically get nothing beyond the considerable development costs, unless they've got a major hit on their hands and they own the IP. Don't underestmate marketing, distribution, and publishing costs -- plenty of finished games never see store shelves because they are judged unlikely to recover those costs. Likewise, as game development budgets increase, it becomes necessary to spend more on marketing to ensure that investment in development pays off. A $40Mgame might have a $20-30M marketing budget.
 
mmendez said:
I understand that the development costs have gone pretty high in this gen with all the HD assets that need to be created, but if only 3/10 games are profitable I would expect most game companies to fold after a while, and that doesn't seem to be the case.
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The developers are held up by the publishers, and the developer gets paid whether the game bombs or flies. The publisher suffers the losses or gets the rewards. They have to make sure they are putting out enough largely profitable games to offset the lossy games. This is the same in all creative inducstries AFAIK. Movies and books and such all run according to the same principle of putting out lots of economical failures in the hopes one becomes a bit hit, and that bit hit offsets all the previous losses. This is also why games get shelved/dropped/postponed as the publisher constantly evaluates developments in progress and if they decide further funding wouldn't see any return, they'll pull the plug to cut their losses and move resources to new projects that they rate as having a higher chance of turning a profit.
 
But what is the development cost of a game these days? Is standard 20M or is it less, I would assume "lesser" titles are less than 20M.

Okay we heard Killzone2 having a 50M budget, but that is also console defining game, ie it is done to showcase the console to get people to buy the console. Also we have had indications of tax reductions and grants have been given, after qualifying after som local or EU laws.

And if we are talking multiplatform then the additional cost is probably for "porting", so then the added platform might be quite a profit addition.
 
JPT said:
But what is the development cost of a game these days? Is standard 20M or is it less, I would assume "lesser" titles are less than 20M.

Okay we heard Killzone2 having a 50M budget, but that is also console defining game, ie it is done to showcase the console to get people to buy the console. Also we have had indications of tax reductions and grants have been given, after qualifying after som local or EU laws.
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Gears of War 2 had a $12m development budget. Of course, that doesn't include promotion, packaging, etc. And, of course, the engine was already in place.
 
JPT said:
But what is the development cost of a game these days? Is standard 20M or is it less, I would assume "lesser" titles are less than 20M.

Okay we heard Killzone2 having a 50M budget, but that is also console defining game, ie it is done to showcase the console to get people to buy the console. Also we have had indications of tax reductions and grants have been given, after qualifying after som local or EU laws.

And if we are talking multiplatform then the additional cost is probably for "porting", so then the added platform might be quite a profit addition.
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KZ2 was a "Halo" game for Sony, for lack of a better term. However, a $50M budget isn't unprecedented or even uncommon these days for AAA titles.

The cost of a port is mostly a few engineers, QA, and added risk of slipping on the ship-date if it's a simultaneous release. If it's a staggered release, then there may be a second marketing spend for the other platform.
 
ban25 said:
KZ2 was a "Halo" game for Sony, for lack of a better term. However, a $50M budget isn't unprecedented or even uncommon these days for AAA titles.
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Not sure I agree on the uncommon part, what other titles are at that level? And are you including marketing etc?
 
Practically every Final Fantasy title nowadays, also GTA for sure, and perhaps Call of Duty. Oh, and Gran Turismo as well.

Large open world games and those that require a LOT of assets are the most likely candidates, especially if they need to develop new technology.
 
Pretty much any AAA title if you include marketing, with some budgets being well north of that figure. Just think of the labor costs -- a 100 person team with an average salary of $80,000 is going to cost $8M a year, excluding benefits. Now add in licensing, office lease, utilities, etc., and you'll see that it's very easy to get to $50M, especially with a 3-4 year project. Now, if you're going to sink that much into the development of a game, you'll certainly want to spend another $15M to market it.

I've heard that GTA4 was around $90M. Considering how long it's been in development, FFXIII must be up there, even with lower labor costs in Japan.
 
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ban25 said:
Pretty much any AAA title if you include marketing, with some budgets being well north of that figure. Just think of the labor costs -- a 100 person team with an average salary of $80,000 is going to cost $8M a year, excluding benefits. Now add in licensing, office lease, utilities, etc., and you'll see that it's very easy to get to $50M, especially with a 3-4 year project. Now, if you're going to sink that much into the development of a game, you'll certainly want to spend another $15M to market it.

I've heard that GTA4 was around $90M. Considering how long it's been in development, FFXIII must be up there, even with lower labor costs in Japan.
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I doubt most titles, AAA or not, start with a 100 person team on day one. Any dev with that big of staff is hardly going to devote almost all its resources into one title at a time 100% of the time.
 
dobwal said:
I doubt most titles, AAA or not, start with a 100 person team on day one. Any dev with that big of staff is hardly going to devote almost all its resources into one title at a time 100% of the time.
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No, but you'd be surprised how quickly some of these projects spin up. You can definitely have 50 people on a project after the first year, and more from there. By the end, you could have well over 100, excluding outsourcing.
 
dobwal said:
Any dev with that big of staff is hardly going to devote almost all its resources into one title at a time 100% of the time.
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I also find it highly unlikely to have that kind of staff with average salary anywhere near 80k. Even in US that sounds high, and other countries are quite a bit lower.
 
Fafalada said:
I also find it highly unlikely to have that kind of staff with average salary anywhere near 80k. Even in US that sounds high, and other countries are quite a bit lower.
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Well, the employer pays more than just the salary. The rule seems to be that if you pay someone N bucks, it costs you ~2N. At least in Germany, YMMV.

So all in all, that's 40K$ or 27.3k€ or 2275€/month, which is a good junior programmer salary where I come from...
 
US is more like 1.5-1.6, although it obviously varies.
With Blizzard you get a 24h company car wash among other things, for example...
 
ban25 said:
No, but you'd be surprised how quickly some of these projects spin up. You can definitely have 50 people on a project after the first year, and more from there. By the end, you could have well over 100, excluding outsourcing.
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Epic, Infinity Ward, Insomniac and Naughty Dog, last time I check, have somewhere between 100-180 people on staff (Insomniac is closer to the 180 range while the other 3 are closer to the 100 range) and are able to crank out 1-2 titles every couple of years (with Insomniac its more like every year). While I agree there are some big name games that have huge staffs and long turnarounds and produce 50 million+ games, there are others that have smaller staffs or shorter turnarounds times for their triple A games.
 
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Fafalada said:
I also find it highly unlikely to have that kind of staff with average salary anywhere near 80k. Even in US that sounds high, and other countries are quite a bit lower.
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I'd bet Bay Area companies in the US average considerably higher than 80K in salary a year. My guess would be closer to 100K+ a year.

And you can double that number when you factor in benefits and overhead.
 
ERP said:
I'd bet Bay Area companies in the US average considerably higher than 80K in salary a year. My guess would be closer to 100K+ a year.

And you can double that number when you factor in benefits and overhead.
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Yeah, my $80K ballpark is including QA, junior designers and other entry level positions. Engineers in the bay area are going to be well above that, and the larger companies typically pay more than the small independent studios.
 
Fafalada said:
I also find it highly unlikely to have that kind of staff with average salary anywhere near 80k. Even in US that sounds high, and other countries are quite a bit lower.
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Average. Senior Engineers in the Bay Area are typically well north of $100K, excluding benefits and bonuses (figure ~10-30% annually).
 
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