Study: Average dev costs as high as $28m

[Silent_Buddha]

I was reading this thread and I was thinking there must be something wrong here, I mean companies like EA, Microsoft, Sony etc losing money and continue to do the same what are they game lovers? doing it for the fun?

And why in the world are costs so high nowdays? Big companies are very inneficient? Something doesn't seem right and way too much money is spent on advertizing imo, maybe big companies ruined the fun for everyone else with huge budgets and marketing? Seems to me that good marketing is a lot more important nowdays tha the quality of the game when it comes to making proffit.

There's a lot of reasons why things have gotten to hard.

Back in the 80's and early 90's developement costs (location, utilities, programmer wages, number of programmers needed) were far far lower and packaging costs were a fraction of what they currently are. Thus margins were also significantly higher. As someone noted previous in that climate your potential return on investment for an average titles was about 7:1. Meaning for every one dollar invested you had a fair chance to get 7 dollars back.

It's also why you saw far more experimentation in game design and game types around that time. Far more risks taken and far more niche products, because it was also far easier to get a return on your investment.

Fast forward to today. And not only are programmers getting more more (2-3x more) but you need more programmers. Going from a team of 3-5 [or less] for the average dev. team in the early 90's to anywhere from 50-200 programmers and artists. Likewise facility fees, administration fees, taxation, etc. have also risen. Oh and let's not forget the impact of regular old infation on a static non-changing game price.

Packaging even though in most cases is limited to a DVD case + DVD is still more expensive than the Big box + Floppy Disk(s) + 200 page Manual + cloth map + whatever else. Print media costs have skyrocketed in the interim which is why you don't see manuals. Ditto for Cloth Maps. Or for consoles I'd be willing to bet that DVD/BRD + Case is more expensive than the old NES/Genesis cartridges, but probably not much. Consoles have always been fairly low on packaging compared to computers.

Add to pirating is far more prevalent and commonplace now than it was in the early even late 90's. It wasn't until the advent of P2P filesharing that pirating on computer's skyrocketed. Dial-up analog modems, terminal software, BBS's, FTP, Usenet, etc aren't something your average joe on the street knew about or knew how to use. Edonky/Kazaa and now the ubiquitous Bittorrent however, everyone knows about and knows how to use.

Oh and marketting budgets have also had to skyrocketed, not only due to cost of ad spots, but also needing more marketting to be able to reach a larger audience to try to get enough sales to hopefully recoup costs and make a profit.

Now, all that equates to far FAR higher dev costs. We're talking going from 10's of thousands to 10's of millions. Higher packing, administration, facilities costs. And so we end up with an industry average of return on investment of 1.7 dollars for every dollar spent, IF you manage to have a blockbuster.

Remember this is all with regards to AAA titles that everyone likes to play.

So, knowing that ~70% of games are going to NOT make back your return on investment. And rather than spending 10's or even 100's of thousands you instead have to spend multiple millions (10's of millions for the really big AAA titles), how many people do you think would be willing to do that.

Other than slashing dev. costs (less programmers, less artists, lower wages = lower quality) or going Digital Distribution only (lower potential market, but higher margins), there really isn't a whole lot the industry can do.

It's easy to say, change how you do things. But there really isn't all that much you CAN change. You can't exactly go back to the 3-5 (or less) programmers/artists days. You can't cut wages. You're not going to get a break on property taxes/rent and utilities. You're still going to need administration. Packaging is what is and there isn't anythin gto be cut there either. And you certainly aren't going to reverse the effects of inflation on everything.

The music, movie, and computer games industry all have alternative models. But I have a feeling almost everyone on this forum wouldn't be happy with those alternatives.

For movies, Indie films are an example of low cost developement. Would everyone be happy if Pixar for example folded shop to go to a lower budget Indie approach?

For movies, we have self promotion, which rarely reaches a large audience and often with low production values. But I have a feeling this would be easier for people to swallow. Sacrifice quality for price.

For computer games you have pop-cap/stardock style developement. Small scale, limited single player, limited storylines, limited graphics. Sound like a plan? Drop devopement of all UC2, KZ2, Halo, MW2, etc style games in order to lower dev/publishing costs?

Regards,
SB

 

[paawl]

Dude, no way were material and packaging costs for ROM cartridges ever less than for optical media! (Serious question, and absolutely no slight intended, but how old are you? Do you remember what ROMs used to cost? Or what any PCB with an IC on it used to cost? Some of the carts we used to play actually had auxiliary microprocessors on them, in addition to ROM, SRAM, backup batteries, etc. I assure you that those were much more expensive than pressing a disc.)

I think it's pretty well accepted that the costs of art production and promotion have greatly outstripped the costs of programming and media reproduction.

In addition to the obvious costs of all the great visual artwork, animation, and CGI in a new title, relative to the cost of 48 kiB worth of sprites, text has been replaced with voice actors, MIDI music has been replaced with recordings of actual orchestras, and advertisements aren't just printed in EGM, they're aired during the Superbowl!

You say that there are 50-200 programmers and artists, but they're mostly all artists. For example, Uncharted was done with "6 designers, 18 programmers, ~50 artists", and Killzone 2 was done with a similar amount, and those were games where entirely new tech and engines had to be developed!

 

[Nesh]

Yeah I think some cartridge games costed more at the time. I dont know the reason at the time (was it due to special taxation? duty costs? manufacturing costs?) that some games were sold as much as around 110 euros in my country. And 110 euros were the equivalent of much more in real value back then than today.

 

[eastmen]

If i recal right from an old game pro they stated that a n64 game (I believe it was zelda oot) cost $35 for just the cart programed from nintendo.

Considering a dl dvd is less than a quarter but lets just say 25 cents. Even if MS /Sony is taking $10 a disc pressed. Your still far below past costs.


I really think its just really bad work programs. I know synergy is a played out term. But I don't see why you don't have 1 engine being used with a team of artists working on art work to populate like games. IF you know you have a tony hawk game coming out each year. Get a ton of artists and have them just keep working on art and models and what not. There is no point in throwing away past work.

If they are throwing stuff away for some reason then they aren't thinking far enough away and are still designing based on the old 4 people making a game in 6 months attiude. PErhaps its time to change up how things are done.

 

[Silent_Buddha]

You say that there are 50-200 programmers and artists, but they're mostly all artists. For example, Uncharted was done with "6 designers, 18 programmers, ~50 artists", and Killzone 2 was done with a similar amount, and those were games where entirely new tech and engines had to be developed!

I'll give you the ROM argument as I only paid cursory attention to the console market prior to 1997, and only a tad more than that after. At the time my focus was almost purely on the PC market.

However, are you calling the KZ2 devs liars when they stated they started with a dev team of 55 and ended up with a dev team of 190? That would seem to be far higher than the 74 you are implying even averaged over the course of developement.

And still in the 50-200 ballpark average for a AAA title nowdays, compared to my example of 3-5 (and sometimes less) in the early 90's. And thus why there was such a high ROI on titles back then compared to now. Late 90's is when dev costs started to escalate quite rapidly and also was the start of mass studio closures, buyouts, and mergers.

Regards,
SB

 

[DeadlyNinja]

Drop devopement of all UC2, KZ2, Halo, MW2, etc style games in order to lower dev/publishing costs?

I've played 2 of those games. One of them is incredible mediocre while the other was fun. Three of those are generic FPS games. Yeah, I think the industry would benefit from dropping development of these kinds of games. We're over-saturated with this stuff. Worst of all, most of these so-called AAA titles aren't all that good. I can't speak for all 4 of the games you listed, but I've played games like Oblivion, Bioshock, Crysis, Prey, Far Cry, Doom 3, Tomb Raider, GRAW, and R6V. I really loved GRAW and R6V. Crysis I did enjoy, but sure as heck wasn't GOTY material that every mag was hyping it up to be. Most of the games I listed are all flash and no substance. They are either plain not fun, poor mechanics, or bad level design. It seems like many of these games use plot, cinematics, and hype to cover up bad design. Some of them are incredible big so they don't have to do level design. Multiplayer focused games are similar to reality TV. Have the setting and the goal set, and let the people do as they please. Everything else looks so same-y. For the longest time, I thought Mass Effect and Fallout were FPS games and didn't give them a second look.

Maybe I'm being harsh, because I've honestly never played every single game out there. I'm just so sick and tired of games being the same crap over and over again. Maybe the industry doesn't have to focus just on AAA titles and go back to trying smaller games and focus on FUN. I think the industry drove itself into this corner, though. All the hype and media now focused on flash and graphics. If say a company like EA tries to market a really well done 2D game, people would immediately think it's some shitty game because the graphics are 3D. Imagine an industry where a game like A Boy and His Blob would stand toe to toe with Crysis in the minds of the gaming public.

 

[ban25]

50-200 is a reasonable range for a AAA title. Bear in mind, however, that even though there's an army working on a title, a ton of production art work is being outsourced to Korea and China and some studios have toyed with outsourcing pieces of the engineering effort to India.

 

[ban25]

If i recal right from an old game pro they stated that a n64 game (I believe it was zelda oot) cost $35 for just the cart programed from nintendo.

If I remember correctly, Final Fantasy IV for SNES sold for around $80 in the early '90s, essentially the same price as Final Fantasy XIII in Japan today.

 

[Silent_Buddha]

I've played 2 of those games. One of them is incredible mediocre while the other was fun. Three of those are generic FPS games. Yeah, I think the industry would benefit from dropping development of these kinds of games. We're over-saturated with this stuff. Worst of all, most of these so-called AAA titles aren't all that good. I can't speak for all 4 of the games you listed, but I've played games like Oblivion, Bioshock, Crysis, Prey, Far Cry, Doom 3, Tomb Raider, GRAW, and R6V. I really loved GRAW and R6V. Crysis I did enjoy, but sure as heck wasn't GOTY material that every mag was hyping it up to be. Most of the games I listed are all flash and no substance. They are either plain not fun, poor mechanics, or bad level design. It seems like many of these games use plot, cinematics, and hype to cover up bad design. Some of them are incredible big so they don't have to do level design. Multiplayer focused games are similar to reality TV. Have the setting and the goal set, and let the people do as they please. Everything else looks so same-y. For the longest time, I thought Mass Effect and Fallout were FPS games and didn't give them a second look.

Maybe I'm being harsh, because I've honestly never played every single game out there. I'm just so sick and tired of games being the same crap over and over again. Maybe the industry doesn't have to focus just on AAA titles and go back to trying smaller games and focus on FUN. I think the industry drove itself into this corner, though. All the hype and media now focused on flash and graphics. If say a company like EA tries to market a really well done 2D game, people would immediately think it's some shitty game because the graphics are 3D. Imagine an industry where a game like A Boy and His Blob would stand toe to toe with Crysis in the minds of the gaming public.

Heh, those were just the easiest examples I could come up with for a high cost AAA dev title. Could as well throw in ME2, DAO, C&C 3, Heavy Rain, Alan Wake, etc...

The point is that people want pretty graphics, and pretty graphics are very expensive. Especially if you want pretty graphics that are better than the pretty graphics from 2 years ago. That's compounded by always wanting long games (MW2 still ended up with a short campaign despite having a healthy AAA budget). It's not cheap making realistic graphics and then trying to design levels that feel like they could be realistic with a realistic atmosphere.

Now imagine if we reduced all dev costs to say under 1 million or perhaps 1-2 million. You have far less graphically impressive games. Model, art, etc. will tend to be more mundane and less detailed. Less time will be spent trying to improve on AI (heck not even a big focus anyways). Less money spent for a good storyline (script and all the other stuff).

This isn't to say games wouldn't be fun. After all fun can be had regardless of the level of graphics. But overall, I like a nice balance. I like the occasional game that makes me go WOW just by looking at it. Really, there aren't all that many solutions or ways to do things differently.

Regards,
SB

 

[DeadlyNinja]

Heh, those were just the easiest examples I could come up with for a high cost AAA dev title. Could as well throw in ME2, DAO, C&C 3, Heavy Rain, Alan Wake, etc...

I name them because they are games that I own and have played. I can't say anything about your list because I've never played them.

Now imagine if we reduced all dev costs to say under 1 million or perhaps 1-2 million. You have far less graphically impressive games. Model, art, etc. will tend to be more mundane and less detailed. Less time will be spent trying to improve on AI (heck not even a big focus anyways). Less money spent for a good storyline (script and all the other stuff).

I don't completely agree with this statement. I'm a DS/PC owner (GF8800GS), and at least when it comes to ART, money is not the issue. Many of today's HD games have horrid art and the same bald men in their 30's. My DS games have some gorgeous art. My jaws were on the floor when I played Wizard of Oz: Beyond The Yellow Brick Road on the DS. The art was gorgeous. My jaws were on the floor whenever a new area was unlocked. I was seriously saying, damn, this game can't look any better, and then come the next stage that just blows me away again. Technologically, the game's around N64 but with gorgeous art, colors, and settings. I have never been this captivated by Crysis. That's not to say Crysis is an ugly game, mind you, but when it comes to art, it's only average. The same can be said about many of the games I listed before. Oblivion being the worse offender and Bioshock being the best.

The point is that people want pretty graphics, and pretty graphics are very expensive. Especially if you want pretty graphics that are better than the pretty graphics from 2 years ago. That's compounded by always wanting long games (MW2 still ended up with a short campaign despite having a healthy AAA budget). It's not cheap making realistic graphics and then trying to design levels that feel like they could be realistic with a realistic atmosphere.

This isn't to say games wouldn't be fun. After all fun can be had regardless of the level of graphics. But overall, I like a nice balance. I like the occasional game that makes me go WOW just by looking at it. Really, there aren't all that many solutions or ways to do things differently.

I definitely understand the problem with budget. I actually made a post worrying about the future of game budgets a few months ago here on Beyond3d.

I don't mind WOW games either (I own Crysis and Warhead). My problem is the industry wants nothing but WOW games, and push hard only for WOW games. It's now so ingrained into the public's mind that anything that isn't a WOW game is 95% of the time completely overlooked. Not only that, but now we games are stuck with this incredible generic look of the world and the characters. I my perfect world the industry has a healthy dose of small games that gets as much attention as the big games. Everyone live in harmony, cats and dogs getting along, 2D and 3D games are loved by everyone. None of that is going to happen.

 

[Silent_Buddha]

I don't mind WOW games either (I own Crysis and Warhead). My problem is the industry wants nothing but WOW games, and push hard only for WOW games. It's now so ingrained into the public's mind that anything that isn't a WOW game is 95% of the time completely overlooked. Not only that, but now we games are stuck with this incredible generic look of the world and the characters. I my perfect world the industry has a healthy dose of small games that gets as much attention as the big games. Everyone live in harmony, cats and dogs getting along, 2D and 3D games are loved by everyone. None of that is going to happen.

That's the big problem though. And compounded when your review scores (another avenue of marketing) is sometimes hugely tied to graphics and production values. IMO - ME2 being one of those, getting high marks for graphics and production values (storyline) while having quite ordinary and to me disappointing gameplay. Yet it still manages to pull in scores over 90 (quite a few 100's).

I'll still enjoy it for the storyline most likely, but certainly don't think it rated higher than maybe an 85-88 or so if I'm being generous.

Compared to a little known and passed over game I recently played on PC, King's Bounty Armored Princess, with below average graphics and production values, but extremely addicting gameplay.

As I said, there really isn't many ways to do things differently going forward, unless you can convince the general public (actually mostly reviewers) that graphics aren't important... And good luck doing that, people have been trying since the mid 90's.

Regards,
SB

 

[Toaddio]

As I said, there really isn't many ways to do things differently going forward, unless you can convince the general public (actually mostly reviewers) that graphics aren't important... And good luck doing that, people have been trying since the mid 90's.

Regards,
SB

Movie and music reviews tend to work because individuals do these reviews and readers/viewers get to learn which individual reviewers they relate to, can appreciate and trust. Video game reviews don't seem to have hit this level yet. With 100+ sites reviewing a game anonymously the score is the only thing a reader can understand.

Now if a few respected individuals become regular reviewers, the general gaming population will be able to learn which reviewers they can trust. Some will know a specific genre so well that people who like that genre will trust that reviewer. Right now this doesn't seem to happen.

For whatever reason game reviews still haven't hit that mass market level. My cynical side tells me that game publishers don't want reviews to go that route because then they'll become truly independent and more trustworthy.

I will admit that I'm out of touch with reviews as I don't trust them so maybe things have changed.

 

[tuna]

Movie and music reviews tend to work because individuals do these reviews and readers/viewers get to learn which individual reviewers they relate to, can appreciate and trust. Video game reviews don't seem to have hit this level yet. With 100+ sites reviewing a game anonymously the score is the only thing a reader can understand.

Now if a few respected individuals become regular reviewers, the general gaming population will be able to learn which reviewers they can trust. Some will know a specific genre so well that people who like that genre will trust that reviewer. Right now this doesn't seem to happen.

For whatever reason game reviews still haven't hit that mass market level. My cynical side tells me that game publishers don't want reviews to go that route because then they'll become truly independent and more trustworthy.

I will admit that I'm out of touch with reviews as I don't trust them so maybe things have changed.

A game reviewer can not review as many games as a movie reviewer can because games take a lot more time to review. Of course, giving out a score is not reviewing, that is grading. The only way you can have any confidence if you will like a game or not is by taking in the review (in written or some other form). Just looking at the grades a game (or movie) gets doesn't tell you anything.

 

[nintenho]

A game reviewer can not review as many games as a movie reviewer can because games take a lot more time to review. Of course, giving out a score is not reviewing, that is grading. The only way you can have any confidence if you will like a game or not is by taking in the review (in written or some other form). Just looking at the grades a game (or movie) gets doesn't tell you anything.

Then again, a lot of game reviewers don't even finish the games. I remember this one Gamespot video review for Kane & Lynch where the reviewer was bashing the game but all of the clips that they showed were from the first tutorial level....

 

[eastmen]

If I remember correctly, Final Fantasy IV for SNES sold for around $80 in the early '90s, essentially the same price as Final Fantasy XIII in Japan today.

Yes and how much does that bluray disc cost vs the SNES cart ?

From the 16bit gen to the 32bit gen (or the 3rd modern gen ? dunno how you want to do it) we went from carts to discs and the cost of printing games drop most likely hundreds of times.

If a n64 cart cost $35 to produce and a xbox 360 dvd cost $.25 Then for the same game devs have $34.75 more profit there.

We actual had a drop in price going from the snes , gen , n64 to the ps1 , saturn of anywhere from $10 to $30 but thats also because many n64 titles required huge costs going higher than the average. But then we had a jump this gen for $10 usd.

So i really don't see the problem. Perhaps devs shouldn't go with huge advertising campains on the size of say mass effect 2. Mass effect already had a huge following.

 

[Silent_Buddha]

If a n64 cart cost $35 to produce and a xbox 360 dvd cost $.25 Then for the same game devs have $34.75 more profit there.

Except you won't see that. Developement costs will more than absorb all of that... Average ROI which is an indirect reflection of margins gives a big clue that margins for todays titles are far lower than titles a decade or more ago.

Regards,
SB

 

[eastmen]

Except you won't see that. Developement costs will more than absorb all of that... Average ROI which is an indirect reflection of margins gives a big clue that margins for todays titles are far lower than titles a decade or more ago.

Regards,
SB

Yes but why is it ?

there has to be a problem or many problems in the development pipeline for that.

Of course perhaps we will hit a point where development costs even out. Don't artists already create high res textures and models and reduce them down for the game ? Perhaps as we move ahead they wont need to do that anymore.

Perhaps more developers will go the multi game route like Lord of teh rings did with movies. Create 3 games from the start all 3 using the same engine and assets and release as they finish instead of what seems to be start development of the first game . Wait till you see sales results and then start from scratch on the second game.

Sure some smaller titles can't do that. But is there any doubt in peoples minds when ms made halo 3 there wouldn't be a halo 4. Budgets would have been greatly reduced if they just built halo 3 , odst and reach from the day halo 3 development started. Instead of how they are going about it now.

 

[Silent_Buddha]

I'm sure companies would LOVE to be able to make 3 games in the time it takes to make one game. Unfortunately, that's never going to happen.

They have a hard enough time making the amount of content they do in 4 years.

You could get more done with more devs/artists, but then that costs more money. You could take longer to release your game, but that just spreads the same cost over more years and you will likely miss your window of opportunity for your graphics.

You can't just magically reduce the amount of devs/artists and still expect AAA titles with AAA level graphics, storyline, campaign, game balance, etc. to launch every ~4 years.

You could force them to work for free (what Pirates want), but that's hardly going to work to attract programmers and artists.

You already have companies outsourcing art to companies that specialize in it in an attempt to reduce some costs there.

You also have companies using pre-packaged art assets also in an attempt to reduce costs.

It isn't like devs are deliberately bloating the money they need to finish or make a project.

And at the end of the day, it's still one HUGE gamble that enough people will like your game and buy it in enough quantities for you to make back your investment.

Regards,
SB

 

[eastmen]

I'm not following.

You set up a trilogy and you go to work. You have writers making a trilogy from the onset. of course game one gets a higher priority but all are worked on.

You have programers creating an engine to be used on all 3 games. You have artists creating art that will be used on all 3 games and models and animations and what not.

You start in 2010. In 2013 you release the first game. Since game 2 is reusing the same art , engine , animations and what not you release it in 2014 , you then release part 3 in 2015. If the first 2 games at that point are have sold very well and warrent a 4th , 5th and 6th game you look at the market. IF its a console game and hte generation will be over by the time the 4th game ships you move target platform . And you have to start from scratch. If you however you started early in a generation you might get lucky and can have the next 3 games come out on the same platform using the same assets as the first 3.

Now you can say that developers wont have that type of money. But the bigger publishers certianly do . Look at mass effect again.

Its a bioware game which was a planned trilogy. How much money do you think they wasted by waiting for part 1 to ship before moving on to part 2. There has been a what 2 or 3 year gap between releases ? IF it was a planned trilogy from the start they could have liscensed the unreal 3 engine as they did , and start developing 3 games.

2010 start development. 2013 launch the first game and generate revenue. 2014 , second game and generate more revenue , 2015 last game and generate more revenue . in between each release they can have some dlc to supplment income.

Its much more reasonable than how it currently is done.

 

[Laa-Yosh]

Making people buy your second game in similar (or preferably larger) numbers means that you have to significantly improve the experience. Nobody would pay you for playing the same game three times, that should be obvious.

Making the game better can mean several things, like improving on existing things and adding all kinds of new content.
The first part absolutely requires feedback and experience from the first game and thus it means you can only start the second game once the first is released. Look at how Gears of War 2 has significantly improved even the main characters and the engine as well. Would it have been as successful if Epic just re-used the same engine and content?
The second part also means that either you co-finance two art teams of the same caliber or wait until the one team completes the first game. One year is just not enough to fill up a game with new levels, enemies, weapons and stuff.

However, gearing up full scale production of a new IP with two entire teams is clinically insane. You risk wasting two times the money if the first game fails.

Let's look at it from another angle. Would Mass Effect 2 be such a critical success if it had the same main elements, but just with a few new planets? Because that's what your approach would get them.



I'd also like to remind you that Lord of the Rings wasn't 3 movies made at the same time at all and your assumptions here aren't exactly right.

Live action photography involved a LOT of reshoots and pick-ups, because Jackson kept rewriting the script based on his experiences and the reception of the movie. Complete sequences like the ents' siege of Isengard were added months before the premiere of the actual movie.

Also, Weta has worked on the movies sequentially - they only started with TTT once FOTR and its Extended Edition were completed. Gollum was completely re-designed ~8 months before the second movie's release. The visual effects suffered a lot because of this, there were huge amounts of rushed shots with bad compositing of blue/greenscreen elements and so on.

And the reason he was allowed to do this was because he made the entire starting investment back with just the first movie. He realized that he could make better sequels with more resources and work than what was originally planned, and ended up changing almost everything. There's a reason no studio has attempted to work the same way - it is very, very inefficient and risky.