Study: Average dev costs as high as $28m

[London Geezer]

I have had a question for a while which surely the bright boys around here can answer.

What are the chances that one day far far away, technology will be advanced enough there will only be one engine? One really, really advanced engine or middleware which does anything you can throw at it, be it an action game or a racing game.
Developers just put in the art, animations and controls and whatnot and the rest is done.
Everything would work based on real physics, which can be adjusted here and there for different effects, of course.

That would surely cut r&d costs to a minimum and let devs focus on actually making the game, without having to build an engine from the ground up.
I mean, when things approach photorealism, you can't get any more photorealistic, right?

Any ideas?

 

[Shifty Geezer]

This has been discussed before. Eventually hardware makes possible games at a fraction of the cost. Pretty much anyone with sufficient smarts and determination could recreate any 8- or 16-bit title in a couple of months using high-level, easy-peasy languages. Eventually you'd expect tools to make creating the games we have now to be possible for individual enthusiasts. But I don't think it'll happen in our lifetime unless we get server-based computing and thin-client consoles. There's just not enough processing power to drive a generic engine to produce the results we want. Every game needs tweaking, even on middleware engines, to get the performance needed from the hardware, while the best games need custom engines. eg. Uncharted 2 wouldn't work on any middleware, needing a custom PS3 engine. And that engine wouldn't be able to power GTA or GT5, which need their own engines and data structures.

In the distant future with fabulous internet connections, super-powerful servers could potentially run an extremely broad engine to supply games. I can imagine Ubisoft or EA creating such a service for themselves with their own global engine, fast game turnaround, and subscription-based gaming for a much more stable income.

 

[ban25]

I realize this is a technology forum, but the vast majority of effort behind game development is in the content. It requires design, character concept, environmental concept, modelling, texturing, rigging, animation, level design, terrain modeling, sound design, score, cinematic cutscenes, etc. And all this has to be done at scale. An engine is often the cheapest part of the overall production, although it can be expensive to change once a project has ramped up to full production size.

 

[Shifty Geezer]

Yes, but in our Brave New World of the Future, procedural content creation should make a lot of this far cheaper. Laa-Yosh may complain bitterly about the poor artistry, but a load of auto-generated human figures will satisfy most gamers playing COD17 or GTA8. Themes could allow for more cartoony or gothic or whatever seeds for content. If the idea is the lowest possible game creation costs, hence using a massively versatile and generic engine in the first place, procedural content would be the obvious choice for content creation.

 

[Laa-Yosh]

You bet I will...

 

[nintenho]

I have had a question for a while which surely the bright boys around here can answer.
What are the chances that one day far far away, technology will be advanced enough there will only be one engine? One really, really advanced engine or middleware which does anything you can throw at it, be it an action game or a racing game.
Developers just put in the art, animations and controls and whatnot and the rest is done.
Everything would work based on real physics, which can be adjusted here and there for different effects, of course.
That would surely cut r&d costs to a minimum and let devs focus on actually making the game, without having to build an engine from the ground up.
I mean, when things approach photorealism, you can't get any more photorealistic, right?
Any ideas?

Would that work if not all designers and artists wanted to make a photo-realistic game?

 

[Laa-Yosh]

Very few games are photorealistic nowadays, most are stylized in some way and to various extents.

 

[assen]

The difference between a photorealistic and a non-photorealistic game affect mostly the art production side, and a tiny sliver of the code, so this does not rule out the "one engine to rule them all" scenario.

 

[London Geezer]

Would that work if not all designers and artists wanted to make a photo-realistic game?

My 'scenario' di specify that the design is up to the artists. So, say, a tree can be made look like a 'real' tree, but also stylised or abstract. Still running on the same big engine.

 

[Silent_Buddha]

Not at EA. Revenue has grown 36% from fiscal year 2007 to fiscal year 2009, while R&D has grown at a 30% clip. However, revenue costs has grown 65% in that time period. In 2009, R&D costs were 1.4 billion while revenue was 4.2 billion.

Its not development costs that are killing EA.

Yes, in addition to R&D there's all the other mundane costs that rarely gets talked about. Packaging, distribution, administration, building maintenance, IT, marketing, licensing (NOT cheap for EA, with NFL licensing, etc.) etc... Add in the need to have regional HQ's in various markets and that's even more duplicated costs. For example, you can't use the same marketing in Asia as you do in N.A.

So yes, it's not just developement costs.

Regards,
SB

 

[Laa-Yosh]

EA has cut the Hungarian office last year, one of my pals was almost out of a job - now he's working for the new central (I think that's in Prague) as a local agent or so. They used to be 5 or 6 people before; and other countries' offices have been closed as well.

 

[Squilliam]

Whats exactly R+D in terms of game development? My initial guess is that it means game development and research for technology around said game development. Am I right?

 

[Silent_Buddha]

Whats exactly R+D in terms of game development? My initial guess is that it means game development and research for technology around said game development. Am I right?

Pretty much all manpower involved with the developement of the game. So obviously engine, art, prototyping, storyboarding, scripts, voice recording, etc... I would assume outsourcing of art production would be included, but accounting for that would depend on the company.

Regards,
SB

 

[Squilliam]

Thanks.

 

[dobwal]

Was reading the earning report for EA's last quarter. Here goes some interesting information.

"Package goods, our fiscal ‘11 plan currently includes a total of 36 titles for the fiscal year versus 54 in fiscal ‘10. This number excludes, expansion packs. Our top 20 titles for fiscal ‘11 are expected to generate approximately 80% of total non-distribution package goods revenue. This compares to an estimated 76% for the top 20 titles in fiscal ‘10. We have included a fiscal ‘11 title plan with our earnings press release which details our principal titles, including digital games for console in PC."

"Fiscal ‘11 full year guidance; revenue on a GAAP basis, we expect revenue of $3.45 billion to $3.7 billion. On a non-GAAP basis, we expect total revenue of $3.65 billion to $3.9 billion. Breaking this down into three components, we expect digital revenue of $750 million or more in fiscal ‘10. We expect approximately $160 million in distribution revenue, which is a $459 million year-over-year decrease and we expect packaged goods revenue ranging from approximately $2.75 billion to $3 billion."

Is it me or are they saying they're bascially expecting their top 20 packaged games to generate $2.2 to $2.4 billion dollars or roughtly $110 to $120 million a top20 title on average?

 

[Silent_Buddha]

Is it me or are they saying they're bascially expecting their top 20 packaged games to generate $2.2 to $2.4 billion dollars or roughtly $110 to $120 million a top20 title on average?

That's basically it. Here's the thing, they don't know which of the 36 titles will be the top 20/top 10. Hence the gambling. And the 2.75 to 3 billion is basically a really big educated guess. Added to that, I wouldn't be at all surprised if the top 5 provides greater than 50% of their packaged goods revenue.

Also interesting to note that they indicate reduced developement funding for games with 36 in '11 versus 54 in '10. This is would be budgetary decisions from ~2-3 years ago.

So they've attempted to reduce costs but in the process also exposed themselves to greater risk. Less titles in development means less chance for multiple high profit games to float the games that incur a loss.

Regards,
SB

 

[obonicus]

They're probably counting on Madden and FIFA to be in their top 2 (top 5 at least), which actually might drop the average they expect per game slightly. The EA MMA game is out this year too, but without a license I don't know how it'll actually do, but I wouldn't be surprised if EA expected a lot -- THQ had 1 million copies sold just in May, and probably another 500k in June. And that's just NPD.

 

[Mr. Domino]

Anyway, the point still stands - even among the few big publishers that have survived the past 5 years, we can find quite a lot that are suffering, because of the low success rate of video games. EA is just one of them, Sony and THQ and Eidos (before the Square purchase) and a few others aren't doing that well either. And the overall sales of X360 titles seem to support the 30% average success rate too.

How bad is Sony really doing? Uncharted 2 is around 3 million, U1 about 2,7. Infamous did over a million, GT5 P over 4 million, LBP over 3 million now, GOW3 will probably pass 2 million relatively easily and the collection must have been profitable. The two Resistances went over 3 and 1,5 million.

K2 did 2.2 million (yeah, basing this on vgchartz info but anyway). It probably was one of Sony's most expensive games yet, but I would think that selling more than 2 million copies with a self developed, self published game would be enough to recoup the costs right?

MAG isn't really that hot, I think 1,5 weeks ago it did 500.000 copies, it could go over a million I they give it more time. No idea about their budget though. Motorstorm is also over 3 million but the second one bombed pretty hard I guess.

It seems that they have more games that make a profit than bombs no?

 

[Silent_Buddha]

How bad is Sony really doing? Uncharted 2 is around 3 million, U1 about 2,7. Infamous did over a million, GT5 P over 4 million, LBP over 3 million now, GOW3 will probably pass 2 million relatively easily and the collection must have been profitable. The two Resistances went over 3 and 1,5 million.

K2 did 2.2 million (yeah, basing this on vgchartz info but anyway). It probably was one of Sony's most expensive games yet, but I would think that selling more than 2 million copies with a self developed, self published game would be enough to recoup the costs right?

MAG isn't really that hot, I think 1,5 weeks ago it did 500.000 copies, it could go over a million I they give it more time. No idea about their budget though. Motorstorm is also over 3 million but the second one bombed pretty hard I guess.

It seems that they have more games that make a profit than bombs no?

Going to keep this short as it's been gone over ad nauseum over the past couple years.

But it's hard to say without knowing exactly how much was spent in developement and exactly how much was received per copy and exactly how many copies were produced and sold from the initial duplication.

My own thoughts, I don't think KZ2 recouped costs. Especially when you add in the marketing campaign. I DO however, think that KZ3 will be able to both recoup initial costs incurred by KZ2 and generate a profit through leveraging the engine work and art assets that were created for KZ2.

LBP probably got a decent profit, especially when you take into account the DLC released for it which brought in revenue above and beyond the sell through of the physical copies. Heck with DLC thrown in, it might have made an exceptional profit.

Regards,
SB

 

[zed]

I saw this today

http://www.digitalbattle.com/2010/02/20/top-10-most-expensive-video-games-budgets-ever/

10. Killzone 2: $45 million
9. Final Fantasy XII: $48 million // lower than I thought
8. LA Noire: $50 million // Ive never heard of this game
7. APB, $50 million // Ive never heard of this game
6. Halo 3, $55 million // higher than I thought
5. Metal Gear Solid 4, $60 million
4. Too Human, $60+ million
3. Shenmue, $70 million
2. Gran Turismo 5: $80 million // higher than I thought
1. Grand Theft Auto 4: $100 million

WRT halo3
"over $200 million Microsoft spent promoting the game."

I knew it was the most expensive marketing campaign ever for a game overtaking gears of war, but $200+ million is enormous