The Cost of Game Development? Where does the money go? *spawn*

Discussion in 'Console Industry' started by Tkumpathenurpahl, Oct 21, 2017.

  1. Tkumpathenurpahl

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    I know I'm saying this from a position of ignorance, but how on earth do you spend tens of millions of dollars making a linear game in the first place?

    It strikes me that there must be an awful lot of overpaid and lazy employees involved.

    Let's assume an average, annual salary of £25,000, with a development time of four years and we have a cost of £100,000 per person, per project. At the current exchange rate, that's $131,916.50.

    That means it would take 454 people to necessitate such a budget.

    How can it take 454 people - working 8 hours a day, 5 days a week, for 4 years, with a decent wage - just to generate a ~12 hour adventure?
     
  2. mpg1

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    Software is complex and "creating" is only half of it....testing/fixing takes up a lot of time/resources.
     
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  3. BRiT

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    In the game industry I don't think anyone other than possibly QA Testers are paid hourly. Most of the staff related to development is salary. No one that is salary works only 8 hours a day.
     
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  4. bunge

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    Lazy devs!
     
  5. Silent_Buddha

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    Good software engineers get paid WAY more than that and even average software engineers get paid more than that. Do you want cheap talent or do you want good talent? A lot of game development houses go with cheap talent as that's more affordable and conducive to game budgets. But you do get what you pay for. And with tight time constraints for most development teams (most don't have the luxury of releasing the game when they want), sometimes cheap talent means a buggy mess when the game is released.

    Regards,
    SB
     
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  6. Shifty Geezer

    Shifty Geezer uber-Troll!
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    Much. ;)
    Firstly, your salary is very low. You'd be looking at at least 50% more for anything other than a junior position.

    Secondly, you've missed all the other costs. You need a place to house these people. How much do you think an office that can fit 150+ people costs? Then you need to provide them with hardware and software. You have running costs, insurance, tax, and whatnot. Then there's the mind-numbing difficulties that come with software development that add bonkers amounts of hours and workload such that no-one can predict even after decades in the industry - no-one can nail with absolute certainty how long a title take to produce except those churning out the annual events like FIFA, which I imagine they crunch like the Dickens to hit their immovable deadline. Add to that marketing and promotion, and wasted effort in changed directions and art-work thrown out for new locales etc., and you have a linear title of 12 hours blasting past its allocated 50 million and you're begging investors to help you finish the thing with another 10 mil.
     
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  7. Nammo

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    TL;DR version: Development is time consuming, the creative process is often wasteful, salaries are higher than that, running a company is really expensive, especially in a high-cost city. Salaries are a small portion of the budget.

    I'm not sure if you're pointing to a specific game, but a $60M development budget is above average - more common these days, but still not average.
    I assume you mean just development, not marketing. Marketing costs often exceed development, because advertising is expensive.

    Let's break it down. In the US, the average game industry salary is $90K/year. That average includes artists (a bit less) and developers (bit more).
    The true cost of each employee is much higher than that - corporate taxes, health care, and other benefits bring that average to $135K/year.
    And that's just the average! A studio located in an expensive area (say California) pays both higher salaries and higher taxes.
    Don't forget rent, fancy PCs, fancy software, cubicles, desks, QA, support roles (IT, build engineers, HR, recruiting, janitors), management, electric bills, etc.
    For an expensive city, with all overheard costs included, $300K/year per developer is a much more reasonable starting point.
    That's 50 developers working 4 years - not average, but not unheard of. (And over 100 people all told, adding in QA/support functions, etc.)

    Another part you're missing is how wasteful development is.
    No matter how talented the team, a huge amount of work gets thrown away.
    Those "12 linear hours" weren't the only 12 hours the team built - they're the very best 12 hours of content after a tortured editing process.
    Some games go smoothly - but they're not the ones you're talking about.
    More often, great-sounding ideas turn into 'meh' content, and sometimes it takes a long time to really know if something will work out.
    Sometimes teams start over completely - sometimes more than once - that's just part of the creative process.

    I haven't even gotten into the huge variety of middleware and (fancy $$$) software tools used in industry, or engine licensing, or server farms.
    Developer salaries are a small portion of the budget.
     
    #7 Nammo, Oct 21, 2017
    Last edited: Oct 21, 2017
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  8. BRiT

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    Your estimate of 25,000 Pound Sterling is obscenely low. Bing conversion indicates that's 32,974 US Dollars. The average salary of a Senior Software Engineer even in less demanding industries such as Banking, Financing, Point of Sales, or Insurance Industry even in less costly regions such as the Mid-West US (Ohio for instance) is at least $100,000 per year before adding in benefits. That puts it at 75,000 Pound Sterling per year before any benefits.
     
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  9. Nesh

    Nesh Double Agent
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    I have a different question which may deserve a different thread. Some games cost as much as a space program to develop and some significantly more. It is nuts.

    https://en.wikipedia.org/wiki/Mars_Orbiter_Mission
    "On 23 November 2008, the first public acknowledgement of an unmanned mission to Mars was announced by then-ISRO chairman G. Madhavan Nair.[27] The MOM mission concept began with a feasibility study in 2010 by the Indian Institute of Space Science and Technology after the launch of lunar satellite Chandrayaan-1 in 2008. The government of India approved the project on 3 August 2012,[28] after the Indian Space Research Organisation completed ₹125 crore (US$19 million) of required studies for the orbiter.[29] The total project cost may be up to ₹454 crore (US$71 million).[11][30] The satellite costs ₹153 crore (US$24 million) and the rest of the budget has been attributed to ground stations and relay upgrades that will be used for other ISRO projects"

    The first Destiny cost around $500 million including all related costs plus marketing https://en.wikipedia.org/wiki/Destiny_(video_game)

    But those costs arent enough, You ve got also running costs since this is an always online game with server maintenance and such!

    A break down of estimate revenue per game sold is as such http://unrealitymag.com/video-games/how-your-60-video-game-is-chopped-up/

    So around $18 and $9 go to publisher and developer. Which is around a $27 for those that spent on the game's creation and promotion. Dividing the total cost by the total amount gives an estimated 13.5 million FULL PRICE sales just to break even the $500 million costs! AFTER that the publisher and developer should expect to get profit!

    How is that possible?

    What am I missing? It doesnt add up

    It almost sounds like money laundering :p
     
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  10. Silent_Buddha

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    Wages, infrastructure costs, government regulations, etc. are all much lower in India than they are in the US and most other first world countries.

    In other words, software also costs significantly less to develop in India.

    Regards,
    SB
     
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  11. tuna

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    They actually finished Destiny. Did India ever make it to Mars?
     
  12. Nesh

    Nesh Double Agent
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    You guys are still commenting about India?
    Not the astronomical numbers and their weirdness? :p
     
  13. BRiT

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    How long was that $500 million spread over?

    Maybe the had a major sales event (Microsoft buying the Halo IP) to where they were so flush with cash and had no self-control that they went on one hell of a bender (new company resorts and celebrations, new facilities, new comoany cars, new company perks, new employees)? Next thing they knew they had nothing left except black-out missing memories and had to ask Activision for money to make their next big thing?

    Maybe part of that $500 million costs is settling all the wrong Activision did in forcing certain lead founders of Bungie out of the company? For instance, we're well aware of howthey abused Marty the musical talent founder. Were other founders pushed out too? I remember hearing a lot of the original company that made Halo was no longer involved.
     
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  14. mpg1

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    Have to wonder if a game like Witcher 3 could have existed if it wasn't developed in Poland. Have to imagine the wages are lower there than other western countries.
     
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  15. Dr Evil

    Dr Evil Anas platyrhynchos
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    I think the 500M for Destiny was somehow calculated as a total costs for the IP in the foreseeable future, including sequels like Destiny 2 and whatever they were planning. I am certain that Destiny 1 didn't come even close to those numbers.
     
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  16. bunge

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    From this article on the demise of Visceral Games:

    https://kotaku.com/the-collapse-of-viscerals-ambitious-star-wars-game-1819916152

    That link leads to:

    Why Video Games Cost So Much To Make

    https://kotaku.com/why-video-games-cost-so-much-to-make-1818508211
     
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  17. mpg1

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    There's no real way to get around the fact that software development is manpower intensive and highly skilled manpower (expensive) at that. Gaming is probably near top of in terms of software devlopment complexity...especially bigger titles. So it's just an upward linear slope in cost as your game get's bigger and more complex.

    Unless there is a breakthrough in automation around game development this isn't changing. So the business model is going to have to adapt. Either the top tier games become more expensive or more in-game purchases or there are less AAA games.
     
  18. Nesh

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    Do we have a link to this? Mentioning cost forecasts as cost of the game doesnt make much sense to me unless these guys wanted to show something for very specific financial purposes.
     
  19. Silent_Buddha

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    That's true but manpower (labor) is also the most easily controlled cost. There's no reason to have studio out in the bay area (San Francisco) when the cost of operation is so high per employee. The cost per employee may have only been 16,000 USD per month compared to the 10,000 USD per month average (60% higher). However, according to some of the former employees interviewed that was also 2-3x (100-200% higher) than the 2 Canadian studios in Montreal and Vancouver. I'm assuming the Austin studio was closer to the 10k USD average for the industry.

    Perhaps instead of trying to close the studio, EA should have tried to move it to a more development friendly location? However, that has short term costs and logistic issues associated with it as well. And it's entirely possible that the team at Visceral didn't want to move out of the bay area. /shrug.

    Want to operate in a high cost area? Be prepared to have to walk a tightrope of profitability with expectations that you have far less rope with which to hang yourself if your team underperforms.

    Regards,
    SB
     
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  20. Graham

    Graham Hello :-)
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    Well you don't really move a studio to another country. You close it and expand one that's already there.

    As for why it was there in the first place, well, the bay area has been a hub for investor money for so long that a lot of the talent is there. I get the feeling it's changing though.

    Game dev is partly so expensive because it is an employees market. It can be *incredibly* difficult to fill skilled roles, especially the more niche ones. Doubly so if there isn't a local base of studios attracting and maintaining a talent pool.
     
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