As you suspect, the biggest part is salaries. I don't really know how the costs work in the US, but here you have the salary itself from which the employee pays his/her taxes. But the employer has additional costs to pay for health insurance and such, which is usually not counted in the salary.
How much do artists get paid?
$40-120.000 per year, depending on position. Art director, senior artists, standard artists; same for animators.
Programmers?
Dunno, but probably a bit more then the artists in general.
Sound techs?
Dunno, but you don't need too many.
Creative team leads?
Writers?
Game designers get less pay then artists and programmers. 'Star' designers are an exception of course.
Playtesters?
They're usually the ones to get the lowest pay, many times they're on part-time job and go to school during the day, or just got their degree and plan to get into game design this way.
If you calculate with a development time of 20 months, a team size of 40 people, and an average salary of 60K per year, than you'd get $4 million just for the payroll. I think this is a likely average for a next-gen console game.
It's also worth noting that a lot of the tasks on a game are easy to outsource to contractors. High profile concept artists, mocap studios, voice and music recording facilities and so on can be very expensive, and are not required through the entire project, so it's better not to have them on the full-time team. So it's an obvious way to optimize costs.
Adidtional costs include PC equipment (workstations are replaced in every 2-3 years), for 40 people $2000 per machine adds up to 80-100K per project; then there's software which can cost up to $3-5000 per machine. Nextgen console development requires a HDTV for many artists, programmers and designers too.
Then there's the regular company stuff. You have to pay the rent for the office unless you own it (unlikely) with electricity, aircon, cleaning etc., and you need a fat internet connection to regularly FTP stuff to the publisher. I've no idea about these costs in the US - I don't even know how much we pay
You also have to spend on the workspace of the employees: buy them ergonomic furniture, pens, pencils, paper and printer stuff, desk lamps; provide some food, and entertainment to let them relax. You'll want to organize some events at least once but probably more often per year: go to a restaurant, to an excursion, play paintball or race gocarts, and so on.
How are contracts set up between the dev and publisher? Who gets paid first? is it project by project or are their royalties? Do you all get a cut of the sales?
There's been some posts on Scott Miller's
blog about this, but I didn't really get it. The exact calculations are quite complicated.
I never understood how games are made or what it takes in terms of cost and personnel to make a game. Just asking.
It takes a lot of people and a lot of money, and a lot of time. And if you're lucky it'll earn you a lot of money, but in most of the cases you're not gonna make a profit...
