Activision Boss Predicts Rising Game Development Costs

[Andy Chalk]

Activision Boss Predicts Rising Game Development Costs

Activision CEO Bobby Kotick says every new console generation has resulted in higher development costs and this one will be no exception.

We may not know exactly what the next generation of game consoles has in store but we do know that it's coming soon, and however it works out the big dog at Activision says the cost to make games for it is almost certainly going to go up.

"This is my twenty-second year doing this, and every single console transition we've seen an increase in development costs," Kotick said in a post-earnings call to investors. "Over long periods of time it gets smoothed out, but I would say this is not a transition where that's going to be an exception."

"We're going to have to figure out how to take advantage of the unique abilities of new hardware and that requires new skills and investment in tools and technology and engines and so yes, that's likely," he added.

Kotick's comments have a bit of an ominous ring to them, in that they could be an early hint of higher game prices in the next console generation. Activision recently reported revenues of over $4.8 billion [http://www.escapistmagazine.com/news/view/121995-Activision-Reports-Record-Setting-Results-For-2012] in 2012 so it's not as though it can't afford to eat some rising expenditures, but it didn't get to where it is today by being a charity.

On the other hand, Take-Two Interactive CEO Strauss Zelnick expects development costs will stay more or less flat into the next generation. "We don't have any reason to believe our dvelopment budgets will change significantly," he said. "If anything we have become - group-wide - much tighter in terms of how we spend our money. We can't say specifically, but no, we don't expect to see a meaningful change in what it costs us to release these top quality products."

Source: Develop [http://www.develop-online.net/news/43214/Kotick-Rising-next-gen-dev-costs-inevitable]


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[Soviet Heavy]

Why does Kotick remind me of a demonic version of Chancellor Gowron?

 

[Ninjariffic]

That's hilarious. I was going to say he looks like a cross between Palpatine and Skeletor.

 

[Sylveria]

I'm pretty sure that I've read in numerous places that the relative cost of game development is cheaper now than it was in the early days and the increased costs are based in the massive amounts of money these guys spend on marketing. Making a new engine is pricey, but once an engine is established and widely used, like Unreal regrettably is, the costs drop off significantly.

 

[cidbahamut]

It seems like development costs going up would be pretty self-evident.

 

[Soviet Heavy]

Will we still have to push buttons as well Mr. Kotick?

Why does Kotick remind me of a demonic version of Chancellor Gowron?

It's the forehead

You know it's bad that the Klingon is for once NOT the demonic version of something.

 

[CriticalMiss]

Maybe he and other executives could take a pay cut so that the people actually making the games can get paid to cover the extra costs? HAHAHAHA!

 

[Genocidicles]

Well here's a thought:

You could always just not spend millions on marketing, or on trying to get the best graphics ever, or on having celebrities voice characters in your games.

 

[the7ofswords]

In other news: ice is cold, the sun is hot, water is wet, and space is really, really big.

Amazing work there, Creskin.

 

[iniudan]

No shit... thank you captain obvious, might has well announced a new COD this year while your at it, never mind they already did. =p

 

[KeyMaster45]

Why does Kotick remind me of a demonic version of Chancellor Gowron?
*img snip*

Because he is.

OT: Yeah go ahead and jack up the prices publishers; my fat ass could use an extra incentive to exercise instead of play video games.

 

[Adam Jensen_v1legacy]

They could cut marketing spending significantly by simply using YouTube and social networking sites instead of spending millions on live action trailers, CGI trailers, TV commercials and giant posters around cities. Also, stop using Hollywood actors in video games. It's a big immersion breaker and how many people really choose to buy a game because someone famous is providing a voice for one of the characters?

 

[Covarr]

There is some truth to this. New architectures need to be learned, resulting in slower development cycles (fewer game releases, more man hours, less income) and additional costly training. Of course, if they weren't so focused on making AAA games, they might be able to push out some smaller-scale games to bridge the gap while they're learning the new system... Actually, I take that last part back. These big companies only know AAA and shovelware, nothing in between. It's only the smaller devs that can be arsed to make medium-scale games.

P.S. Thanks

 

[Irridium]

This is what I've been saying, and it's also worried me. Games are expensive as hell to make now. Now sure how many are going to cope with games costing more to make. I really hope costs don't go up, but since with each generation costs have risen... yeah I'm not too hopeful on that.

If they do go up, and these publishers don't figure out how to cope, I can guarantee more will be joining THQ.

 

[UltimatheChosen]

It seems like development costs going up would be pretty self-evident.

To be fair, he said this while talking to investors (who may not understand the industry all that well). He wasn't really trying to present this as some kind of great revelation, just saying "here's how things work, and they're probably not gonna change".

 

[BrotherRool]

If development costs were to increase for everyone, we'd see more publishers and developers go out of business, it's risky enough as it is. And the last of the independent developers would fall, I can't imagine someone like Obsidian could survive the market getting even tighter. We'd have Valve and CD Projekt because they're actually publishers basically, and maybe Epic could survive with their game engine, but no-one else.

Unless...

There is some truth to this. New architectures need to be learned, resulting in slower development cycles (fewer game releases, more man hours, less income) and additional costly training. Of course, if they weren't so focused on making AAA games, they might be able to push out some smaller-scale games to bridge the gap while they're learning the new system... Actually, I take that last part back. These big companies only know AAA and shovelware, nothing in between. It's only the smaller devs that can be arsed to make medium-scale games.

P.S. Thanks

This might be the thing to finally change that. If you look at the games everyone was talking about this year, The Walking Dead, Journey, FTL, Katawa Shoujo, XCom, (To The Moon, Super Hexagon, Thomas Was Alone), I reckon small scale games have attracted more attention than the big budget ones as far as gaming media goes. Maybe 5 big AAA games on everyones tongues, ACIII, ME3, Far Cry 3, Dishonoured, CoD (whatever one it was) but most the awards and best of lists have been taken up by small to medium budget games. And we#ve got the kickstarter business on top of that, with a lot of the big games coming out this year and next

If prices rise, maybe all but the very best games will be forced to stop competing for the top and we'll begin to see the niche games finally expanding at last

 

[Chimpzy_v1legacy]

That was an astounding and insightful piece of analysis.

Gotta hand it to Kotick. Just when you start wondering why he's earning the big bucks, he goes about proving just that.

 

[RA92]

On the other hand, with better hardware, you won't have to spend so much resources optimizing your game, so cost goes down there.