Why exactly are Triple A development costs being ALLOWED to rise so much?

[MammothBlade]

There is no "we, the gamer". Different people want different things from games.

I for one don't feel like splashing out so much for so little in terms of gameplay and content. Tomb Raider looks good, but I don't like spending £30-40 when I know it's only ~10-15 hours in playtime despite being the price of 8+ cinema tickets (£6 each) which could easily give me 16+ hours of enjoyment. Or the price of 3-4 novels (£9.99 each) which give me weeks of enjoyment.

A lot of marketing costs are rubbish, since all you need is a trailer and a website, even just a youtube account, and the internet will literally do the marketing for you. That's one way to look at it.

Taken as a whole, yes, there is a "we, the gamer" to the games industry. This is especially true for when the industry is trying to figure out what works best by looking at what people are buying.

People are buying more of X, so we should include that, but they're also buying a great deal of Y, so that should be included too, and the end result is the mess of games by committee that get made. Makes perfect sense on paper, especially from a business point of view, but things rarely work out as well as they hope.

There are gamer demographics, not gamers as a whole. Sure, the majority of people can share some things in common, and games can have a cross-demographic appeal - but executives are largely out of touch with what really makes a great game "click" with multiple audiences. They may try to spread the net too wide, overestimating the mass appeal a game might have. Not everyone wants a flashy cinematic experience at the prices offered, and some don't want it at all. Mass appeal just doesn't work the same way with games as it does blockbuster films, and the sooner developers/publishers realise that, the better.

Or perhaps the market is oversaturated with "AAA" titles all competing for gamers' limited time and money - but the expectation that tens of millions of people are going to queue up to buy your hyped-up AAA "cinematic experience" at launch is a little unrealistic for most games that aren't extremely popular franchises such as Grand Theft Auto or Call of Duty. 1 million is a good sales figure for high-end console games, maybe they should budget accordingly.

 

[KarmaTheAlligator]

Side-question here; when companies say that it cost let's say £200M to make a game, what exactly did they spend that money on? Is it all wages and marketing? Because if so, I think they could cut down costs by maybe firing the dude that makes the tea and the person that photocopies the paper, because that's a crazy amount just to pay people. Or do they have to spend money on stuff like pre-existing engines etc?

Firing those people would do nothing, as they're probably on minimum wages and part time, so they hardly cost anything. Plus, the practice of studios is now to hire people only when they're needed, so they don't get a lot of people (like, say animators, lighting artists and other specialised jobs) twiddling their thumbs when they're just beginning a new project. That alone usually keeps the costs for staff to a minimum.

 

[Tom_green_day]

Firing those people would do nothing, as they're probably on minimum wages and part time, so they hardly cost anything. Plus, the practice of studios is now to hire people only when they're needed, so they don't get a lot of people (like, say animators, lighting artists and other specialised jobs) twiddling their thumbs when they're just beginning a new project. That alone usually keeps the costs for staff to a minimum.

Yeah, I was like... joking.
I am genuinely interested to know where the money goes, as I know for music, my area of expertise, that recording an album costs basically nothing and it's pretty much free to write a book too, so I don't understand how making a game/film could cost so much.

 

[Greg White]

Firing those people would do nothing, as they're probably on minimum wages and part time, so they hardly cost anything. Plus, the practice of studios is now to hire people only when they're needed, so they don't get a lot of people (like, say animators, lighting artists and other specialised jobs) twiddling their thumbs when they're just beginning a new project. That alone usually keeps the costs for staff to a minimum.

Yeah, I was like... joking.
I am genuinely interested to know where the money goes, as I know for music, my area of expertise, that recording an album costs basically nothing and it's pretty much free to write a book too, so I don't understand how making a game/film could cost so much.

Writing and music can get pretty expensive. People who did good work on certain projects are highly sought after by people all over the industry to work on their project in the hope that they'll bring some of their magic to this new project. Granted, this is more the case for composers than for writers since good contemporary composers are rare, but decent writers are a dime a dozen.

Also, if you want a rough understanding of how the games industry works from the developer's point of view, I suggest looking at Extra Credits.

Bit more informative, if less entertaining, that Jim Sterling since he does his work from the critic's side of things.

 

[Dragonbums]

I mean, the thing is, we can't TELL them not to waste exuberant amounts of money on games.
It's all on them if they can't finance worth shit.
The issue isn't so much them wasting that much money, but they blame it on us when they fail.

 

[Aiddon_v1legacy]

Honestly I don't get it either. It's the same kind of mentality Hollywood runs on in that they take a "go big or go home" top heavy, self-destructive approach to production. However, gaming publishers and devs seem to forget that the games industry can't work like the movie industry. The film industry, even if a movie disappoints financially, still have other sources of revenue that can make up for it either through merchandising or through home video sales down the line. Games don't HAVE that second bump. Either a game makes its budget back in the first month or it's BONED.

Of course this wouldn't be such a problem if pubs and devs hadn't completely destroyed the idea of the middle-tier franchises. And before someone brings up indie devs, let's make something clear: those AREN'T mid-tier devs most of the time. Typically they are making things on a shoestring with an extremely small team. That's LOW tier. Mid-tier devs would be, say, sixty man teams working with a budget of probably $20 million at BEST. Middle tier franchises were all over thre place during the PS1 and PS2 days. For instance, Squaresoft did of course make big blockbusters like the FF series, but also had a TON of smaller, more experimental franchises in its 1992-2000 era such as the Front Mission, Mana, Saga Frontier, Bushido Blade, Parasite Eve, Secret of Evermore, Chrono Trigger and Cross, Brave Fencer Musashi, Einhander, Threads of Fate, Ehrgeiz, The Bouncer, Vagrant Story, Xenogears, and a TON of others that never came out in the US. Heck, Kingdom Hearts was essentially a B-tier game when it started and then it became one of Square's biggest franchises. They had a treasure trove of titles that could really do some offbeat stuff due to not being as financially risky. They didn't get as BIG of an audience, but they could still turn a profit and earn a following. Though we all know how things are nowadays. It seems that the ONLY studios who give a damn about B-tier stuff are in Japan such with Nintendo, Namco, Atlus (who THRIVE off B-tier stuff), and even CAPCOM due to how much stock they put into the handheld market.

Anyway, I REALLY don't know why so many studios don't understand the point of cost-effectiveness. It seems like instead of taking a slower, steadier approach and truly mastering and getting the most out of what we have now, they go full bore into tech they don't really understand which will inevitably also be unmastered and thrown aside to the next step and so on. Gunpei Yokoi is probably spinning in his grave at this gross mishandling of technology. Devs and pubs need to learn this harsh truth: diminishing returns have started rearing their head AND THERE IS NOTHING YOU CAN DO ABOUT IT. You are going to hit a wall and you will be FORCED to either make the most of what you have or face the consequences. And of course the only company that saw that was Nintendo. Who a lot of people mock for being "behind the time"

 

[TeaCeremony]

I think you underestimate how irrational companies can be. As we've seen from various booms and busts, recessions, and bankruptcies, business can quite easily convince itself that past growth, equals future growth, and that potential custom, is predicted custom. So a company will look at Game 1 selling 2 million, Game 2 selling 5 million, and conclude that Game 3 will sell 10 million. It's the kind of gamble that leads to industries making terrible mistakes.

but...but that is just stupid...how are these people permitted to be in charge of anything?

You are aware people like that were the reason we had the 2008 stock market crash, and the bond price collapse thats happening currently. A survey somewhere said around 60% of CEOs were sociopaths (or psychopaths, the kind that doesnt empathize) so they wouldnt really care about anyone else and just put what they think would be good.

 

[thehorror2]

The real answer is fairly simple. The break points here are the developers making the games. No lead dev is going to look at a check for millions of $$$$ and say "no thanks, we don't need that much money."

That's one reason they continue to balloon. Why money keeps getting funneled into ventures with such stupid regularity is an exercise I leave to readers with sharper minds than mine.

 

[Aiddon_v1legacy]

The real answer is fairly simple. The break points here are the developers making the games. No lead dev is going to look at a check for millions of $$$$ and say "no thanks, we don't need that much money."

That's one reason they continue to balloon. Why money keeps getting funneled into ventures with such stupid regularity is an exercise I leave to readers with sharper minds than mine.

This is why people should embrace this little piece of advice: don't STIFLE an artist...but keep them on a leash. If you allow an auteur to run wild they will BANKRUPT your ass.

 

[Otaku World Order]

I think this is a lot like what happened with movies that go way over budget. Things start to get out of control and then the have to spend more of forfeit the money they invested so far. The usual logic is that if you get the project finished there's still a chance it will sell well enough to make a profit.

CAPTCHA: cookie cutter. A very good description of a lot of triple A games.

 

[Seracen]

High end graphics, multiplayer, story, sound, all of that costs money to be top-of-the-line, and this isn't even including the marketing costs, which REALLY hurt some game's final budget, like Tomb Raider.

As to how it got to this point...we, the gamer, demanded bigger and better and these companies are trying to deliver.

There is no "we, the gamer". Different people want different things from games.

I for one don't feel like splashing out so much for so little in terms of gameplay and content. Tomb Raider looks good, but I don't like spending £30-40 when I know it's only ~10-15 hours in playtime despite being the price of 8+ cinema tickets (£6 each) which could easily give me 16+ hours of enjoyment. Or the price of 3-4 novels (£9.99 each) which give me weeks of enjoyment.

A lot of marketing costs are rubbish, since all you need is a trailer and a website, even just a youtube account, and the internet will literally do the marketing for you. That's one way to look at it.

This, entirely this.

The consumers can hardly be blamed for wanting a good product, and pretty lights and sounds do indeed grab my attention.

But if the experience is shallow, I could hardly care less. I've always posited that a 50 hour game with Ninja Gaiden XBOX graphics (which still isn't bad) trumps a 10 hour game with Crysis graphics (and I forgot what happened in Crysis a week after playing the damn thing).

Yes, it is value for money. Why bother paying 60 bucks for an experience that won't even last a few days? Sure, we all hated waiting a long time for games to come out, but throwing more people at the problem won't necessarily make the game better.

Take Colonial Marines: a whole bunch of dev teams were thrown at this, when all it really needed was one dev team with a passion for the game, and the time to realize it in.

Simply throwing copious amounts of money down and hoping it will yield dividends is irresponsible, it should be used wisely first.

I always like to reference Goldeneye N64. It sold maybe 5 million units, over the course of years (correct me if I'm wrong), which isn't the same returns as CoD, but still a blockbuster success that also defined a generation.

Yet, in order to recoup losses, Tomb Raider and Dead Space have to make at least that much? Foolishness.

I know the N64 graphics are inferior, AT THIS POINT. However, we must realize that Goldeneye was just as bleeding edge when it came out, as the games of today are currently.

Tech gets cheaper to build as it is mass produced, and sure there's more and better tech nowadays. But there's a disconnect here. Let's take a Hollywood example: Waterworld and Titanic, in their day, cost about as much to make as the Matrix movies. Each of these films was the pinnacle special effects engineering.

Does this mean the money spent on the older movies was any less substantial, b/c the visuals were less advanced? No, the tech just changed over time. Making the Matrix today would cost less money, which is why spectacles like the Avengers are being made for that sort of money now.

Barring marketing and dev team bloat, I'd like to think the cost of game dev hasn't changed ALL that much. If it has, then I posit that the devs of today are doing less with more, and a restructure is necessary.

 

[Seracen]

doublepost...my bad...

 

[ThriKreen]

We begin the project with 60 programmers and engineers whose average annual salary is $84,124. That means we are spending $6,729,920 per year, so for 3 years that brings us to $20,189,760 over the course of 3 years. Now our artists and animators make $63,214 annual wage. For this project we have 25 artists/animators. That means we are spending $1,580,350 annually. After 3 years we spent $4,741,050. Total that makes $11,470,970. Again this assumes that all other costs (taxes, rent/utilities, overtime, marketing, new equipment, QA, extra hires, etc.) are all comped and they do not need to pay any of that. Making a game is expensive, never doubt that.

Then add some more for support staff: IT, HR/administrative, you'll definitely need a receptionist to handle the front door stuff since everyone else is busy working on the game. And some PR/marketing people or a community guy or gal, or several, to manage the forums, FB and Twitter. Oops, someone left for whatever reason, now you have to hire someone new and spend 3 months training them. Oh, living in an out of the way area, or in a high cost of living area, need a good salary to attract talent (seriously, notice how there are no studios in Alaska?

Then add in a couple thousand for a decent computer for each person, and all the other stuff they'd need: stand up desk? 2 monitors? $3000 for a Wacom Cintiq for the artists, etc. Also from a dev standpoint you'd need a very good dev system on the back end for revision control and backups. Like we're talking a big RAID5 over several servers. And of course, the building the studio is in, leases aren't cheap either, especially if you occupy a whole floor (or more!) and might need the building to allow you to renovate and break down the walls between the offices, or install your own staircase.

Benefits would also extend to taxes, EI, medical, food during crunch time.

Then the marketing costs, booth space at cons aren't cheap, especially when you're going to PAX Prime, East, Australia, E3, SDCC, Dragon*Con, GDC, GenCon, who knows what else every year. Or flying journalists to a release party to let them play the game.

And that's even assuming the game is finished and released - what if the game reached a point after 2 years and the dev team realizes "Oh wait, this sucks, let's cancel this project or restart it." - You've now just wasted 2 years of dev time and costs.

While you would think a studio could probably shave some funds here and there, it's still a lot of things that still add up. Probably a good rule of thumb is to take your budget for just the game dev itself, and double it for all the ancillary costs.

 

[Ryan Hughes]

This has been bugging me for a while and I'm certain I'm not the first one to think or even say this, there will have been countless others, whenever the subject of the price of video games comes up in conversation. (or really just the general subject of money in relation to gaming) the next thing to be brought up is the positively MASSIVE costs in development, as if that's an absolute necessity in a game, of course we all know it isn't.

Call me paranoid or conspiracy-minded or whatever else might come to mind, but sometimes I have my doubts as to whether AAA development is really as expensive as publishers tell us it is, because if it was, they shouldn't even be THINKING about releasing new consoles and thus having the costs climb even more.

and that's another thing, why exactly are the costs climbing in a rate so disproportionate to the advancement of technology, surely as the technology to create games evolves so too does the amount of ways to use it right? The current consoles have been available for the better part of a decade, surely they must have found ways to make development cheaper, and if not, why not?

It seems to me that instead of pumping stupid amounts of money into a project, a more sensible thing to do would be to find ways to develop the same game for less, I simply cannot believe that in the 8 years companies have had to develop for current-gen consoles they haven't found a way to make it more cost-effective.

Publishers would find ways to develop games for less if they were rational people, however, it is a tremendous assumption that they are. I do not think you are conspiracy-minded or anything, but there is an easy explanation as to why dev costs have increased so much. First, let me break down how they have increased:

This is from the now-defunct Factor5 development, in a presentation at the 2005 GDC. They refer to the increase in development costs as "geometric," and I think that is a fitting term. Though, much to the dismay of Factor5, actual costs for development of their game "Lair" were closer to $25 million USD. This is one of the elements that led to the company's demise.

To put things as simply as possible, perhaps too simply: Ever since the beginning of video games, we have been programing for every on-screen pixel. So, the SNES had a resolution of 240 interlaced lines, equal to 120 progressive lines. Then N64/PS1 had 480i (240p). Then, 480p, 720p, and now 1080-1440p. With 4,000p looming. This geometric growth in pixel counts roughly equates to the geometric growth of game development costs.

So, we see how we have gotten here. But what to do next? Shuhei Yoshida and Hideo Kojima were some of the first to address the rise of game development costs in early 2001, and both were very concerned. However, their concerns were mostly ignored by the industry at large, which was booming at the time. Sony developed the expensive Stream Processor for its PS3, while MS used the slightly-less expensive IBM Power PC technology for its 360. So at that point, everyone but franchises like CoD and GTA were screwed.

However, the PS4 and WiiU, along with next-gen engines like FOX (and presumably Panta Rei, but who knows?), have taken steps to correct this by moving processes that were once handles exclusively by the CPU over to the GPU. This allows for mass-parallel processing, removing the need to program for every pixel. MS has been much tighter with the details of the Xbox One, so I cannot say for sure whether or not they have taken steps in the same manner.

The problem is that companies like EA, Activision and Ubisoft do not seem to recognize that development costs are a problem. I know that sounds strange, but considering how insular and complacent they have shown themselves to be, it is simply the truth. Also, the high-risk / high-reward nature of the last generation has benefited their companies greatly, so why bother to change?

The leaders in the drive to lower dev costs are mid-tier Japanese developers and indies, like Unity and OpenGL/OpenCL. So, who knows what we will see in the next gen? The truth of the matter is that Activision and Ubisoft, despite their sales, are on very thin ice. Ubi -prior to FY2013- was 90 million Euros in the red over a three-year total, and only just recouped that. Activision is still 61% owned by Vivendi, a company that is now leaching off of their profits and yet could still go bankrupt.

I could go on, but hopefully this give you a fuller picture of the state of the industry. If you want more info, I talk about this at length during this podcast: http://gamebuddyfuncast.podomatic.com/entry/2013-01-22T13_43_32-08_00

 

[josemlopes]

Okay...remember the kickstarter for Skullgirls, the one that cost $100,000 to add one character to an existing game?

Now imagine making a AAA game from scratch, involving hundreds, maybe thousands of employees of various professions, and taking months, possibly years, to achieve the level of polish needed to be a AAA title, and costs can get well into the millions very easily in order to achieve the level of excellence gamers demand of such a title.

High end graphics, multiplayer, story, sound, all of that costs money to be top-of-the-line, and this isn't even including the marketing costs, which REALLY hurt some game's final budget, like Tomb Raider.

As to how it got to this point...we, the gamer, demanded bigger and better and these companies are trying to deliver.

I'm not disputing any of that but high-end graphics and everything else (at least on consoles) have been at more or less the same level of potential for a long time now, there must be ways to make it cheaper, as opposed to releasing new consoles and raising that level of potential making it ever more expensive to utilize, and if there isn't then they should find a way to make one.

If you look at game engines like the Unreal Engine 4 you will realize that its a lot easier and cheaper then it was back then to create the same result (even a better result), the thing is that people arent expecting to see the same Duke Nukem 3D flat room but with dynamic lightning, they want properly made furniture in it that reflects lighting accordingly and can be smashed into a thousand pieces if shot for example.

 

[Ryan Hughes]

Side-question here; when companies say that it cost let's say £200M to make a game, what exactly did they spend that money on? Is it all wages and marketing? Because if so, I think they could cut down costs by maybe firing the dude that makes the tea and the person that photocopies the paper, because that's a crazy amount just to pay people. Or do they have to spend money on stuff like pre-existing engines etc?

Other than Star Wars: Old republic, I am unaware of any game that cost that much. Usually, when you see numbers above $100m USD, that is because the company is quoting development, marketing, and administrative costs all together. To answer your question: yes, pre-existing engines do cost money through licensing fees, unless it is an open-source engine like Unity, or a proprietary engine owned by the publisher, like Capcom's MT Frameworks.

Also, SWtoR cost so much because 1) it is an MMO with a large amount of content 2) Because LucasFilm was pain an undisclosed amount upfront and 3) because BioWare long ago stopped learning how to save money.

Have you hear of the phenomena called the "Hedonistic Treadmill?" It is kind of like that, only with game companies.

 

[5ilver]

My theory:
Well, you just hired all these programmers, graphics designers and misc (it was a really good deal at the time plus your last game sold really well so its only natural) and now you have to put them to work somewhere. So you make the game bigger and prettier and it should be fine because then more people will buy it and you break even.

So next time, you might get even more personnel. Or maybe the engine, assets, etc. end up costing even more (everything right now is aimed at both costs and profits going up so you can't really compare costs now to costs 10 years ago). And you can't just fire staff because that would cause your stock to plummet, which would lead to a downward spiral etc.

Basically, you either have to slowly raise costs everywhere or you just lay off a bunch of people which pretty much equates to going bankrupt.

 

[5ilver]

I think you underestimate how irrational companies can be. As we've seen from various booms and busts, recessions, and bankruptcies, business can quite easily convince itself that past growth, equals future growth, and that potential custom, is predicted custom. So a company will look at Game 1 selling 2 million, Game 2 selling 5 million, and conclude that Game 3 will sell 10 million. It's the kind of gamble that leads to industries making terrible mistakes.

but...but that is just stupid...how are these people permitted to be in charge of anything?

You don't have to be smart or experienced to be in charge of people. All it takes is either:
1) Cash
2) Influence/ Connections
3) Luck (as seen with Notch)

 

[Aiddon_v1legacy]

The leaders in the drive to lower dev costs are mid-tier Japanese developers and indies, like Unity and OpenGL/OpenCL. So, who knows what we will see in the next gen? The truth of the matter is that Activision and Ubisoft, despite their sales, are on very thin ice. Ubi -prior to FY2013- was 90 million Euros in the red over a three-year total, and only just recouped that. Activision is still 61% owned by Vivendi, a company that is now leaching off of their profits and yet could still go bankrupt.

I could go on, but hopefully this give you a fuller picture of the state of the industry. If you want more info, I talk about this at length during this podcast: http://gamebuddyfuncast.podomatic.com/entry/2013-01-22T13_43_32-08_00

Heck, it's actually looking like Vivendi could drive Acti into debt with what's currently going on. You'd think after dramatic collapses like THQ (who also BADLY managed themselves in general) and 38 Studios (who folded after ONE game) publishers would stop this BS and crack down on bloated budgets, but they're blissfully unaware. It would literally take a giant like Acti, EA, Take Two, or Ubisoft collapsing in order for anyone to finally wake up.

As for Japan, they seem to be more interested in taking a slower, more methodical approach. Atlus has developed all of TWO games for the PS3 and 360 (Catherine and Persona 4 Arena), instead getting mileage out of the PS2 as they could and making stuff for handhelds such as the PSP and the DS line. Even guys like CAPCOM and Namco (who still make big AAA titles) do smaller stuff on handhelds or just B-tier games in general. Nintendo is also the same way with their franchises hitting a LOT Of different genres and audiences. Japanese devs aren't as dramatic or glamorous in their approaches, but they're being smarter.