12 April 2013

The Costs of AAA Games Development

Today cloud computing firm ProfitBricks released an info-graphic detailing the costs of making games, the pitfalls and benefits of cloud gaming and what information to take into account when selecting the correct publisher model for your game.

Yet the really interesting information, at least to me, is the look at the money involved in game development and where that money goes during the cost of development.

The chart highlights six games and compares the risk (the finances dedicated to the project) and the reward (the number of unit sales).

Stretching from 1981's Donkey Kong all the way up to 2011's Star Wars: The Old Republic, the information reveals the staggering increase in costs along the way. Donkey Kong sold a mere 1.13 million copies yet it only cost $100,000 to develop or, adjusted for inflation, $356,000.

By comparison, The Old Republic, the most expensive game in history, had a cost of $200,000,000 - excluding marketing. That game sold 2.56 million copies and clearly represents a breathtaking increase in terms of the money invested with only a minimal (just over double) increase in unit sales.

Of course this is in relation solely to those two games. As another example, it highlights Grand Theft Auto IV which came in at $100,000,000. However, it sold 20.63 million copies.

Clearly, from that information alone, AAA games development relies on more than capital invested to ensure success. This can also likely be reflected by the series of closures which have riddled the industry lately.

Redundancies at EA, the closure of LucasArts, the collapse of THQ. The resignation of John Riccitiello and Yoichi Wada. The co-founder of BioWare saying the industry is facing into "a sick market for old-school gaming."

These are just some of recent major occurrences. The list goes on.

Part of this contraction is natural, the fact is the industry probably did grow too large between 2005 and 2011/12. We're now seeing it contract back to more manageable proportions, which, naturally, is of no comfort to those directly effected. As a sizable chunk of the market moves from traditional gaming devices to other platforms we should perhaps see more of the same to follow.

And indeed, it seems highly unlikely that next generation consoles will match the success of current systems. Which is not to say they cannot be successes in their own right, certainly, for now at least, there's significant buzz building around the PS4 - whether this interest translates into sales remains to be seen.

Both Ubisoft Montreal CEO Yannis Mallat and Ubisoft Toronto President Jade Raymond have said they expect the AAA market to contract, perhaps to 8-10 core titles a year. While this may not seem like much it leaves enormous scope for excellent indie and middle tier titles. In the case of those two studios, with 2,700 employees between them, it seems there's at least some life in top of the range development - unless, perhaps, Assassin's Creed 4 tanks which seems an unlikely prospect.

The core problem is the cost of game development. With each successive generation of platforms the price of game making rises. The forthcoming console era will be no different even if costs are tempered somewhat by the PS4's and Xbox 720's PC-like system architectures.

In the ProfitBricks info-graphic the breakdown of how resources are divided in the making of a $10,000,000 game are laid out. Though this would be a very modest price for console releases these days it's likely not too different with higher cost games.

55% of the money is contributed to marketing, publisher fees, console licensing and manufacturing copies of the title. The remaining 45% goes on actual game development.

With $100,000,000 games the ratio likely leans more heavily towards marketing even as production cots increase. Imagine what could be done if all 100% was dedicated to development? (Not that it's feasible for AAA development of course.)

Game costs will continue to rise and they may very well come with associated increases in prices charged to consumers. We may well see fewer top-tier games going forward but throwing money into development doesn't always lead to success at retail.  

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