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Poetic.Injustice
Member
(10-13-2017, 01:20 AM)
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Making games is expensive. Let me rephrase that: making games is really, really expensive.

Obviously, that's no secret, but the numbers involved are even surprising to those of us who follow the industry every day. Last month, Kotaku reported many studios budget around $10,000 per person per month to cover salaries plus overhead. Considering that many of the more polished games on the market can take years to create, budgets can spiral out of control very easily and this has a impact on the entire ecosystem.

Moreover, that $10,000 figure is actually lower than many studios spend, industry veterans Brian Fargo (inXile Entertainment) and Jeff Pobst (Hidden Path Entertainment) tell me.

"I used $10,000 per man-month [for budgets] when I was a producer for Sierra online in 2000," Pobst notes.

Fargo concurs: "I would say [$10,000 is] on the low side. I think Tim Schafer pointed out a couple of years ago that this is why these things cost so much to make. There's a big difference between small developers cutting their teeth that have no overhead versus a team of people who've been in the business for two decades. They have families and expect medical insurance, and so it's not going to be something that costs less than $10,000 on average for my people.

"That's on the low end by maybe 20% or 30%. I don't think we're seeing double that, but certainly it's the trajectory we're all going towards. I think that's a fair number. It's always been a funny disparity. We talk about making a game with a budget of, say, $10 million and the smaller developers tend to look at it and go, 'How do they waste so much money?' And then the triple-A guys say, 'How do they do it for so cheap?'

Citing Ninja Theory's Hellblade and Larian's Divinity: Original Sin 2 as recent examples, Fargo laments that expectations for games coming out of the double-A space are rising too rapidly.

"All of a sudden double-A developers are spending in excess of $10 million," he says. "And it's only a matter of time before this rises to $20 million. In fact, I wouldn't be surprised if there were some at those values already. So now what you've got is the triple-A people who are unaffected by the salaries and they're going to be spending hundreds of millions of dollars between production and marketing, and then you've got the double-A companies now starting to spend significant money. What that's going to do is to create an expectation from a user's perspective of what the visuals should look like.

"It creates a harder dynamic for even the smaller companies, because some product is at $39 or $44.95 that doesn't have a multi-million dollar marketing budget. It's still going to have production values that are incredible, and so what will people expect out of a smaller developer? That's the cascading effect of all these different things, and of course you layer on top of that the discoverability issue we've all got with an un-curated platform and it makes it very tricky."

"Curation has always been a hot topic. One might argue there's a greater risk of a game being lost in a sea of products, than that of a great game not making it through the quality bar to be in the store. The stats of more and more and more games hitting Steam have not been favorable for any of us... You've got kind of a one, two, three-punch against the smaller publishers/developers."

The shift to digital storefronts and the rise in the sheer number of titles flooding those digital shelves is not ideal, Pobst agrees, and it's making life hard for the really small indies out there.

"For a period of time... we could sell games that were not $60 top price games, and we could make good money... and we could get the opportunity to make more games," he says. "That opportunity is being challenged because there is such a large number of games at low prices in the marketplace. That takes the market, which gives lots of people choice and is really good for gamers in the one sense, and it splits the amount of money against a large number of people.

The other issue to contend with is how games are transforming to games-as-a-service, which could be a positive in terms of generating more revenue or a negative because of the need to support staff year-round.

"As I look out towards the future, we are most definitely looking to incorporate aspects of that business model," Fargo notes. "The plus sides of it, of course, is that there's no piracy, and you're able to do better business in some territories where piracy is extremely high. But also it allows you to build a community and have a live-ops team and do [fewer] products, but keep people on it everyday and make it better - doing tournaments and all of those things... It's a very compelling thing to have [but] it does put pressure on a single-player experience game."

http://www.gamesindustry.biz/article...d-tier-studios
CalamityPixel
Member
(10-13-2017, 01:22 AM)
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Yup. It's getting pretty bad.
sungahymn
Junior Member
(10-13-2017, 01:26 AM)
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I'm no economist, but this sounds like some kinda bubble has formed/is forming at a rapid pace, particularly in these past few years. And we all know what bubbles do...

At any rate, if this keeps up, double-A development doesn't seem like likely to continue. We've already seen a decline in those kind of games since the new generation came around.
Succinct Verbosity
Member
(10-13-2017, 01:27 AM)
Did we ever find out what Hellbladeís budget was, because I feel like whatever route they took is the best way forward for mid-tier devs.

Also I disagree with that game pushing out mid tier studious. Quite the contrary.
Deeke[VRZ]
Member
(10-13-2017, 01:28 AM)
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Now we see why microtransactions are so commonplace.
Steel
Banned
(10-13-2017, 01:29 AM)
Just when AA companies started reappearing too.
DriftingSpirit
Member
(10-13-2017, 01:32 AM)
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Originally Posted by Succinct Verbosity

Did we ever find out what Hellbladeís budget was, because I feel like whatever route they took is the best way forward for mid-tier devs.

Also I disagree with that game pushing out mid tier studious. Quite the contrary.

JordanN
Junior Member
(10-13-2017, 01:33 AM)
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Originally Posted by Deeke[VRZ]

Now we see why microtransactions are so commonplace.

Microtransactions would be pennies unless you sink your teeth on some whales.

It's not like cosmetics cost the same amount as a game ($60). What if a dude buys a $5 in-game shirt and that's it? The game is still going to flop unless you can bring the amount of players (and who want to spend serious money) up.
RockmanBN
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(10-13-2017, 01:35 AM)
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Originally Posted by sungahymn

I'm no economist, but this sounds like some kinda bubble has formed/is forming at a rapid pace, particularly in these past few years. And we all know what bubbles do...

At any rate, if this keeps up, double-A development doesn't seem like likely to continue. We've already seen a decline in those kind of games since the new generation came around.

Huge dropped since PS2/Wii. Licenced games have been almost dead this generation other than Lego or mobile.
jelly
Member
(10-13-2017, 01:38 AM)
Don't bite off more than you can chew.

I also wonder if all studios are actually business wise. Do they really budget as best they could and know what they're doing?
meerak
Member
(10-13-2017, 01:41 AM)
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Would making uglier games help?

Just wanted to say that's fine with me. There's enough games out there... they don't all need to chase prettyness so hard.
zelas
Member
(10-13-2017, 01:42 AM)
Sounds more like some developers care too much about competing with AAA devs, aspiring to earn AAA revenue, instead of just focusing on the niche market they're in.

And who's asking for Larian's type of games to look like HZD? Divinity can afford a visual and asset downgrade.
GHG
Member
(10-13-2017, 01:42 AM)
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I don't see the problem. All they need to do is add a lootbox or two and they should be able to do ok.
CEJames
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(10-13-2017, 01:42 AM)
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Out with the small/poor, in with the filthy well-established/rich.....
Antiwhippy
the holder of the trombone
(10-13-2017, 01:43 AM)
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Originally Posted by CEJames

Out with the small/poor, in with the filthy well-established/rich.....

It's more like out with the middle class.

Indies are getting bigger and bigger.
OmegaDL50
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(10-13-2017, 01:48 AM)
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Originally Posted by jelly

Don't bite off more than you can chew.

I also wonder if all studios are actually business wise. Do they really budget as best they could and know what they're doing?

If you look at a small development studio of 5 to 10 people.

Using the average of 10,000 per person a month. So at the max 100,000 a month for 10 people.

These costs are not just for the creation of the game, but the expense budget just to operate the business as a whole. This factors everything into employee wages, equipment (computers and development tools), workplace costs (rent, utilities, maintenance and upkeep). All of these things are a factor.

Just like any good business they also have personal financing and accountants doing the number crunching to manage these budgets. Even a small team of developers has a means to manage their expenses.

Or that rely on something like Kickstarter and pray the public buys into what you are potentially offering (i.e Larian with Divinity: Original Sin for example)
GearFourth
Banned
(10-13-2017, 01:51 AM)
Cut on costs in places then like also reduce marketing costs
Greigor The Fellhand
Member
(10-13-2017, 01:51 AM)
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I'm interested in seeing a Line item break down of how its hitting 10k+ a month
Compsiox
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(10-13-2017, 01:52 AM)
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Games as a service could probably help with this, depending on if the games are meant to last for years. Also this depends on enough people liking the game. Nothing is simple huh.
Cow Mengde
Banned
(10-13-2017, 01:52 AM)
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This has been an issue since the start of the PS3 and 360 generation. Tons if companies died because of HD. Nothing was done to solve the issue this generation. Things will only get worse.
Shredderi
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(10-13-2017, 01:52 AM)
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Costs rising is real, but I have to question the whole thing a bit. Why are they rising? What is the specific component that drives prices up. It's gotta be graphics, right? Rising expectations are cited, but tbh I haven't seen this in real life. It seems like the games that sell gangbusters are many times pretty damn primitive when it comes to visuals, at least when compared to the AAA-crowd. It just doesn't seem to me like the market at large is demanding better and better graphics, especially from mid-tier studios. So am I just a stupid fucking idiot or could there be some self-imposed aspects to this as well?

I literally don't know anyone IRL who demands for better and better graphics. Do they like them when they see them, of course. All my friends are hard core gamers and most of the games they seem to play are way behind the curve graphically. I hear even less demands for better graphics from the more casual call of duty crowd.

To be fair, I am a graphics whore through and through as in I really admire good well done graphics, but they don't get me to buy games nor do they deter me from buying games if they look fun.
HP_Wuvcraft
Banned
(10-13-2017, 01:56 AM)
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Originally Posted by jelly

I also wonder if all studios are actually business wise. Do they really budget as best they could and know what they're doing?

You're gonna have to clarify this.
KawabataSan
Member
(10-13-2017, 01:57 AM)
The replies in this thread are something else.

We really need more education as to how games are made and how much they cost to make.

Originally Posted by jelly

I also wonder if all studios are actually business wise. Do they really budget as best they could and know what they're doing?

Nope. Every game company is clueless. They should hire you so you can show them the light.
FStubbs
Member
(10-13-2017, 02:00 AM)
It'll reach the point where you have a few tentpole genre kings with AAA levels of graphics/budget and indies.

Sony and Microsoft will build their platforms around these 6 or so games and the rest will be download only experiences.
Deeke[VRZ]
Member
(10-13-2017, 02:04 AM)
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Another huge thing gamers don't usually think about when making games: taxes. (Unless you're Take-Two :D)
Deeke[VRZ]
Member
(10-13-2017, 02:06 AM)
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Originally Posted by KawabataSan

The replies in this thread are something else.

We really need more education as to how games are made and how much they cost to make.

100% this. Blood, Sweat and Pixels has changed how I see gaming, and this article helps add merit to my new perspective.
Velocity:Design:Comfort
Banned
(10-13-2017, 02:22 AM)
How big was the witcher 3s budget? Does being located there reduce costs a lot?
Lathentar
Looking for Pants
(10-13-2017, 02:23 AM)
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Originally Posted by Shredderi

Costs rising is real, but I have to question the whole thing a bit. Why are they rising? What is the specific component that drives prices up. It's gotta be graphics, right? Rising expectations are cited, but tbh I haven't seen this in real life. It seems like the games that sell gangbusters are many times pretty damn primitive when it comes to visuals, at least when compared to the AAA-crowd. It just doesn't seem to me like the market at large is demanding better and better graphics, especially from mid-tier studios. So am I just a stupid fucking idiot or could there be some self-imposed aspects to this as well?

I literally don't know anyone IRL who demands for better and better graphics. Do they like them when they see them, of course. All my friends are hard core gamers and most of the games they seem to play are way behind the curve graphically. I hear even less demands for better graphics from the more casual call of duty crowd.

To be fair, I am a graphics whore through and through as in I really admire good well done graphics, but they don't get me to buy games nor do they deter me from buying games if they look fun.

Graphics is certainly a big part of it. But it's really all aspects. Everything is high fidelity and unique. Producing high quality usually means using high quality talent which means high salaries. Especially for engineers, the starting salaries for entry level outside of gaming for engineer is six figures in parts of the country. Someone with years of experience would be significantly higher. An engineer is probably costing 15k a month minimum when you include their equipment and benefits expected.
DriftingSpirit
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(10-13-2017, 02:25 AM)
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Originally Posted by Velocity:Design:Comfort

How big was the witcher 3s budget? Does being located there reduce costs a lot?

http://www.neogaf.com/forum/showthread.php?t=1059873
Piscus
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(10-13-2017, 02:33 AM)
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Originally Posted by sungahymn

I'm no economist, but this sounds like some kinda bubble has formed/is forming at a rapid pace, particularly in these past few years. And we all know what bubbles do...

At any rate, if this keeps up, double-A development doesn't seem like likely to continue. We've already seen a decline in those kind of games since the new generation came around.

ArkhamFantasy
Member
(10-13-2017, 02:45 AM)
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Originally Posted by Deeke[VRZ]

Now we see why microtransactions are so commonplace.

Ironically its not the Ninja Theory's that are doing it, its the biggest and most successful publishers pushing micro transactions and lootboxes.
Poetic.Injustice
Member
(10-13-2017, 02:48 AM)
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Originally Posted by DriftingSpirit

Somehow I don't think the solution is for every studio to downsize to 12 people.
Crossing Eden
Hello, my name is Yves Guillemot, Vivendi S.A.'s Employee of the Month!
(10-13-2017, 02:50 AM)
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Originally Posted by GearFourth

Cut on costs in places then like also reduce marketing costs

Man if only game devs pressed the "cut on costs in places" button more often then they wouldn't be in this mess.
JamesHolden
Banned
(10-13-2017, 02:54 AM)
Imagine an Industry where labor costs grow with inflation and where new technology needs to be invested into a product that is sold for a cost that does not rise with inflation into a market with greater and greater saturation.
Evil Monkey DTT
Banned
(10-13-2017, 02:56 AM)
AA might go away but our indie games are growing, and honestly it's getting harder to tell indie products from AAA in terms of presentation and quality. It's a shame for AA studios but I do think it's possible to win here.
fenners
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(10-13-2017, 02:57 AM)
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Originally Posted by Greigor The Fellhand

I'm interested in seeing a Line item break down of how its hitting 10k+ a month

Didn't we go over this in one of the recent Blood, sweat, pixels threads?

Salary of a decent software engineer in CA - averages out to $100k (far higher for good senior talent). That amounts to $8.3k a month. Then on top of that you have benefits (inc health/401k/ancillary). Then on top of that, you have the cost of running the office they're in, including IT/HR/Office staff. It adds up.

Obviously, there's staff that's lower cost than that, but the overheads are pretty consistent for the officespace/support. More senior staff? Higher costs.

Work in other parts of the country? Changes the equation slightly, but not by much. Changes your talent pool too, obviously.

If it's costing you $120k per person, per year, and you've got 75 people working on a project for two years? $18 million?
Transistor
Banned
(10-13-2017, 03:01 AM)

Originally Posted by Poetic.Injustice

Somehow I don't think the solution is for every studio to downsize to 12 people.

Wow, is that how many people made Hellblade?
mugurumakensei
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(10-13-2017, 03:02 AM)
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Originally Posted by Transistor

Wow, is that how many people made Hellblade?

That's what the slide shows with a max of 15 members at any point in time.
nynt9
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(10-13-2017, 03:07 AM)
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Originally Posted by fenners

Didn't we go over this in one of the recent Blood, sweat, pixels threads?

Salary of a decent software engineer in CA - averages out to $100k (far higher for good senior talent). That amounts to $8.3k a month. Then on top of that you have benefits (inc health/401k/ancillary). Then on top of that, you have the cost of running the office they're in, including IT/HR/Office staff. It adds up.

Obviously, there's staff that's lower cost than that, but the overheads are pretty consistent for the officespace/support. More senior staff? Higher costs.

Work in other parts of the country? Changes the equation slightly, but not by much. Changes your talent pool too, obviously.

If it's costing you $120k per person, per year, and you've got 75 people working on a project for two years? $18 million?


Also, they don't make the full price of every copy sold. 30-50% of the retail price goes to the distributor. At $30, to break even for your amount, they'd have to sell nearly a million copies. Of course, your math doesn't even include stuff like marketing, middleware licenses, IDE/tool costs, art assets that need to be purchased or in house artists that need to get paid, etc.
baxter2231
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(10-13-2017, 03:14 AM)
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Maybe not set up shop in places where you need to pay someone 150k just to live in a 1 bedroom shack?
Randomizer
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(10-13-2017, 03:16 AM)
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Mid-tier development has been dead for some time. That's why Kickstarting games became so popular.
Purple Cheeto
Member
(10-13-2017, 03:24 AM)

Originally Posted by baxter2231

Maybe not set up shop in places where you need to pay someone 150k just to live in a 1 bedroom shack?

How do you get and retain talent if you aren't in a location where it exists or can't pay for it?

Remote development is pretty rare in games and almost non existent if you do console work.
g11
Member
(10-13-2017, 03:33 AM)
I feel like there's more mid-tier stuff than there has been in a while, it's just that people call it "big indies" and the like now. Kind of feels like mid-tier is having a renaissance.

Honestly I don't think dev costs are that crazy, but you hear the marketing budget for some games and I'm like "what in the fuck are you thinking?" Wasn't the story with Bioshock Infinite that dev was around $80M and the marketing budget was over $100M? That seems completely illogical. I know Infinite wasn't mid-tier, but you hear the same rumblings and worse about AAA dev.
whateverblah
Junior Member
(10-13-2017, 03:36 AM)
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Hopefully the Switch can become a haven for mid-tier devs.
HariKari
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(10-13-2017, 03:38 AM)
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Potential reach in terms of sales has never been higher with stuff like Steam. Just don't open your scope up so wide that you run out of money. More is not automatically better.
epeternally
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(10-13-2017, 03:42 AM)
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Originally Posted by g11

and the marketing budget was over $100M?

If marketing didn't bring a return on investment, publishers wouldn't do it. No one is wasting money by spending it on marketing. Figuring out an optimal marketing budget is done by paid professionals whose job it is to balance these numbers. They know what they're doing. Everyone on here needs to get the idea that marketing costs are ever the problem with game budgets out of their heads immediately.

Also it's completely bizarre that folks rag on publishers incessantly for daring to spend money on marketing, but then also complain when games like Evil Within 2 and Prey don't get a lot of marketing. Which is happening because they've determined that extra marketing spend wouldn't provide a return on investment. People with degrees and years of experience are working full time to figure these things out. You don't know better than them.
Renekton
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(10-13-2017, 03:47 AM)
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Originally Posted by sungahymn

I'm no economist, but this sounds like some kinda bubble has formed/is forming at a rapid pace, particularly in these past few years. And we all know what bubbles do...

I don't think it is a market bubble by standard business definition.
foxuzamaki
Doesn't read OPs, especially not his own
(10-13-2017, 03:48 AM)
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I'm really hoping the switch helps with this somehow
KingV
Member
(10-13-2017, 03:54 AM)

Originally Posted by epeternally

If marketing didn't bring a return on investment, publishers wouldn't do it. No one is wasting money by spending it on marketing. Figuring out an optimal marketing budget is literally some people's job. They know what they're doing. Everyone on here needs to get the idea that marketing costs are ever the problem with a failed game out of their heads immediately.

Also it's completely bizarre that folks rag on publishers incessantly for daring to spend money on marketing, but then also complain when games like Evil Within 2 and Prey don't get a lot of marketing. Which is happening because they've determined that extra marketing spend wouldn't provide a return on investment. People with degrees and years of experience are working full time to figure these things out. You don't know better than them.


Iím one of those people that figures out what marketing spend you need (not in gaming) and itís an art not a science. There are elements that are scientific, but measuring ROI is very difficult.

This compounded for something like a movie or video games because you basically have one shot to get it right and everything must culminate with release day.

Typically, most companies in those types of business will overdo it a bit, because they would rather have a bit too much advertising then not enough, and the way the launch works, it will be hard to tell if the money was worth it after the fact anyway
Coriolanus
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(10-13-2017, 04:13 AM)
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Originally Posted by KawabataSan

The replies in this thread are something else.

We really need more education as to how games are made and how much they cost to make.

We don't. It is fine if people want to learn about it, but we do not need to, and most consumers will never give a single fuck how they're made or how much they cost to make. All that will matter to the majority is if it looks like something that they want to play.

This is not a problem that the consumer has to worry about. It isn't with the movie industry, nor with the car industry, nor with any other industry. This is solely a problem for developers and publishers, and they'll have to find a way to get around it if they want to keep working in these titles. Because this is a problem that the majority of consumers won't ever worry about.

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