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."