Forget GAAS. They should be going after the 'indie' market. Games are far cheaper to make, you need less people to make them and it doesn't need to sell 10 million copies to break even.
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[Insomniac Leak] Spider Man-2 needed to sell 7.2 million copies to be profitable. Budget breakdown and the reason why it was so expensive found
Forget GAAS. They should be going after the 'indie' market. Games are far cheaper to make, you need less people to make them and it doesn't need to sell 10 million copies to break even.
StealthGoblin
Banned
Would people buy a console for indies?
StreetsofBeige
Gold Member
It's actually more than that as it doesn't include marketing costs. So a $300M dev budget is probably more like $500M with marketing.
SneakersSO
Member
Honestly, the only silver lining to this leak is that this private industry discussion is going to be made public. We are long past the point that we should be carefully analyzing why so much budget is going into new projects and what can be done about heading this off.
The most fascinating part of all the data that came out was Insomniac doing a very well researched fiscal pitch to do "smaller" ($100m is still a lot) projects instead of one big one, and how that can mitigate financial risk. Under these budget levels, why would any dev blow a AAA budget on a new IP, for example. Without a built-in audience, its almost impossible realistically forecast that you're going to do over 7m units of sales, even if you were multiplatform.
There is a very prescient internal note in the financial analysis docs that basically asks themselves, 'We spent $200m more on SM2 than SM1 ($300m vs $100m), but can anyone play that and feel that extra money?'. Paraphrasing, but this is a really self-aware question to ask.
I want to head off any discussion by immediately stating that we should not ever say that devs are being overpaid - relative to how much games bring in, despite how much more it takes to break even, game devs have been the most underpaid area of software development for far too long, they still are not making as much as their contemporaries, and the answer to this situation is not, nor will it ever be, to pay devs less. I think it needs to start with why it takes so much more manpower to make the games that we're making. Yes, Insomniac doubled in size basically going for FY20 to FY21, but those devs were spread around multiple projects, although now we know most of those other projects hit the back burner in order for SM2 to ship this year.
I wish we could get some producers in here who have done PM work for a long time to gain some insight on just what is eating up resources to this absurd degree. When you look at a game like SM2, so much of what it is is built on top of what was already done. The framework for its gameplay, for its open-world, for enemy behaviors, is mainly implemented, just waiting to be iterated on, so why did it take that many more devs an 2/3rds the amount of money in order to ship a sequel.
Sleepwalker
Member
Found the problem:
Not every game by every dev needs to be AAA. That includes companies like Naughty Dog and Insomniac.
StreetsofBeige
Gold Member
Given the big budgets AAA games need over 5 years for any company, it goes to show the big publishers trend to the "go big or go home" mentality.
Most other industries given big budgets will spread it across a product line. Not just because it's easier to tweak some products and make one core product into 8 variants, but because it also spreads out the risk. Any bog corporation if they wanted to could sink that giant budget into one product and market the hell out of one product, but chances are they got 5 or 10 or more selection. If one or two products suck, who cares as you still got 8 good sellers.
In big gaming, a $100, $200M, or $500M might get gunned to one product. And it's all or nothing.
They could take that money and break it up into lets say 3 games, but theres decent chance they prefer sinking it into one big one trying to make a cornerstone franchise. it may or may not work. But one thing that is true no matter what is that it ties up budget into fewer products.
bender
What time is it?
Game worlds are larger (more objects) and 3D scanning only takes care of part of the pipeline and doesn't take into account object behaviors.
I just wonder what the breaking point is for chasing better visuals and tech. Need to sell 7.2 million copies is bananas and it is easy to see why one failure can doom a studio/publisher.
Maybe it's a dumb dream, but I still think a major publisher could look at funding projects with smaller teams with the expectation of 500,000-1,000,000 unit sales and be highly successful. Lord knows there is enough unused IP out there to help make that marketable. Falling short of those sales expectations would be far less painful and a homerun that exceeds those expectations would be ridiculously profitable. More risks could be taken and we'd see better creativity. Nintendo mostly does this already and is a side benefit of developing for modest hardware.
Magic Carpet
Member
My issue with the smaller 3 games idea is, I may only buy one of the 3 games. They only get 1/3 of my money. Waste 2/3 of their investment. It's more risk.
YeulEmeralda
Linux User
bender
What time is it?
Funnily enough, Yahtzee went over this in his review and compared it to trying to rush out a licensed game for a movies release rather than going the Robocop route for an IP that will always be popular.
The artful mincer
Member
No! This leak has revealed that marketing budgets are nowhere near that. Spidermans 2 marketing budget was 35 million.
This idea that marketing budgets Doubled dev costs came from an independent analyst estimate of GTA5 overall budget and was NEVER confirmed by Rockstar.
Spyxos
Gold Member
How do you market indie games to people who are expecting God of War and Spiderman2 production value?
fran.fernandez
Member
Good! Folks working on this deserve the money! 
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Pagusas
Elden Member
outsourcing. Didn't UBI's AC:Valhalla have the majority of its work done via outsourcing/non-payrolled staff?
semiconscious
Gold Member
seems to me that writing code'd be the easiest thing in the world for ai to learn, considering it's built out of it. all it'd have to do is analyze itself...
Miyazaki’s Slave
Gold Member
Seeing these financial slides (especially the P&L/SG&A recaps leak like this) makes my stomach hurt. This isn't nightmare fuel...it is a dystopian hellscape made real. This will impact future investment in the group and industry overall. Its normal for investors to see summaries of this stuff, sure, but the granularity we have when all the data can be collected and then combed through; GODDAMN the scrutiny is painful to see.
First quarter finance reconciliation/review is going to be a M'FER in 2024 for SONY.
Fake
Member
Found the problem:
John from Digital Foundry said a few directs weekly ago that maintain a studio in California is high expensive. I can't understand why Sony keep doing things in California. Keep in mind that John used the quote 'insanily high'.
Is like they love to burn money, I get that, but this is starting to get very suspicious. If you want to reduce costs instead of firing people, why in hell you still doing bussiness in California, one of the US most expensives places to work?
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DForce
NaughtyDog Defense Force
sendit
Member
I can attest. I work at a FAANG and we have a team liqueur cabinet with over 10K in whiskie's, gin's, vodka's, etc...
OccamsLightsaber
Regularly boosts GAF member count to cry about 'right wing gaf' - Voter #3923781
Have you considered that their location part of the the reason that they have been as successful as they have been?
mitch1971
Gold Member
DForce
NaughtyDog Defense Force
Tony Todd said they only used 10% of his lines in Spider-Man 2.
www.playstationlifestyle.net
And now we're getting DLC in 2024? I think I read somewhere those were just side missions in SM2. But maybe part of the development in that was included and some content was cut for later releases. That's the only way I can explain the extra development cost.
Tony Todd Says Insomniac Games Only Used 10% of His Lines in Spider-Man 2 - PlayStation LifeStyle
Tony Todd voiced Venom in Insomniac Games' Marvel's Spider-Man 2, and recently revealed that there are a lot of unused dialogue of him.
www.playstationlifestyle.net
And now we're getting DLC in 2024? I think I read somewhere those were just side missions in SM2. But maybe part of the development in that was included and some content was cut for later releases. That's the only way I can explain the extra development cost.
Mr.Phoenix
Member
I saw that, but that makes no sense. aOr is weird math.
Unless I am not understanding that, what they are calling "break-even" is a number that already includes a 70%+ return on investment. Over a 12-month period from release.
Looking at that slide, the development cost of 308M (which I believe includes $35M marketing)
7.2 sales x $70/game = $504M
61% ROI of 308M is 187M.
308 + 187= 495M
See? The math is weird.
Fake
Member
Are you saying the place is the secret for the Sony success, not the people that work at?
kazuyamishima
Member
500m budget is nuts, but this game will easily reach close to 10m units sold by years end and will have a shot of doing 25-30m units on PS5 alone.
It will get its money back easily.
It will get its money back easily.
EDMIX
Member
Disney is not going to just let them having it a completely different city. They likely have a set number of things that must be in the title.
LOL Yea....no. You are free to fucking do that btw, but don't you question why games that even mimic that exact thing fail?
Just cause they USED to have development like that, doesn't mean it makes sense today as are you speaking as if its in a fucking bubble or something. Someone would need to do so much of the development themselves and even then it would struggle to move units to even justify its existence compared to the likes of Cyberpunk or something.
So I have nothing against those type of indie games existing as shit, I love the original Deus Ex, but for fuck sakes man, I don't delude myself into think me fucking liking an old game, magically means going back and doing that will suddenly being this super sustainable thing, as if THAT type of old development is wanted, desired and will move enough units to keep the lights on in a small studio or something.
You don't think its weird everyone isn't making some N64 looking game to bank?
Sure that isn't just nostalgia talking orrrr?
This.
Needing 7 million isn't shit for a game that will likely move 25 to 30 million. They have such a budget cause this isn't a normal, standard AAA game in the first place.
Thats like someone thinking GTAVI's budget is some normal thing in the industry.
OccamsLightsaber
Regularly boosts GAF member count to cry about 'right wing gaf' - Voter #3923781
The location includes the pool of talented engineers to draw from. A giant pool of talent up and down the coast.
Drizzlehell
Banned
That's what happens when a workplace turns into adult day care where most of the staff spends half a day sipping on lattes during pointless meetings and team bonding activities.
Thirty7ven
Banned
Isn’t it just taking into account Disney royalties and marketing?
It’s why people can’t extrapolate this to other games. Not every game will be paying Disney royalties + big marketing campaign.
tommib
Gold Member
Ever heard of Hollywood and Silicon Valley? What’s next? Move Apple Park to West Virginia?
Oddvintagechap
Member
I really don’t understand this at all.
They are successful because of licensed Spiderman games.
R&C: Rift Apart
Sunset Overdrive
Fuse
Resistance didn’t move the needle.
Nevermind them trying to become a premier mobile studio with Outernauts, Bad Dinos, etc.
Them needing to be a morph indie studio to keep afloat. Song of the Deep.
Trying to become a premier VR studio.. with Seedling, Stormland..
Only reason they probably still exist it’s because of them churning out Ratchet and Clank games.
DaGwaphics
Member
I think that will happen and in many cases already is. Insomniac is extremely successful with these Marvel games and has the Sony machine behind them now, I think they'll be okay.
But when you look at Capcom's numbers and even WB with Hogwarts (rumored to be around $150m) there are studios that that are getting solid results while spending less than what Insomniac and most of the Sony studios currently are. It's the same thing that happened in film, for a moment there everyone was going crazy with budgets and almost everything was losing money, but then studios began to wise up and be realistic about the returns they should be expecting.
Killer8
Member
The chart shows just how extended the 'pre-alpha' phase is during game development. Over 2 years of production work, 4 with pre-production, and then it all comes together relatively quickly in the final year. Really shows that a ton of people have no idea what they're talking about when they see the words pre-alpha in a trailer and start attaching meaning to it. My favorite assumptions are: "how can it only be in pre-alpha? This must be years away!" or "it's fine that the graphics are shit right now, it's only pre-alpha so will surely improve".
Fake
Member
That can't be at others places? Is that what are you saying? They can't leave this place or something? They can't be hired from other states or move into another state when needed?
The only thing you are arguing is that California is the bed of talent, but thats not mean they need to stay there. Maybe can be shocking for you, but they can be at other states from USA and still hire talents from California.
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Jimmy_liv
Member
Other Direct Costs
simpatico
Member
I really liked the Insomniac stuff on PS3. That was my prime era for the studio.
Fredrik
Member
Insomniac is one of the most efficient devs in the whole industry. They make 3-4 games while other big devs make 1.
SlimySnake
Flashless at the Golden Globes
Sony loses 20% from each physical sale. That’s the retailer cut.
They also have to give a 20% cut to marvel.
So out of a $70 copy, they get to take home 42 dollars. 42*7.2 million = $305 million. They do get to keep 80% of the digital sales but the math adds up here
StreetsofBeige
Gold Member
When it comes to royalty cuts (at least contracts I've seen in the past), it's based on the supplier's shipments dollars or as a fixed amount per unit shipped out.
No supplier or Marvel will be able to track 100% of retail sales, so an accurate total retail dollars for a royalty calculation would never be known. Tracking any big retailer sales is easy as they'd have the data in terms of units or dollars. But any sales to mom and pop stores or wholesalers shipping to random game stores would not really be known. Nor would the final retail prices.
I'm just going on what I know. But if the Sony/Marvel contract specifically states the % cut is based off retail prices totaled up somehow then that's cool.
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thicc_girls_are_teh_best
Member
Maybe it's time for Sony to move their studios to Malaysia or something, then. Those budgets for Spiderman 2 are crazy IMO, more than most Hollywood blockbusters. And this doesn't even include marketing, so it's probably even more expensive than the MCU films.
I'm wondering if the costs factor in the deal Sony have set up with Disney/Marvel, where they're paying it out over a period of years instead of all at once/upfront? That would at least in part explain the costs. Other people are saying they doubled the studio size, I guess that would be a factor as well.
You mean the amount Sony paid for the license? There's no way this amount doesn't include some portion of that cost being paid out over the course of the game's development. Has to be similar for the other Marvel games Insomniac are making too.
Otherwise these costs really do look rather insane. These companies are gonna use AI so hard to get these costs down like crazy as soon as it becomes viable. Some are gonna go overboard...hopefully Sony aren't one of them.
Fredrik
Member
Probably not enough. But Neon Giant used AI to create NPC voices in The Ascent. Bethesda used AI to check planets for geometry placement faults in Starfield.
I’m thinking the biggest cost here isn’t coding or QA but using real actors for voices and motion capture and making everything look realistic, surface and behaviour. That seems to be the AAA thing right now, everything needs to look real.
If devs would drop the ’real’ and just go bananas with their creativity instead things would be cheaper, and probably more fun too.
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