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[EXGN]

Are we including marketing budgets in production costs too? Because those are entirely too high and need to be axed too.

 

[Flying_Phoenix]

Well, costs certainly haven't hit a ceiling in the sense that it's not possible to spend more -- obviously someone can.

They also haven't hit a ceiling in the sense that some publishers in the industry (i.e. platform-holders who can almost indefinitely subsidize titles for their own system, or mega-publishers like EA and Activision) can't choose to spend $70 million on a game, if they want, and probably even sometimes still profit on the result.

At the moment, if hardware companies don't put a brake on it and publishers keep trying to raise budgets to distinguish themselves from each other, eventually you'll hit the point where basically no one is profitable anymore (we're already pretty close) and the industry will see a major crash.

Yeah, but at least developers pushed and used cutting edge technology to show off their creative visions.

 

[Angelus Errare]

And thats precisely whats going to happen: games of same size as today, but far more detailed in every aspect.

That's what they said about last gen.

 

[Cow Mengde]

I hope not. We can always have more games with bigger budget. Bring on the 100 million blockbusters. I hope next gen, we can see 200 million for game budget to rival Hollywood.

 

[Metal Gear?!]

So what will be the highest budgeted game ever made now that the ceiling is about to be hit? Final Fantasy 13? Does WOW count given it's alternate revenue stream and multiple expansions?

I hope not. We can always have more games with bigger budget. Bring on the 100 million blockbusters. I hope next gen, we can see 200 million for game budget to rival Hollywood.

What game could possibly sell enough copies to make up for that? Keep in mind the best selling games of all time are Wii Sports and Super Mario Bros, and they were pack-ins in most countries.

 

[axiomnightmare]

Well San Andreas is actually larger than GTA4 is.

 

[The Take Out Bandit]

Yeah, I was just mulling over this: current gen has really high production costs for AAA titles. Will next gen be even worse?

And I think it won't.

You already work with rendered characters exported directly to the game engines, only next gen you will have less work because of the advance of rendering power and techniques. And at least from MS, you will go from DX9 interfacing to DX11 which reportedly is much, much better to work with for programmers since it simplifies a lot of tasks that currently require a large amount of code (and therefore processing power, time and dev-money).

You already work with fullres texturing that simply gets compressed to fit console memory... and spend valuable time to do so.
Even on next gen, gameplay areas won't become larger than GTAIV... or at least, nobody will feel ripped off if they don't.

So I think that we kinda have hit the "bottom" for devs now. Next gen won't bring the costs up any higher than they already are, and the devs who survive through the current difficult period will be well prepared for the furture.

Thoughts, comments, everything welcome

Production costs > Game quality

Video gaming is a lost cause.

Enjoy your interactive machinima and fucking atrocious polygons!

 

[DigitalDevil]

Well, next-gen is assuredly taking a Wii-like route all around, so I doubt production costs will increase that much.

as much as I love my wii, this possibility scares the shit out of me.

 

[Flying_Phoenix]

That's what they said about last gen.

And that's what happened.

as much as I love my wii, this possibility scares the shit out of me.

Yes let's bankrupt all of the big name developers. PC, iPod Touch, and Nintendo industry for life!

 

[Ranger X]

Yeah, but at least developers pushed and used cutting edge technology to show off their creative visions.

Creativity is creativity regardless the tool you use. Technology can open up stuff or inspire different things that weren't possible to do before but it doesn't influence creativity. Someone that isn't creative won't suddendly be because he uses better tools.

.

 

[olimpia84]

The Wii is setting the standards for the future of gaming, so don't worry about overly high production costs..........

 

[HoRNS456]

The Wii is setting the standards for the future of gaming, so don't worry about overly high production costs..........

NOOOOOOooo.... <darkvader.gif>

 

[someguyinahat]

They will if someone does it and then goes around advertising their "gigantic truly next-gen world."

Well San Andreas is actually larger than GTA4 is.

Even though it's not next-gen, Daggerfall was probably even bigger than that, even if there were vast regions of mostly nothing. You could fast travel to a city and take two days of game time, or try to travel there on foot and come close to two days of REAL time.

But back to the OP. Production costs on games will likely continue to rise. It would be interesting to see which games had the highest production costs in "real dollars" (adjusted for inflation,) though.

However, for other games, people may try to keep production costs low because of an oversaturated casual market. They have to compete with Popcap and its ilk so they can't look TOO shoddy, but they'd also have to note the psychological barriers of "I won't pay more than X for a game" and "I'm only going to buy so many casual games" so they have to keep budgets tight.

I'd say we haven't hit a ceiling, but only for that niche of games that people want to have nice production quality.

 

[Conflict NZ]

As long as next gen we see Crysis on consoles at 1080p with 16xAA and 16xAF with vertical sync I'm happy.

 

[WinFonda]

They'll keep going up and we'll be all the better for it.

This kinda stems from the Wii talking point that arose from the defense of its hardware and technical capabilities. That the industry would be better off with stagnation in tech and budgets across the board

Really that is a load of crock. There's room for budgets of all sizes. Part of the reason the industry is as large and successful as it is, is because many companies and people with a lot of capital on the line took their risks.

You can't eliminate risk. And all consoles next-gen will be HD, so that right there means development will not be getting any cheaper. Production costs will continue to scale with the technology.

Some companies may go out of business, some may prosper. But the talent doesn't just die off. They find work elsewhere, they adapt. In this context, Tim Schaefer's comments about fans caring too much about whether games succeed or fail is spot on.

The real enemy is waste and poor management on a corporate wide level - not big budgets.

 

[DigitalDevil]

Even though it's not next-gen, Daggerfall was probably even bigger than that,

PROBABLY bigger? Didn't that game have like 5,000 actual towns, all with different names, inhabitants, quests etc...???

 

[FoxSpirit]

In the future when computers and consoles get too fast for their own good (which is already happening on the pc side), a lot of money spent on optimizing the CRAP out of everything will go down.
The heavy load in gaming to this very day is on the programmers. We artists and designers at around alpha and definitely beta stop working on production and give the programmers at least 6 months to optimize and fix the game. That's why you see a lot of DLC by the way. Because the artists are twiddling their thumbs, you might as well make them do something with their time.
Now imagine if the programmers DIDN'T have too worry so much about framerate. That would cut 3 months or more off of our time making our games. That's money in the bank.

Look at Bluray. With a bluray player (that wasn't as slow as the ps3's,) we wouldn't have to worry so darn much about disc space. Again, that's time not wasted on such things. That's money in the bank.

So you are an artist? May I ask at what company you work at? Curious

/snip
Some companies may go out of business, some may prosper. But the talent doesn't just die off. They find work elsewhere, they adapt. In this context, Tim Schaefer's comments about fans caring too much about whether games succeed or fail is spot on.

Do you have a link for me? Thanks.

 

[WinFonda]

Do you have a link for me? Thanks.

http://www.1up.com/do/newsStory?cId=3173603

 

[cuyahoga]

In fact the most expensive game this gen was GTA 4 and it probably cost around 50million USD.

Actually, GTA4 cost $100 million, which does make it the most expensive game this generation, and there are a few other games that have cost more than $50 million this gen.

 

[Roto13]

I think it has less to do with technology and more to do with the fact that crazy development costs have already destroyed a bunch of developers this generation. Things can't get any more expensive because they're already too expensive.

 

[Gorgon]

Actually, GTA4 cost $100 million, which does make it the most expensive game this generation, and there are a few other games that have cost more than $50 million this gen.

We just know that MS payed R* 50 million USD for exclusive 360 DLC, but that doesn't mean the game cost 100 million USD.

Also, what games cost more than 50 million USD this gen?

 

[Gazunta]

hahahhhaahahha
HAHAHAHAHAHAAHHAAHHAHAHAAHAHHA

Spoiler

hahahahaahh

 

[charlequin]

The real enemy is waste and poor management on a corporate wide level - not big budgets.

And the real dollar costs of those budgets are, what, just magically going to come out in the wash?

The math is pretty straightforward: a game with a $100,000 budget needs to sell 5,000 copies (at a publisher take of $20 per copy) to break even; a game with a $1,000,000 budget needs to sell 50,000; a game with a $10m budget needs to sell half a million; a game with a $100m budget needs to sell 5m copies just to break even at that level of publisher take.

 

[WinFonda]

The math is pretty straightforward: a game with a $100,000 budget needs to sell 5,000 copies (at a publisher take of $20 per copy) to break even; a game with a $1,000,000 budget needs to sell 50,000; a game with a $10m budget needs to sell half a million; a game with a $100m budget needs to sell 5m copies just to break even at that level of publisher take.

I imagine games with $100k-1m budgets typically don't retail for a full $60 or even $50. You're looking at DS/PSP/Digital pricing with those kind of budgets.

Anyway, if a multiplatform game with $100m budget doesn't break 5 million copies thanks to its ginormous ad campaign alone, I'd shit bricks.

A game that fails to bank coin with that much money behind it would be the exception, not necessarily the rule. Typically, games with bigger budgets get more exposure than those with smaller budgets.

Here's why I think the big budget boogeyman arguments are silly: There have been games that have failed to profit across all platforms for as long as any of us have been gaming, and the industry has kept on trucking and kept on making money. And they will continue to have bombs and still make money for as long as we live.

It's the same way with the movie industry. That industry has had such a long time to mature and perfect and there are still very savvy businesses producing big budget bombs. Why haven't they learned from their mistakes...? Because the net gains from all their successes handily outweigh their losses. One great success is enough to cover two bombs and then some. That's what happens in a healthy industry. They take risks with big budgets because frankly, that's what puts the asses in the seats. It gets attention, and dare I say it, it grows the industry. The movie industry wouldn't be what it is if not for the likes of King Kong, Star Wars, Titanic, and every other major blockbuster they've produced.

It's really not our duty as consumers to be averse to private companies taking risk. Generally speaking, it's a good thing. That's my 2 cents.

 

[Sohter.Nura]

Movies have budgets of 150 million + because they have a different business model than video-games. They go to cinemas, then TV, Walmart, etc. It's a MUCH safer bet, and it also has MUCH more broad appeal than video-games.

As for the topic: Budgets CAN'T go higher. It's as simples as that. I bet they will, and we will have less publishers next generation, until we really have an industry crash.

I think a way to cut costs and maximize profits that will be very common in the future is smaller content episodically.

 

[Swifty]

Thank God that software is inherently reproducible and can be modularized.

What will keep costs down in the face of increasing demands in quality will be shared software libraries. Just as studios don't write their own 3D graphics libraries in software anymore, more and more studios will no longer have to write their own graphics engines, physics, AI, collision detection, audio libraries, etc. Less programmers reinventing the wheel should equate to more savings in the programming department. And maybe that'll mean more manpower for the "important" stuff such as gameplay and polish.

You think all Unreal Engine 3 games look the same? You've seen nothing yet.

 

[charlequin]

I imagine games with $100k-1m budgets typically don't retail for a full $60 or even $50. You're looking at DS/PSP/Digital pricing with those kind of budgets.

Now? No, generally not. Not too long ago, $1m would have been a normal budget for a relatively high-profile big console title, though.

Anyway, if a multiplatform game with $100m budget doesn't break 5 million copies thanks to its ginormous ad campaign alone, I'd shit bricks.

That's completely ignoring the situation, though. Last generation, 90+% of games* came in under $10 million in budget; this generation, any halfway prominent major release will blow way past that. Right now, $100 million is an almost unimaginable extravagance that only a hugest-possible game (that could obviously recoup off of it) would touch -- but what about when all the AAA games are spending $100m, and even the lower-tier prominent releases are clocking in at $50-75m?

*Made-up figures, but the point is to illustrate a trend and not provide specific cost-benefit analysis here.

Here's why I think the big budget boogeyman arguments are silly: There have been games that have failed to profit across all platforms for as long as any of us have been gaming, and the industry has kept on trucking and kept on making money.

But this is just handwaving that ignores the really, really simple math in play.

Yes, there have been games that "failed to profit" throughout the industry's history, but the profile of these games has changed dramatically. In previous generations, most games could recoup their budgets, and a publisher could absorb the losses from numerous bombs. Today, most games don't recoup their losses by default, each individual bomb is much more devastating than it used to be while each individual success doesn't bring in as much excess cash on top as it would have in the past.

Again, the math is simple. Games are getting made by 200-person teams over 3 years now instead of 20-person teams over one and a half years. Game budgets are rising geometrically and revenues per game are staying relatively flat. That can't be dismissed just as "well, games have always bombed."

It's the same way with the movie industry.

It's really not, because the movie industry doesn't increase film budgets across the board by a factor of 2x-5x every five years.

 

[Brashnir]

Production costs for games at the top end of sales expectations will continue to rise, but I think we're starting to see (and will continue to see) smaller budget games that are better experiences as hardware improves. While it's difficult and expensive to trick the very best out of a hardware platform, as power increases, the challenge (and thus the cost) in getting a game look "good enough" drops significantly.

There will always be shovelware, but I think low-budget gems are gaining a lot of traction, and will continue to do so in the future.

 

[onipex]

It will never reach a ceiling as long as developers think that hardware is limiting their vision. I think any developer that believes that just has limited talent.

 

[Asmodai]

The most popular games out there generate revenues of hundreds of millions of dollars.

Obviously, the potential for hundreds of millions of dollar budget videogames is there. Right now, the fact that they can develop a blockbuster title for 10-30 million and make 100-300 million off it is an insanely profitable. But you have games like GTA IV that are getting huge budgets and still being highly profitable.

 

[Neo C.]

The Wii is setting the standards for the future of gaming, so don't worry about overly high production costs..........

Even if the next Xbox is like a 1.5 Xbox 360, the costs will still rise up (though the rising curve would be more moderate than the curve of a normal console tech cycle).

 

[beat]

And the real dollar costs of those budgets are, what, just magically going to come out in the wash?

The math is pretty straightforward: a game with a $100,000 budget needs to sell 5,000 copies (at a publisher take of $20 per copy) to break even; a game with a $1,000,000 budget needs to sell 50,000; a game with a $10m budget needs to sell half a million; a game with a $100m budget needs to sell 5m copies just to break even at that level of publisher take.

Publishers only take $20 / copy? How do you figure that? The retailer only makes $5-10 on new games, which is the whole reason they're so deep into pushing the used game market. The console licensor takes about $10. So it seems to me like the publisher's take on the retail price is more like $40...

 

[DXPetti]

We still gobble up the AAA titles with big budgets (your Halos, Metal Gears and Grand Theft Autos) so I would say no. But I do forsee more DLC as companys want to squeeze as much money out of one title/engine as they can rather than do it the hard way and be more efficent with their money during production.

 

[charlequin]

Publishers only take $20 / copy? How do you figure that?

Well, the numbers in that post are made up (and noted as such) since the point is about how your break-even point goes up along with your budget. But you're looking at about 25% off the top for either retail or retail + distribution, and 25% off the bottom for platform licensing fees and whatnot. You can plug in $30 or $40 if you want, I don't think that'll change the point that $100m game budgets are completely unsustainable.

 

[Flying_Phoenix]

Lulz at people supporting the industries current state.

 

[Opiate]

Most industries hit a production ceiling, and it seems particularly likely given that production costs in this industry have clearly been shown not to equate well with sales.

The x factor in this is that there are two companies -- Sony and Microsoft -- who are clearly willing to lose a great deal of money to subsidize products they feel could provide portals in to other revenue streams.

Obviously, that sort of subsidization doesn't last forever. Either they actually find their pot o gold -- in which case they'll stop subsidizing because they've gotten what they wanted -- or they won't -- in which case they'll leave entirely.

Either way, I think the time when the industry starts hurting is when gigantic conglomerate corporations stop exploiting us for future market potentials.