Support NeoGAF

[RedC]

Spoiler: Summary

Video Game Budgets Explained — Why AAA Games Now Cost $300M–$500M+

---

Core Thesis

The speaker argues that most discussions around game budgets completely miss the real reason costs have exploded.

When people hear:

• Concord cost hundreds of millions
• Destiny reportedly cost hundreds of millions
• AAA games now cost $300M–$500M+

they often assume:

• executive greed
• wasteful spending
• excessive marketing
• expensive technology

But the biggest factor is actually much simpler:

People.

Modern game budgets are overwhelmingly:

• salaries
• benefits
• overhead
• employment costs
• office costs tied to employees

In other words:

AAA budgets are largely labor budgets.

---

Games Are Different From Movies

The speaker notes that many people compare games to films.

Movies spend money on:

• actors
• sets
• locations
• equipment
• travel
• production logistics

Games are different.

A game studio mostly spends money on:

• developers
• artists
• animators
• designers
• engineers
• producers
• QA
• support staff

And unlike movies:

Many of those people remain attached to the project for years.

You can't simply bring them in for two weeks and then send them home.

AAA development requires:

• large teams
• long timelines
• continuous staffing

which creates enormous ongoing costs.

---

The "Burn Rate" Concept

The speaker introduces the industry's most important budgeting metric:

Burn Rate

Burn rate =

• cost per employee
• per month

including:

• salary
• benefits
• payroll taxes
• office space
• hardware
• overhead
• miscellaneous support costs

---

Historical Burn Rate

Around 2015:

Average burn rate:

• roughly $10,000 per employee
• per month

Equivalent to:

• about $120,000 annually

including all overhead costs.

---

Example: AAA Game In 2015

Assume:

• 100 employees
• $10,000 monthly burn rate
• 3-year development cycle

Calculation:

$10,000 × 100 employees × 36 months
=
$36 million

A fairly typical AAA budget at the time.

---

What Changed?

Two major things:

1. Salaries Increased

Particularly in:

• Seattle
• Los Angeles
• San Francisco
• Vancouver

---

2. Development Cycles Increased

Games now take:

• longer
• require larger teams
• involve more content
• involve more technical complexity

The combination of:

• more people
• for longer periods

causes budgets to explode.

---

Modern AAA Budget Example

The speaker proposes:

Team Size

• 400 developers

Burn Rate

• $15,000 per month

Development Time

• 5 years

Calculation:

$15,000 × 400 × 60 months
=
$360 million

This is how modern AAA projects reach:

• $300M+
• without any extraordinary waste

Just through staffing costs alone.

---

Why San Francisco Is Even More Expensive

In top-tier tech cities:

Burn rate may approach:

• $20,000+
  per employee
  per month

because studios compete against:

• Meta
• Google
• Anthropic
• Amazon
• Microsoft

for talent.

---

A Common Misunderstanding

Many gamers hear:

"$240,000 per year"

and assume:

"Developers are rich."

The speaker disagrees.

In places like:

• San Francisco
• Seattle

those salaries may simply represent:

• upper-middle-class living
• home ownership
• raising children

rather than extreme wealth.

---

Another AAA Example

Using:

• $20,000 monthly burn rate
• 400 employees
• 4-year development cycle

Calculation:

$20,000 × 400 × 48
=
$384 million

Again:

A nearly $400 million game budget without requiring any unusual spending.

Just labor.

---

The Concord Example

The speaker specifically addresses reactions like:

"How did Concord cost hundreds of millions?"

Their answer:

Stop thinking about:

• genre
• scope
• whether you personally liked the game

Instead think:

Number of People

×

Number of Months

That's where the money goes.

Even if the game is:

• a shooter
• not open world
• not an RPG

large teams over long timelines become enormously expensive.

---

Waste Exists — But Isn't The Main Cause

The speaker acknowledges:

Some studios absolutely have:

• waste
• inefficiency
• bloated pre-production
• management mistakes

Examples include:

• years of prototyping
• direction changes
• excessive iteration

However:

The biggest factor isn't mismanagement.

It's simply:

Rising Costs

combined with

Rising Timelines.

---

Why Outsourcing Keeps Growing

One of the most important sections.

Studios increasingly rely on:

• co-development
• outsourcing
• external support teams

because:

Full-time staffing is so expensive.

Instead of hiring:

• 100 permanent employees

a studio can:

• contract specialists
• scale up temporarily
• scale down afterward

This significantly reduces burn rate exposure.

---

Why More Development Is Moving Overseas

The speaker argues:

This trend is accelerating because:

The burn rate in:

• North America

is dramatically higher than in many other countries.

Lower labor costs abroad mean:

• lower budgets
• less financial risk
• greater flexibility

for publishers.

---

Tax Credits Matter More Than People Realize

Another major factor:

Government incentives.

Example:

Montreal

Tax credits can return:

• 30% or more

of labor costs.

This can reduce budgets by tens of millions of dollars.

Meaning:

Location selection has become a major financial decision.

---

The Billion-Dollar Thought Experiment

The speaker then pushes the numbers to the extreme.

Assume:

• 1,000 employees
• $20,000 monthly burn rate
• 5-year development cycle

Calculation:

$20,000 × 1,000 × 60

=

$1.2 billion

The point isn't that every game costs this much.

The point is:

The math itself makes billion-dollar development theoretically possible if team size and timelines continue growing.

---

Why Layoffs Keep Happening

One of the biggest implications:

If a project costs:

• $300M
• $400M
• $500M

then financial failure becomes catastrophic.

This explains why publishers increasingly:

• cut staff
• close studios
• reduce risk
• pursue outsourcing
• seek tax incentives

because budgets have reached levels where:
a single commercial failure can be devastating.

---

The Speaker's Main Criticism Of Internet Discourse

The speaker argues that online discussions often simplify everything into:

• greedy executives
• lazy developers
• incompetent managers

while ignoring the structural economic reality.

Their position:

Those things can sometimes be true.

But the bigger story is:

• salaries rising
• inflation rising
• development cycles growing
• team sizes growing
• production complexity increasing

All simultaneously.

---

Final Takeaway

The speaker's core message is:

When you see reports that a AAA game cost:

• $250 million
• $350 million
• $500 million

don't immediately assume:

• corruption
• executive excess
• runaway spending

Instead ask:

How many people worked on it?

For how many years?

Because modern AAA budgets are increasingly driven by one simple equation:

Burn Rate × Team Size × Development Time

And as:

• salaries rise
• teams grow
• timelines expand

AAA budgets naturally climb into the hundreds of millions of dollars—even before marketing enters the picture.

 

[IDKFA]

$240,000 per year is a comfortable middle-class wage in San Francisco and Seattle?!?!

That's insane! How do people live there that work in bars, shops, hotels etc?

 

[poodaddy]

So studios choose to always open in the most expensive cities in the world, in order to make use of the least productive employees in the world, and then overpay said employees by tens of thousands more than if they had simply opened their studio in a cheaper city, thus saving on overhead from....well.... pretty much every segment of the business imaginable.

 

[Durin]

I mean...the people are part of the wasteful spending on these games.

Both the design leads that struggle to bring a game concept to a fun core game loop, and people on staff that don't pull their weight.

Longer dev cycles for these games, still coming out with half-baked concepts, and performance issues. Some of these staff are even a detriment to projects like the nth time a community manager or dev on twitter picks a fight with paying consumers.

 

[HRK69]

 

[Zamana]

I like Jason's new idea of explaining more deeply about the game industry than his infrequent rants at Bluesky on the gaming woke vs antiwoke mindless war that has plagued most social media and gaming discourse.

This way everyone from both the sides are coming together to learn something new and cool about our favourite hobby and there's no fighting just curiosity, questions but also peace and happiness.

 

[Hypereides]

He's still unwilling to address the elephant in the room: consultants and consultancy fees.

 

[Guilty_AI]

Solution:

• Use smaller teams
• Right amount of content and not bloat
• Dont bother with technical complexity unless its fundamental to the game

50 to 100 employees on a 15k o 20k burn rate for 5 years:

45M to at most 120M on the most expensive place with a 100 people team.

 

[Ryseer]

Spoiler: Summary

Video Game Budgets Explained — Why AAA Games Now Cost $300M–$500M+

---

Core Thesis

The speaker argues that most discussions around game budgets completely miss the real reason costs have exploded.

When people hear:

• Concord cost hundreds of millions
• Destiny reportedly cost hundreds of millions
• AAA games now cost $300M–$500M+

they often assume:

• executive greed
• wasteful spending
• excessive marketing
• expensive technology

But the biggest factor is actually much simpler:

People.

Modern game budgets are overwhelmingly:

• salaries
• benefits
• overhead
• employment costs
• office costs tied to employees

In other words:

AAA budgets are largely labor budgets.

---

Games Are Different From Movies

The speaker notes that many people compare games to films.

Movies spend money on:

• actors
• sets
• locations
• equipment
• travel
• production logistics

Games are different.

A game studio mostly spends money on:

• developers
• artists
• animators
• designers
• engineers
• producers
• QA
• support staff

And unlike movies:

Many of those people remain attached to the project for years.

You can't simply bring them in for two weeks and then send them home.

AAA development requires:

• large teams
• long timelines
• continuous staffing

which creates enormous ongoing costs.

---

The "Burn Rate" Concept

The speaker introduces the industry's most important budgeting metric:

Burn Rate

Burn rate =

• cost per employee
• per month

including:

• salary
• benefits
• payroll taxes
• office space
• hardware
• overhead
• miscellaneous support costs

---

Historical Burn Rate

Around 2015:

Average burn rate:

• roughly $10,000 per employee
• per month

Equivalent to:

• about $120,000 annually

including all overhead costs.

---

Example: AAA Game In 2015

Assume:

• 100 employees
• $10,000 monthly burn rate
• 3-year development cycle

Calculation:

$10,000 × 100 employees × 36 months
=
$36 million

A fairly typical AAA budget at the time.

---

What Changed?

Two major things:

1. Salaries Increased

Particularly in:

• Seattle
• Los Angeles
• San Francisco
• Vancouver

---

2. Development Cycles Increased

Games now take:

• longer
• require larger teams
• involve more content
• involve more technical complexity

The combination of:

• more people
• for longer periods

causes budgets to explode.

---

Modern AAA Budget Example

The speaker proposes:

Team Size

• 400 developers

Burn Rate

• $15,000 per month

Development Time

• 5 years

Calculation:

$15,000 × 400 × 60 months
=
$360 million

This is how modern AAA projects reach:

• $300M+
• without any extraordinary waste

Just through staffing costs alone.

---

Why San Francisco Is Even More Expensive

In top-tier tech cities:

Burn rate may approach:

• $20,000+
  per employee
  per month

because studios compete against:

• Meta
• Google
• Anthropic
• Amazon
• Microsoft

for talent.

---

A Common Misunderstanding

Many gamers hear:

"$240,000 per year"

and assume:

"Developers are rich."

The speaker disagrees.

In places like:

• San Francisco
• Seattle

those salaries may simply represent:

• upper-middle-class living
• home ownership
• raising children

rather than extreme wealth.

---

Another AAA Example

Using:

• $20,000 monthly burn rate
• 400 employees
• 4-year development cycle

Calculation:

$20,000 × 400 × 48
=
$384 million

Again:

A nearly $400 million game budget without requiring any unusual spending.

Just labor.

---

The Concord Example

The speaker specifically addresses reactions like:

Their answer:

Stop thinking about:

• genre
• scope
• whether you personally liked the game

Instead think:

Number of People

×

Number of Months

That's where the money goes.

Even if the game is:

• a shooter
• not open world
• not an RPG

large teams over long timelines become enormously expensive.

---

Waste Exists — But Isn't The Main Cause

The speaker acknowledges:

Some studios absolutely have:

• waste
• inefficiency
• bloated pre-production
• management mistakes

Examples include:

• years of prototyping
• direction changes
• excessive iteration

However:

The biggest factor isn't mismanagement.

It's simply:

Rising Costs

combined with

Rising Timelines.

---

Why Outsourcing Keeps Growing

One of the most important sections.

Studios increasingly rely on:

• co-development
• outsourcing
• external support teams

because:

Full-time staffing is so expensive.

Instead of hiring:

• 100 permanent employees

a studio can:

• contract specialists
• scale up temporarily
• scale down afterward

This significantly reduces burn rate exposure.

---

Why More Development Is Moving Overseas

The speaker argues:

This trend is accelerating because:

The burn rate in:

• North America

is dramatically higher than in many other countries.

Lower labor costs abroad mean:

• lower budgets
• less financial risk
• greater flexibility

for publishers.

---

Tax Credits Matter More Than People Realize

Another major factor:

Government incentives.

Example:

Montreal

Tax credits can return:

• 30% or more

of labor costs.

This can reduce budgets by tens of millions of dollars.

Meaning:

Location selection has become a major financial decision.

---

The Billion-Dollar Thought Experiment

The speaker then pushes the numbers to the extreme.

Assume:

• 1,000 employees
• $20,000 monthly burn rate
• 5-year development cycle

Calculation:

$20,000 × 1,000 × 60

=

$1.2 billion

The point isn't that every game costs this much.

The point is:

The math itself makes billion-dollar development theoretically possible if team size and timelines continue growing.

---

Why Layoffs Keep Happening

One of the biggest implications:

If a project costs:

• $300M
• $400M
• $500M

then financial failure becomes catastrophic.

This explains why publishers increasingly:

• cut staff
• close studios
• reduce risk
• pursue outsourcing
• seek tax incentives

because budgets have reached levels where:
a single commercial failure can be devastating.

---

The Speaker's Main Criticism Of Internet Discourse

The speaker argues that online discussions often simplify everything into:

• greedy executives
• lazy developers
• incompetent managers

while ignoring the structural economic reality.

Their position:

Those things can sometimes be true.

But the bigger story is:

• salaries rising
• inflation rising
• development cycles growing
• team sizes growing
• production complexity increasing

All simultaneously.

---

Final Takeaway

The speaker's core message is:

When you see reports that a AAA game cost:

• $250 million
• $350 million
• $500 million

don't immediately assume:

• corruption
• executive excess
• runaway spending

Instead ask:

How many people worked on it?

For how many years?

Because modern AAA budgets are increasingly driven by one simple equation:

Burn Rate × Team Size × Development Time

And as:

• salaries rise
• teams grow
• timelines expand

AAA budgets naturally climb into the hundreds of millions of dollars—even before marketing enters the picture.

I can't fking stand how this "man" sounds did he have a extra soy shot?

 

[asdasdasdbb]

Pretty much.

I do think devs are going to have to embrace AI (and/or build tools that leverage AI) to generate content faster.

 

[GloveSlap]

So studios choose to always open in the most expensive cities in the world, in order to make use of the least productive employees in the world, and then overpay said employees by tens of thousands more than if they had simply opened their studio in a cheaper city, thus saving on overhead from....well.... pretty much every segment of the business imaginable.

In the past it might have been harder to get qualified people to move to smaller cities. These people are desperate for work now though, so i doubt that is true anymore.

 

[Angry_Megalodon]

I like Jason's new idea of explaining more deeply about the game industry than his infrequent rants at Bluesky on the gaming woke vs antiwoke mindless war that has plagued most social media and gaming discourse.

This way everyone from both the sides are coming together to learn something new and cool about our favourite hobby and there's no fighting just curiosity, questions but also peace and happiness.

He's lying through his teeth in this one.

INCOMPETENCY, in capitals, is the big culprit of ballooning budgets in the West. And he knows as well as I do why that happens. The difference is that I dont lie because I dont need to protect anyone's ass.

 

[poodaddy]

$240,000 per year is a comfortable middle-class wage in San Francisco and Seattle?!?!

That's insane! How do people live there that work in bars, shops, hotels etc?

It's also simply not true, and also not our problem. There's nothing saying they can't open AAA studios in cheaper cities; literally all they'd lose are the danger hair weirdos, which are what keeps tanking their sales anyway with their forced messaging and bullshit ideals.

I lived in Seattle for 12 years. I was married. I had a kid. I never once cracked six figures. I purchased property, both rental and residential. I went to college, so did my wife.

If someone tells you that it costs 240k a year to live in Seattle, they're selling you a pile of bull shit, and they're just fucking liars or idiots, and I honestly don't know what's worse.

 

[blacktout]

This popped into my YouTube feed recently and I told YouTube never to recommend his channel.

If I want takes on the business side of the industry, I will stick with someone like Laura Fryer who actually did the hard work of managing teams and shipping projects, or a channel like Nintendo Forecast that is obviously data and analytics driven, rather than this tool whose sole claim to fame is peddling inside information that he gets by jerking off the egos of the least valuable members of development teams.

 

[asdasdasdbb]

$240,000 per year is a comfortable middle-class wage in San Francisco and Seattle?!?!

That's insane! How do people live there that work in bars, shops, hotels etc?

The cost of the employee is more than just the salary, you know.

 

[dDoc]

Not watching the vid just browsed quickly the summary.

Why do they spend so much on marketing? If a game is really good, word of mouth alone should push sales up.

Why do they spend so much on DEI shite? Cause they want kickbacks? Is it worth it compromising your game for a flat DEI sum?

While high salaries are definitely a huge cost, these highly paid suits should be able to navigate these issues, but alas it seems that they do not.

 

[spons]

Because people are paid too much for this shit, especially in certain regions of the US. $142,000 on average per year is fucking insane.
Move development out of there to Europe or East-Asia and most of the problem is solved without losing a bit of quality.
In fact, when also considering the political situation, it would be a net positive in almost every regard.

 

[Deficit]

Spoiler: Summary

Video Game Budgets Explained — Why AAA Games Now Cost $300M–$500M+

---

Core Thesis

The speaker argues that most discussions around game budgets completely miss the real reason costs have exploded.

When people hear:

• Concord cost hundreds of millions
• Destiny reportedly cost hundreds of millions
• AAA games now cost $300M–$500M+

they often assume:

• executive greed
• wasteful spending
• excessive marketing
• expensive technology

But the biggest factor is actually much simpler:

People.

Modern game budgets are overwhelmingly:

• salaries
• benefits
• overhead
• employment costs
• office costs tied to employees

In other words:

AAA budgets are largely labor budgets.

---

Games Are Different From Movies

The speaker notes that many people compare games to films.

Movies spend money on:

• actors
• sets
• locations
• equipment
• travel
• production logistics

Games are different.

A game studio mostly spends money on:

• developers
• artists
• animators
• designers
• engineers
• producers
• QA
• support staff

And unlike movies:

Many of those people remain attached to the project for years.

You can't simply bring them in for two weeks and then send them home.

AAA development requires:

• large teams
• long timelines
• continuous staffing

which creates enormous ongoing costs.

---

The "Burn Rate" Concept

The speaker introduces the industry's most important budgeting metric:

Burn Rate

Burn rate =

• cost per employee
• per month

including:

• salary
• benefits
• payroll taxes
• office space
• hardware
• overhead
• miscellaneous support costs

---

Historical Burn Rate

Around 2015:

Average burn rate:

• roughly $10,000 per employee
• per month

Equivalent to:

• about $120,000 annually

including all overhead costs.

---

Example: AAA Game In 2015

Assume:

• 100 employees
• $10,000 monthly burn rate
• 3-year development cycle

Calculation:

$10,000 × 100 employees × 36 months
=
$36 million

A fairly typical AAA budget at the time.

---

What Changed?

Two major things:

1. Salaries Increased

Particularly in:

• Seattle
• Los Angeles
• San Francisco
• Vancouver

---

2. Development Cycles Increased

Games now take:

• longer
• require larger teams
• involve more content
• involve more technical complexity

The combination of:

• more people
• for longer periods

causes budgets to explode.

---

Modern AAA Budget Example

The speaker proposes:

Team Size

• 400 developers

Burn Rate

• $15,000 per month

Development Time

• 5 years

Calculation:

$15,000 × 400 × 60 months
=
$360 million

This is how modern AAA projects reach:

• $300M+
• without any extraordinary waste

Just through staffing costs alone.

---

Why San Francisco Is Even More Expensive

In top-tier tech cities:

Burn rate may approach:

• $20,000+
  per employee
  per month

because studios compete against:

• Meta
• Google
• Anthropic
• Amazon
• Microsoft

for talent.

---

A Common Misunderstanding

Many gamers hear:

"$240,000 per year"

and assume:

"Developers are rich."

The speaker disagrees.

In places like:

• San Francisco
• Seattle

those salaries may simply represent:

• upper-middle-class living
• home ownership
• raising children

rather than extreme wealth.

---

Another AAA Example

Using:

• $20,000 monthly burn rate
• 400 employees
• 4-year development cycle

Calculation:

$20,000 × 400 × 48
=
$384 million

Again:

A nearly $400 million game budget without requiring any unusual spending.

Just labor.

---

The Concord Example

The speaker specifically addresses reactions like:

Their answer:

Stop thinking about:

• genre
• scope
• whether you personally liked the game

Instead think:

Number of People

×

Number of Months

That's where the money goes.

Even if the game is:

• a shooter
• not open world
• not an RPG

large teams over long timelines become enormously expensive.

---

Waste Exists — But Isn't The Main Cause

The speaker acknowledges:

Some studios absolutely have:

• waste
• inefficiency
• bloated pre-production
• management mistakes

Examples include:

• years of prototyping
• direction changes
• excessive iteration

However:

The biggest factor isn't mismanagement.

It's simply:

Rising Costs

combined with

Rising Timelines.

---

Why Outsourcing Keeps Growing

One of the most important sections.

Studios increasingly rely on:

• co-development
• outsourcing
• external support teams

because:

Full-time staffing is so expensive.

Instead of hiring:

• 100 permanent employees

a studio can:

• contract specialists
• scale up temporarily
• scale down afterward

This significantly reduces burn rate exposure.

---

Why More Development Is Moving Overseas

The speaker argues:

This trend is accelerating because:

The burn rate in:

• North America

is dramatically higher than in many other countries.

Lower labor costs abroad mean:

• lower budgets
• less financial risk
• greater flexibility

for publishers.

---

Tax Credits Matter More Than People Realize

Another major factor:

Government incentives.

Example:

Montreal

Tax credits can return:

• 30% or more

of labor costs.

This can reduce budgets by tens of millions of dollars.

Meaning:

Location selection has become a major financial decision.

---

The Billion-Dollar Thought Experiment

The speaker then pushes the numbers to the extreme.

Assume:

• 1,000 employees
• $20,000 monthly burn rate
• 5-year development cycle

Calculation:

$20,000 × 1,000 × 60

=

$1.2 billion

The point isn't that every game costs this much.

The point is:

The math itself makes billion-dollar development theoretically possible if team size and timelines continue growing.

---

Why Layoffs Keep Happening

One of the biggest implications:

If a project costs:

• $300M
• $400M
• $500M

then financial failure becomes catastrophic.

This explains why publishers increasingly:

• cut staff
• close studios
• reduce risk
• pursue outsourcing
• seek tax incentives

because budgets have reached levels where:
a single commercial failure can be devastating.

---

The Speaker's Main Criticism Of Internet Discourse

The speaker argues that online discussions often simplify everything into:

• greedy executives
• lazy developers
• incompetent managers

while ignoring the structural economic reality.

Their position:

Those things can sometimes be true.

But the bigger story is:

• salaries rising
• inflation rising
• development cycles growing
• team sizes growing
• production complexity increasing

All simultaneously.

---

Final Takeaway

The speaker's core message is:

When you see reports that a AAA game cost:

• $250 million
• $350 million
• $500 million

don't immediately assume:

• corruption
• executive excess
• runaway spending

Instead ask:

How many people worked on it?

For how many years?

Because modern AAA budgets are increasingly driven by one simple equation:

Burn Rate × Team Size × Development Time

And as:

• salaries rise
• teams grow
• timelines expand

AAA budgets naturally climb into the hundreds of millions of dollars—even before marketing enters the picture.

Dude is ZESTY.

 

[Plague Doctor]

Damn shame I almost never touch AAA Western Games considering how much they cost to make em there and pay all those people.

I am totally part of the problem and, I suppose, actively participating in their collapse.

Damn shame about that.

 

[Insane Metal]

This is absolutely INSANE. Those costs are totally out of the realm of acceptable.

 

[calico]

As if the US still makes games.

 

[HeisenbergFX4]

It's also simply not true, and also not our problem. There's nothing saying they can't open AAA studios in cheaper cities; literally all they'd lose are the danger hair weirdos, which are what keeps tanking their sales anyway with their forced messaging and bullshit ideals.

I lived in Seattle for 12 years. I was married. I had a kid. I never once cracked six figures. I purchased property, both rental and residential. I went to college, so did my wife.

If someone tells you that it costs 240k a year to live in Seattle, they're selling you a pile of bull shit, and they're just fucking liars or idiots, and I honestly don't know what's worse.

I have a couple of friends living there that I have visited a few times and finding a home there for their family for underthing under half a million that is livable was insanely hard for them

Just a quick look online to check home prices and this was the cheapest 3 bed 2 bath home in the area for $550k

 

[ReBurn]

I have a couple of friends living there that I have visited a few times and finding a home there for their family for underthing under half a million that is livable was insanely hard for them

Just a quick look online to check home prices and this was the cheapest 3 bed 2 bath home in the area for $550k

Rustic villa.

 

[StereoVsn]

$240,000 per year is a comfortable middle-class wage in San Francisco and Seattle?!?!

That's insane! How do people live there that work in bars, shops, hotels etc?

It's rough. SF (and most of CA) and Washington cost of living is insane.

A tiny apartment in SF is like $5K.

 

[HeisenbergFX4]

Rustic villa.

Make it your own, once you lit it ablaze and start over

 

[RCX]

Overpaying people to make absolute shit.

AAA is anything but.

 

[ungalo]

That was very obvious honestly. People didn't know that ?

That's why Poland became big in gaming. And now China. Cost of labor.

 

[Dr Bass]

So studios choose to always open in the most expensive cities in the world, in order to make use of the least productive employees in the world, and then overpay said employees by tens of thousands more than if they had simply opened their studio in a cheaper city, thus saving on overhead from....well.... pretty much every segment of the business imaginable.

Stupid opinion. The most expensive cities typically have the best talent. All of the hot startups are in Silicon Valley for a reason. The best CS students go to Stanford for a reason. You have no idea what you're talking about.

Don't you think if someone could open a studio in a cheaper area and be wildly successful they would? It's amazing to me, some of the opinions I see from people who clearly have zero experience in said area but think they are experts.

 

[bitbydeath]

So why do Nintendo make the most expensive games in the world and largely work out of Japan?

 

[An Corp]

This popped into my YouTube feed recently and I told YouTube never to recommend his channel.

If I want takes on the business side of the industry, I will stick with someone like Laura Fryer who actually did the hard work of managing teams and shipping projects, or a channel like Nintendo Forecast that is obviously data and analytics driven, rather than this tool whose sole claim to fame is peddling inside information that he gets by jerking off the egos of the least valuable members of development teams.

100%. This dude isn't the one to listen to. Laura put in the work and understands the industry.

 

[Nevermore74]

Start outsourcing to China or eastern Europe, they can do more with less. Get rid of DEI departments and stop using consultants that add nothing to game quality.

 

[spons]

So why do Nintendo make the most expensive games in the world and largely work out of Japan?

Expensive how? Price of product or expensive to develop? Because I would need some numbers for the latter here.

 

[RedC]

So why do Nintendo make the most expensive games in the world and largely work out of Japan?

That premise is wrong, though.

Nintendo does not make the most expensive games in the world. They make some of the most valuable games in the world. Huge difference.

Nintendo's games are expensive to buy because they hold their price forever, sell for years, and Nintendo almost never trains its audience to wait for a $9.99 fire sale. That is not the same thing as having the highest production budgets.

The actual "most expensive games" conversation is dominated by stuff like Call of Duty, Cyberpunk 2077, GTA, Red Dead Redemption 2, major Sony first-party productions, huge live-service projects, and long-running online games. For example, Activision court-related disclosures put Call of Duty: Black Ops Cold War at around $700 million across its lifecycle, with other recent COD entries reportedly hundreds of millions as well.

Sony's accidentally revealed numbers also showed The Last of Us Part II at about $220 million and Horizon Forbidden West at about $212 million in development budget alone, before substantial marketing.

Nintendo, meanwhile, reports company-wide R&D, not neat public "this specific Zelda cost X" numbers. Their FY2026 financial material listed 177.8 billion yen in R&D expenses and 144.6 billion yen in advertising expenses, but that is for the whole company, including hardware/platform work, not proof that individual Nintendo games are the most expensive in the world.

Nintendo's model is basically the opposite of the Western AAA arms race. They are not usually chasing photorealistic 4K asset bloat, Hollywood-style cinematic production, gigantic voice/mocap pipelines, or "prestige TV with gameplay" production values. They get premium results through art direction, polish, mechanics, strong IP, controlled scope, reusable tech, and games that keep selling for an entire generation.

So Japan is not the magic reason Nintendo succeeds. Nintendo succeeds because their production model is disciplined.

They sell premium-priced software, on controlled hardware, with evergreen IP, strong margins, and long-tail sales. That makes their games some of the most profitable in the world.

But "most profitable" and "most expensive to make" are not the same thing.

 

[Topher]

Moving all these studios out of California, where the cost of living is absolutely absurd, would be a good start.

 

[The Mad Draklor]

He's still unwilling to address the elephant in the room: consultants and consultancy fees.

Plus the hyperfixation on DEI/ESG/BRIDGE.

 

[spons]

Moving all these studios out of California, where the cost of living is absolutely absurd, would be a good start.

Sony doesn't have the balls to cut off Naughty Dog and Santa Monica Studio.

 

[IDKFA]

It's rough. SF (and most of CA) and Washington cost of living is insane.

A tiny apartment in SF is like $5K.

5K a month? WTF?!

 

[Generic]

It's because of graphix. 30 years ago a corridor in a 3D game was just 4 flat textures.

Some people don't want to admit this because it ruins their fantasies of videogames pushing for better and better visuals. They can, at the cost of 300 millions budget and 6 years of development.

 

[TheAnt]

Pretty much.

I do think devs are going to have to embrace AI (and/or build tools that leverage AI) to generate content faster.

This is 100% already happening.

 

[RedC]

Moving all these studios out of California, where the cost of living is absolutely absurd, would be a good start.

If a publisher moves the studio out of California but keeps the same bloated AAA model, you still have a problem. You still have 5-to-7-year timelines, giant teams, endless reworks, massive outsourcing pipelines, huge QA and localization costs, expensive cinematics, online infrastructure, marketing budgets, and executives chasing games that need to sell 10 million copies just to be considered a win.

That is how you end up with the modern AAA monster.

So moving out of California helps. No argument there.

But the bigger fix is moving away from the idea that every major game needs to be a $300 million, 2,000-person, photorealistic, live-service-adjacent, cinematic mega-production.

 

[StereoVsn]

5K a month? WTF?!

It's pretty damn stupid and close to Manhattan levels now.

 

[bitbydeath]

Expensive how? Price of product or expensive to develop? Because I would need some numbers for the latter here.

They cost the most to buy.
$80 vs everyone else @ $70

 

[Generic]

Because people are paid too much for this shit, especially in certain regions of the US. $142,000 on average per year is fucking insane.
Move development out of there to Europe or East-Asia and most of the problem is solved without losing a bit of quality.
In fact, when also considering the political situation, it would be a net positive in almost every regard.

Europe is just as if not more expensive because of the euro.

 

[Generic]

If a publisher moves the studio out of California but keeps the same bloated AAA model, you still have a problem. You still have 5-to-7-year timelines, giant teams, endless reworks, massive outsourcing pipelines, huge QA and localization costs, expensive cinematics, online infrastructure, marketing budgets, and executives chasing games that need to sell 10 million copies just to be considered a win.

That is how you end up with the modern AAA monster.

So moving out of California helps. No argument there.

But the bigger fix is moving away from the idea that every major game needs to be a $300 million, 2,000-person, photorealistic, live-service-adjacent, cinematic mega-production.

Ghost of Yoei got a lot of criticism for barely looking better than a PS4 game.

The reason AAA games are "bloated" is because consumers expect mindblowing graphics.

 

[Kamina]

Annual Reminder:
"Schreier" is German and means "Screamer"

 

[BlackTron]

$240,000 per year is a comfortable middle-class wage in San Francisco and Seattle?!?!

That's insane! How do people live there that work in bars, shops, hotels etc?

Burn rate =/= salary, but yea, still insane.

So why do Nintendo make the most expensive games in the world and largely work out of Japan?

Because they love money and are not forced to adapt to anyone else's failing business strategy.

 

[Topher]

If a publisher moves the studio out of California but keeps the same bloated AAA model, you still have a problem. You still have 5-to-7-year timelines, giant teams, endless reworks, massive outsourcing pipelines, huge QA and localization costs, expensive cinematics, online infrastructure, marketing budgets, and executives chasing games that need to sell 10 million copies just to be considered a win.

That is how you end up with the modern AAA monster.

So moving out of California helps. No argument there.

But the bigger fix is moving away from the idea that every major game needs to be a $300 million, 2,000-person, photorealistic, live-service-adjacent, cinematic mega-production.

---

People.

Modern game budgets are overwhelmingly:

• salaries
• benefits
• overhead
• employment costs
• office costs tied to employees

In other words:

AAA budgets are largely labor budgets.

---

That is a location problem more than anything else. The other stuff you mention are certainly factors, but not "bigger" than this.

 

[RedC]

Ghost of Yoei got a lot of criticism for barely looking better than a PS4 game.

The reason AAA games are "bloated" is because consumers expect mindblowing graphics.

Graphics are a huge part of why AAA budgets exploded, but it is not just because "consumers expect mindblowing graphics." It is because publishers trained consumers to expect every major release to be a visual showcase.

That is the arms race they chose.

And yes, Ghost of Yōtei is a good example of the trap. The game can look very good, have strong art direction, better lighting, denser environments, improved animation, better effects, and more polished presentation, and you will still get people saying, "This barely looks better than a PS4 game."

That tells you how warped expectations have become.

At this point, a game can cost a fortune just to look "normal" to people. Not amazing. Not generational. Just normal.

That is the problem.

Thirty years ago, a corridor could be a few flat textures. Now that same corridor might involve high-poly modeling, detailed materials, complex lighting, shadows, physics objects, destruction states, animation, performance testing, multiple display modes, accessibility passes, QA, and optimization across hardware targets. Then players look at it for two seconds and say, "Looks mid."

So yes, the visual arms race is real.

But I still would not put all of it on consumers. Publishers and platform holders wanted this too. They used graphics to sell new hardware. They used cinematic trailers to hype games. They competed on spectacle. They pushed "next gen" as a marketing weapon. Then they acted shocked when players started judging every expensive game by how hard it melts their eyeballs.

So the real issue is a feedback loop.

Consumers expect mindblowing visuals because publishers spent decades telling them that mindblowing visuals are what make a game premium.

Now everyone is stuck with the bill.

 

[HerjansEagleFeeder]

Start outsourcing to China or eastern Europe, they can do more with less. Get rid of DEI departments and stop using consultants that add nothing to game quality.

Start selling home consoles that are crippled and limited to 1080p 60fps output at the hardware / OS level. Disable everything that could allow for the use of RT, PT etc. to artificially keep development costs down. Target development times of 3 years max. Sell the thing so cheap everyone buys one or two for christmas. Get rid of expensive services and sell a fundamentally barebones, offline first console with finished games on physical media. Get people to buy your shit so that publishers become interested. Save the industry by going backwards.

 

[LiquidMetal14]

I think we can all admit and see that the quality of worker has clearly gone downhill yet they expect more money to push worst games onto us.

Now there is long-term employees that have been in places like blizzard or Sony for 25 years or more. Naturally you would expect those people to progress naturally. But then you hire people and then they get more entitled and you give them more money to produce worse games or more woke and ideologically driven games versus just making games like they used to without any particular agenda.

So yes, the people that are employed now and starting reap the benefits of people that literally have to kill themselves for only a fraction of the money these people make now. It's like wrestling, they used to go around 300 days a year and now they barely do any of that and get paid significantly more. It's unbalanced. That's why I don't mind the studio closing or attrition because there's really just too much blow and the games are frankly driven to cost too much with labor that isn't as good and also wants to work at home about getting paid a lot more than people that worked harder than them years ago.

Sorry but that's the hard truth and that doesn't mean no good games can come out of today's climate but I am firm on that belief and the results speak for it with the types of games we're getting today.