Extra Credits – Why Do Games Cost So Much To Make?

After running a video about why AAA video games should cost more than $60, something we’ve heard a lot, they followed up with a video about what it costs to make a AAA video game.

This, of course, feeds back on discussion that started back in November around another video that was trying to assess, incorrectly, the cost of making video games.

 

7 thoughts on “Extra Credits – Why Do Games Cost So Much To Make?

  1. Isey

    I still don’t understand what makes a AAA game, how that is defined. Is it by cost? What quality ranking denotes a game officially AAA?

    Good things about business cycles and economics, is that if they aren’t making money (or enough money) they will just stop making them. Seems to be OK for them so far =)

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  2. Wilhelm Arcturus Post author

    @Chordian – I’ve seen those sorts of details before… as actual charts, which are easier to read… to the point that I think he lifted those numbers from the article I am thinking of. The thing is, that is also very much the old console bound model where retail is still the main channel and DLC/Microtransaction/Loot Boxes/whatever aren’t counted. It isn’t invalid, but it also isn’t as spot on as it once was.

    Edit: Here is the chart I was thinking of. Not the exact numbers, but in the same ballpark.

    @Isey – It can feel like circular logic where AAA game cost a lot to make and they are AAA games BECAUSE they cost so much to make. It is one of those things where you sort of know it when you see it. A Battlefield or Call of Duty game, probably AAA. Something Daybreak made, probably not. But I don’t know that there is an iron set of rules that defines AAA that applies in all cases.

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  3. Isey

    Yes, that was kind of my point. The video basically says that big budget games take a big budget to make. With a whole lot of rounding and guessing on where that budget is allocated to.

    And nothing about how big budget games also tend to sell millions of units. For all the disaster around Star Wars Battlefront, still estimated somewhere I read it was still expected to sell 14 million units. That’s close to $400,000,000 in income to the publisher (using the $27 per $60 in that LA times chart)

    The classic “spend money to make money” comes to mind.

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  4. Wilhelm Arcturus Post author

    @Isey – Actually, I believe there is a section where they mention that the rising cost has been offset somewhat by more people buying video games.

    But all of this is really in answer to the question of why you can’t just spend $60 on a game and have it all, but rather have DLC and day one DLC and deluxe editions, and in-game purchases, and lockboxes. And, also, why there are less AAA games being made, or more copies in a successful series, and why some now hang around for years. GTA V was released in 2013 yet is at or near the top of the SuperData charts for consoles.

    As with that chart I linked, I think this applies more to consoles in general, and PlayStation and XBox specifically, than the PC market. The PC market has its own issues with Steam creating a low barrier to entry so that the market being flooded with cheap, low quality junk that nobody buys but which clog up your ability to find anything of quality, something covered by this guy:

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  5. Asmiroth

    RE: Steam.

    Do people forget the days of shareware? Or the horrible 3rd party games on consoles during the 90s/00s? I remember walking into a game store and 90% of what was there was horrible. Even the mobile app stores are full of knockoffs, with no barrier to entry.

    For every FTL or WarFrame, we get a bajillion clickers. Some curation is required, or some amazing PR work.

    The price point has a glass ceiling to get market penetration. The price of making a game is entirely related to the projected revenue. Entirely circular, but that’s exactly how large businesses are run. No project ever gets approved without an ROI evaluation. And the floor, in terms of quality/life expectancy goes up after every successful release. As much as we’d like to simplify it, it’s an art form to figure out those financial inter-dependencies.

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  6. Wilhelm Arcturus Post author

    @Asmiroth – Shareware and mobile app stores are both examples of low barriers to entry allowing crap to accumulate and flood the market. If Steam charged a thousand bucks to put a game in its store the problem would be somewhat alleviated. However, there is an indie community out there that howls to the moon at any barrier to entry even though such a barrier might make quality games easier to find, because everybody thinks their game is special.

    There was never anywhere close to this sort of problem when we went to the store to buy software simply because there was a limited amount of shelf space available. Even Fry’s or Micro Center, which used to pride themselves on getting damn near everything on the shelf, still couldn’t handle a Steam-like explosion of titles, where 25 or more new titles show up EVERY SINGLE DAY.

    That is more than 9,000 new titles a year. And the trend is going up, not down.

    But that is one of those twists of selling online, that shelf space is effectively infinite, especially if you’re selling digital goods. It is why I almost never buy mobile apps, because the amount of apps available is huge, it is tough to tell what is worthwhile, and you can only see a couple of the almost infinite amount of titles on your screen at any given time.

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