Reducing game development costs

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Original post by Twigletguy Given that development costs for games have been rising rapidly with each generation, this surely cannot be sustainable for the industry in the long run. How do you see the industry reacting to this? Less AAA titles? More indie titles? DLC?

That's already happening. The problem is, if you want a AAA title on par with the latest blockbuster movies, you gonna need a lot of assets.

And why couldn't it be sustainable? As long as there is a demand for it, and you sell enough to recoup a profit.

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How can we as developers reduce the costs? Better middleware and tools? Procedural generation of assets?

That's already happening as well. Better tools for better productivity, noneless, you still need a lot of people generating the content, the tools, and procedurally generated content is not always a solution.

The thing is, you can only go so far with cost cutting measures, before it starts to fall apart. It's like making movies really. Blockbuster movies ain't getting exactly cheaper, they just get more high-tech.

my 2 cents.

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Given that development costs for games have been rising rapidly with each generation, this surely cannot be sustainable for the industry in the long run. How do you see the industry reacting to this? Less AAA titles? More indie titles? DLC?

More Indie titles. The mainstream market simply costs too much in advertising and publishing costs when it comes to AAA titles. The amount of money the developers receive is tiny compared to the actual makings of the game, simply because of of the developer/publisher relationship.

The biggest change needed is to reduce the publisher control by altering 'how' games get to market. Steam and XBLA are excellent methods in that they empower smaller development studios to get their games to market with proper quality filters in place. I think this model will continue to grow and make up a larger portion of the overall gaming landscape.

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How can we as developers reduce the costs? Better middleware and tools? Procedural generation of assets?

I don't think the developers really have much room to mitigate this since the raw development costs are actually not that bad. Game developers are paid lower than most - if not all - other development jobs of equal skill requirements, and general development tool costs are semi-negligible compared to the other costs. Using cheaper middleware (Ogre instead of Unreal, etc) is possible, but that's usually fixed depending on target audience or platform.

Developers could cut license costs to near or at zero by turning to cheaper/free operating systems or development tools (Blender instead of Maya or 3DMax, Codeblocks or Eclipse instead of Visual Studio), but it'll be moderately hard to find coders or artists who can work well outside their 'bubble' so you'll pay for it in the end. Even if you had a full team of skilled workers, there will be a ramp up time. This is only realistic for non churn-and-burn studios.

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Given that development costs for games have been rising rapidly with each generation, this surely cannot be sustainable for the industry in the long run.

Well from what I hear the cost bubble has already burst over the past 12-24 months.

Only 1% of "boxed product" (i.e. regular retail games) have been selling over 1M copies as of late, so it's definitely not sustainable to be spending so much money on development, unless you're making MW2, etc and you know you're going to be in that 1%. On top of that, only 10% of titles sell over 100K copies, which at AAA budgets is still a borderline financial failure -- a big-budget game wouldn't even make half its money back from this many sales.

The big publishers have responded to this. They've halved the number of games they're funding, and they've halved the budgets for the ones they are funding (except for those projected to be in the 1%).

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How can we as developers reduce the costs? Better middleware and tools? Procedural generation of assets?

The number 1 player that these cut-backs will "attack" is time. You can halve the development costs of any project simply by moving the deadline. When you're the publisher, you can do that -- It doesn't matter if the developer says the deadline is unrealistic, you can just say "I don't care, you'll do it or you won't get paid". So staff are stretched thin, features are cut, assets are reused, work is outsourced to China, iterations are reduced and another piece of shovelware ready to go into the 99% basket is born, for half price... which means you just might have a chance of making that money back in the meagre sales it's going to get.

Another trick is for a publisher to get 3 or more developers working on a new game at the same time, without them knowing about each other. Three months in, you cancel them all except the most promising looking one - that company gets paid to finish the game, the other's get screwed. A few months later they end up in The Daily GameDev.net attributing their failing to their super secret unannounced title which didn't pay off. Projects have a ramp-up time so it's relatively cheap for the publisher to pull these kinds of tricks, while having "insurance" of getting a half-decent game on the deadline they want.

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How do you see the industry reacting to this? Less AAA titles? More indie titles? DLC?

As necreia said above, lots of companies are reacting to this by getting as far away from traditional "boxed product" as they can... however, many companies are still going to be tied to publisher-money to do these smaller games.

So all 3 of your suggestions are correct. There'll still be AAA titles, but these will only be the Hollywood blockbuster sort. Everyone else is scrambling for B-grade contracts, downloadable-whatever, smaller games, add-ons, pay-me-to-customise-your-avatar, etc.

[Edited by - Hodgman on May 10, 2010 9:12:00 AM]

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Original post by Hodgman Quote: Given that development costs for games have been rising rapidly with each generation, this surely cannot be sustainable for the industry in the long run. Well from what I hear the cost bubble has already burst over the past 12-24 months. Only 1% of "boxed product" (i.e. regular retail games) have been selling over 1M copies as of late, so it's definitely not sustainable to be spending so much money on development, unless you're making MW2, etc and you know you're going to be in that 1%. On top of that, only 10% of titles sell over 100K copies, which at AAA budgets is a financial failure -- a lot of games wouldn't even make half their money back from this many sales -- so we can guess that over 90% of traditional games have been financial failures over the past 2 years. The big publishers have responded to this. They've halved the number of games they're funding, and they've halved the budgets for the ones they are funding. Quote: How can we as developers reduce the costs? Better middleware and tools? Procedural generation of assets? The number 1 player that these cut-backs will "attack" is time. You can halve the development costs of any project simply by moving the deadline. When you're the publisher, you can do that -- It doesn't matter if the developer says the deadline is unrealistic, you can just say "I don't care, you'll do it or you won't get paid". So staff are stretched thin, features are cut, assets are reused, work is outsourced to China, iterations are reduced and another piece of shovelware ready to go into the 99% basket is born, for half price... which means you just might have a chance of making that money back in the meagre sales it's going to get.

I wonder where you get those numbers from. Thats not what I see at all, neither on the sales nor on the budgets. A million unit sales is actually becoming pretty average for a boxed release, and I havent seen budgets being cut. You dont see people with a sales pitch and no experience getting millions to make a game anymore. Well, not so often, and thats a good thing. But the average development budget of well-established teams & studios still seems to rise. Over here anyway.

Im talking about the console market, which is where most of the industry releases are...

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Original post by Steadtler I wonder where you get those numbers from.

GDC2010.
I haven't done my own surveying, but vgchartz has a lot of data (example graph). It's a shame you can't restrict their lists to certain release dates though.

Maybe your company is lucky enough to still be in the 10%, or even the 1%? =D

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Original post by Hodgman Quote: Original post by Steadtler I wonder where you get those numbers from. GDC2010. I haven't done my own surveying, but vgchartz has a lot of data (example graph). It's a shame you can't restrict their lists to certain release dates though. Maybe your company is lucky enough to still be in the 10%, or even the 1%? =D

We're doing pretty well I think, thanks for asking :P

I dont think Fracture is representative of the industry in general, but since we're using VGChartz...

If you look at this instead, there is close to a hundred million-sellers titles on the Xbox360 *alone*. Now theres around 600 released titles on the 360, which give us about 17% of released titles have already reached a million copy on the 360.

And thats not even counting total next-gen sales (360+PS3), and recently-released titles that I included in the total and will reach a million copies. If you counted total next-gen sales and only titles released more than 2 months ago, I wouldnt be surprised to see between 25-30 % of boxed titles reached a million sales. Maybe more.

It seems to be that the general feeling is that this is not an issue that can be "solved" by better use of tools or any kind of technological solution, but rather requires a rethinking of the types of games that are being made.

Obviously costs are closely linked to time, and when developing these blockbuster, huge titles, creating that sheer volume of assets is going to take massive man-hours, and hence a lot of money. If it is the case that making this process more efficient isn't enough, then surely the only other option is to reduce the number of assets? ie; changing the design and types of games being made.

Obviously there will always be developers fighting for the lucrative, mainstream, multi-million selling topspot(MW2, Halo, etc), and indie developers can get away with catering to more niche markets given their game's drastically smaller scope and costs. What I'm wondering is what would happen to the "middle-ground" developers and games? Will developing new IP become even riskier? It seems that you have to have a franchise in mind already when developing a new IP, will that only get worse?

Sorry if this is a bit fragmented. Still can't really get my head around what I was actually trying to say.

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Original post by Twigletguy Obviously costs are closely linked to time, and when developing these blockbuster, huge titles, creating that sheer volume of assets is going to take massive man-hours, and hence a lot of money. If it is the case that making this process more efficient isn't enough, then surely the only other option is to reduce the number of assets?

According to EA, 80% of money is spent on marketing. Entire development, idea to gold only accounts for 20% of total cost.

It is not technical part that is the problem.

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What I'm wondering is what would happen to the "middle-ground" developers and games?

Middle-class, in every meaning of the word, is all but dead.

Its been my experience that most projects who fails to make their cost do so because of simple mis-management. I find that in the game industry, the level of applied knowledge in simple software project management to be very, very low. You cannot manage software development like you manage a cardboard factory and expect to be successful, but unfortunatly too many teams are still managed that way. Every experienced developper has his horror stories...

Managers love to talk about "rising costs", but more often than not they are just covering their own failures.

Theres the same problem among game designers. There are methods to properly design games, but most game designers Ive met just make it up as they go. I cherish the few that know what they are doing.

IMO, the first and foremost way to reduce costs in this industry is a healthy dose of professionalism.

[Edited by - Steadtler on May 10, 2010 2:33:14 PM]

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Original post by Antheus According to EA, 80% of money is spent on marketing. Entire development, idea to gold only accounts for 20% of total cost.

I'm sorry but is this really true? Do you have a source on that, because that would be incredible. I know that marketing and general "production" (as distinct from development) costs are expensive but really, 80% of a game's budget?

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Original post by Antheus Quote: What I'm wondering is what would happen to the "middle-ground" developers and games? Middle-class, in every meaning of the word, is all but dead.

I'd say it has been dead, but there's a lot of movement int hat direction with things like Steam, XBLA, PSN, and Wii-ware (if not the Wii itself). I think the middle-ground market just started changing radically and a lot of middle-ground developers couldn't adapt and a lot of start-ups and skilled indies are starting to fill that void.

@OP.

Think of it like movies. As the market grows, costs and budget will grow. That's not a bad thing; it's just an evolution of the market that's being adapted to. The reason people are running into problems is because of poor management and poor forecasting. People expected the video game market to continue to grow through the depression, and that killed a lot of people whose budgets quickly dwindled down to bankruptcy.

I expect that both of these problems will work themselves out in the coming years and we'll see huge increases in game budgets or number of games being made on large budgets.

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Original post by Twigletguy I'm sorry but is this really true? Do you have a source on that, because that would be incredible. I know that marketing and general "production" (as distinct from development) costs are expensive but really, 80% of a game's budget?

MW2. $40-50 mil development, marketing $200 million. EA is the de-facto Big League player.

Other costs. A single L4D marketing campaign cost $10 mil.

There's tons of articles out there.

Now consider that at these prices, the cost of Unreal Engine at ~$500k is just a drop in the bucket, which raises the bar for competition to whole new level, and just means that quality of UE is the zero point, any competitive advantage starts there.

You read numbers like that and it just reinforces the fact that the gaming industry pays way too low in comparison to other industries.

Personally, I think all of this equates to an opening in the market for indie game developers. Low-cost middleware technology is now on the tail of nex-gen and progressing quickly. I think when you pair a high quality rapid-development environment with a talented small development team, much more can be accomplished with much less - which is attractive to some of these sore publishers and allows start-ups to get their feet on the ground.

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Original post by Rydinare You read numbers like that and it just reinforces the fact that the gaming industry pays way too low in comparison to other industries.

I dont follow you. Why would high money spend on advertising means that the game industry pay less than other industries. Advertisement budget has nothing to do with salaries. You think the movie industry doesnt spend on advertising? What was the advertisement budget on Windows 7 ? They spend on advertising because they get a good return. Advertisement works (sadly, people are easy to influence).

Besides, check the latest Game Developper report. The game industry pays really well for -qualified- people. I myself nearly doubled my revenue when I went from programming robots to programming games.

I dont get why so many people in here are trying to downtalk our industry so much.

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Original post by Steadtler Quote: Original post by Rydinare You read numbers like that and it just reinforces the fact that the gaming industry pays way too low in comparison to other industries. I dont follow you. Why would high money spend on advertising means that the game industry pay less than other industries. Advertisement budget has nothing to do with salaries. You think the movie industry doesnt spend on advertising? What was the advertisement budget on Windows 7 ? They spend on advertising because they get a good return. Advertisement works (sadly, people are easy to influence). Besides, check the latest Game Developper report. The game industry pays really well for -qualified- people. I myself nearly doubled my revenue when I went from programming robots to programming games. I dont get why so many people in here are trying to downtalk our industry so much.

Okay, well first, I think you may have read more into my post than what I actually said, so let me elaborate.

I've worked in the gaming industry, so first, I've experienced this before. People are willing to take considerably less to work in a gaming job than other jobs, despite often having more hours. Is this true for every gaming company? Probably not, but has certainly been what I and others have seen.

In my experience, the salary reduction is often anywhere from 10% - 30%. True everywhere? No. But, it is common enough to be noted. This has nothing to do with being qualified, in my experience. Paying well and paying competitively well are two different things. I would say that your success in doubling your salary is not the norm.

As for advertising, it simply follows proportions. If the company is spending only 20% in development, then raising developer salaries 10% is almost negligible. The 10% salary boost would only increase total costs for the project 2%. Simple proportions.

Overall, seeing that so much is being spent on advertising when at many shops, developers are spending most of their lives working through the project and getting paid subpar salaries is kind of disturbing to me.

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Original post by Rydinare Okay, well first, I think you may have read more into my post than what I actually said, so let me elaborate. I've worked in the gaming industry, so first, I've experienced this before. People are willing to take considerably less to work in a gaming job than other jobs, despite often having more hours. Is this true for every gaming company? Probably not, but has certainly been what I and others have seen. In my experience, the salary reduction is often anywhere from 10% - 30%. True everywhere? No. But, it is common enough to be noted. This has nothing to do with being qualified, in my experience. Paying well and paying competitively well are two different things. I would say that your success in doubling your salary is not the norm. As for advertising, it simply follows proportions. If the company is spending only 20% in development, then raising developer salaries 10% is almost negligible. The 10% salary boost would only increase total costs for the project 2%. Simple proportions. Overall, seeing that so much is being spent on advertising when at many shops, developers are spending most of their lives working through the project and getting paid subpar salaries is kind of disturbing to me.

Game studios aren't non-profit organizations. Like any business, they'll try to keep their cost as low as possible. If more money spent on advertising brings more revenue than more money spent on salaries, it make sense to spend more on advertising.

I'ld just like to get rid of the old stigma that "game development pays like crap", which isn't true anymore. Average game programmer salary is 80'000$ US, and its much higher with experience. Average Art&Animation is 71'000$ US for a job that doesnt even require a college degree. I dont know a lot of artists outside of game development that earn those numbers.

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Original post by Steadtler I'ld just like to get rid of the old stigma that "game development pays like crap", which isn't true anymore. Average game programmer salary is 80'000$ US, and its much higher with experience. Average Art&Animation is 71'000$ US for a job that doesnt even require a college degree. I dont know a lot of artists outside of game development that earn those numbers.

Sounds like it's time for me to move to Montreal (or BC for that matter... Ubisoft in Montreal, EA in Vancouver area). [grin]

Not all publishers are willing to throw a 100+ million dollar marketing campaign at a product. MW2 is very much the exception to the norm, there was a segment on GameTrailers which discussed this very issue. From their break down it seems overall most titles spend 30%-40% on marketing (for their total budget calculations), which seems reasonable, compared to the 80% for MW2.

Newer middleware are coming out which are empowering smaller tier developer houses, with technology which only a few years before were well out of their reach.

Intelligent management of your human resources, using experienced people, picking the right middleware, guerrilla/viral marketing and perhaps aggressive out sourcing can significantly reduce game development cost. I've seen bit and pieces done here and there and it does work to reduce the cost, the trick is to do all of those things to reduce cost significantly.

Another way to reduce cost is to amortize technology/people/advertising investment over multiple product cycles or product pipelines, ie (God of War series, Uncharted 1 & 2, Gears of War, Halo, GTA, etc..) But to do that, the game has to be successfully enough to become a franchise.

A newer model is to use DLC, (ie Fallout model) where they don't build a new engine/game each product cycle, but rather build in DLC from the very start and release DLC packs which are significantly less costly to produce (if they build in DLC technology from very start).

-ddn