Are Game Development Costs Set to Spiral out of Control?

Last week we learned via a Eurogamer interview, that 2013’s Tomb Raider reboot only started to make a profit nine months after its March release date, despite selling 3.4 million copies in its first three weeks. If it takes that long for a game that good that sold that well to actually make money, how long can companies afford to make similar blockbuster big-budget games?

Tomb Raider’s budget was reportedly around £60 million ($100 million), which is probably why Square Enix set their sales targets so high (5 million units) in the first month,  which would have seem them move into the black straight away.

With Tomb Raider on the PS3, 360 and PC platforms being available for a tenner or less nowadays, I can now see why Square Enix are throwing such weight behind the upcoming PS4 and Xbox One versions and why they can’t really afford to charge any less than they are. Not that savvy shoppers can’t shop around to avoid the £50 RRP and pre-order it for about £38. Despite my earlier reservations, maybe some of these next-gen re-releases aren’t such as bad idea if they’re going to keep these companies going. Not that I’m ever going to pay £50 for one.

Are Game Development Costs Set to Spiral out of Control?

But what about brand new games or IPs that we hope to have dropping our jaws on the PS4 and Xbox one over the next few years? As the costs to make a game get closer to those of producing a film (GTA V reportedly cost at least £100 million), it’s going to get harder to turn them into profitable properties.

With the technological leaps we see with each console generation, there’s usually a steep rise in development costs, especially in titles that aim for higher graphical fidelity and scope. So when our favourite franchises that were already mind-blowing in their day last-gen -the GTAs, Gears of Wars and Uncharteds to name a few- make their inevitable march towards the new dawn of consoles, we can expect their budgets to soar too. The one respite that developers could take solace in is that dev time may be reduced thanks to the internal architecture of the new console closer resembling that of a PC, meaning the learning curve is less imposing and time-consuming to climb.

Other costs that can raid a game’s budget include pricey license acquisitions for film tie-ins or official sports league endorsements. It wouldn’t be too hard to imagine that EA spend more on buying up the top football league rights than actually developing FIFA each year. Doing so has allowed them to batter Konami’s Pro Evo into submission for the entirety of last gen in terms of sales and (unlike the PS2-era) critical acclaim too.

Are Game Development Costs Set to Spiral out of Control?

As graphics move closer to providing near photo-realistic representations of actors, we can expect more big names to be drawn to video game roles. Willem Dafoe and Ellen Page’s involvement with Beyond: Two Souls saw Quantic Dream give character models a significant boost up the Promised Land that is the Eastern side of the Uncanny Valley. But as these big names come in, so will their obscene wage demands.

Another key cost must also be taken into account when we look at how much a publisher spends before they can hope to see a return and that is marketing. These costs can be so high, that even the biggest companies can be wary of releasing a game if they think it will cost too much to market to recoup their money, regardless of the fact that a game may be almost finished and had millions spent on development already. This is exactly what happened when Activision dumped True Crime: Hong Kong, as they didn’t believe it would make any money. Of course, we all know that since then, Square Enix picked up the game, gave it a few healthy meals and released it as Sleeping Dogs to critical acclaim and sales of 1.75 million in its first few weeks. For all we know though, it may not have been quite the fairy tale ending it sounds like as Square may not have made that much out of it as their target sales (to recover their costs?) lay around 2.5 million. At least they’ve spotted the potential though and greenlit a sequel.

So how can these soaring costs be handled? As with any business, better planning is always going to prove essential. Take Borderlands, how much sooner would that have made money if they’d gone with the cel-shaded design from the start rather than work on the game for years before realising it looked like every other dull sci-fi shooter out there?

Are Game Development Costs Set to Spiral out of Control?

Publishers shouldn’t rush out a product to save money though. Last gen we saw way too many games patched after release because they hadn’t been tested enough or even finished. Releasing these technically shoddy products could send consumers elsewhere. Skyrim was a sales success but it was an absolute dog (especially on consoles) for months with technical issue making the game unplayable. Not exactly the best way to get players to stump up extra cash for DLC expansions, especially when Bethesda admitted the PS3 versions were delayed because they couldn’t get them running properly. It’ll certainly mean this writer waits for the reviews before pre-ordering any future Bethesda titles.

Gamers are keen to vocalise their feeling around DLC gouging for the likes of expensive extra multiplayer maps (hello, Call of Duty), or the missing content of Dead Space 3 (would sir like to pay for the ending?). It can be done well though, 2K’s large push for extra expansion packs for the Borderlands games has widely been well received as decent value for money and seems like a better way to bring in vital revenue without gouging your fans. EA haven’t the best track record, but ditching the Online Pass was a great move as they put a larger focus on building additional content like FIFA’s Ultimate Team mode (an optional footy sticker collecting-style team builder) to make some extra cash to counter the losses made by players picking up pre-owned copies of their games.

Most large publisher firms have dedicated teams working on mobile titles, which -love them or loathe them- are an excellent way to bring in extra revenue with the ever-increasing market for mobile and tablet titles and should certainly be pursued further. Mobile gaming shouldn’t be seen as a threat to big budget or blockbuster titles, but as a way of funding them. After all, wouldn’t you rather pay Ubisoft or EA for the latest match-3 game than actual bastards like King?

Are Game Development Costs Set to Spiral out of Control?

We’re very early into the new generation of consoles and most games only appear to have slight graphical improvements over their last-gen counterparts, but within a few years, you know that gamers will be demanding vast improvements. They too are expecting a return on their investments after paying hundreds for a new console.

It’s a worrying thought that the gaming industry may be facing serious struggles in the next few years. Can the industry afford to invest so heavily to satiate our need for new experiences or graphics that continue to threaten the best productions of Hollywood CGI teams? Or as costs rise will we see fewer releases pushing the envelope? Surely, the industry would stagnate if only the giants of EA, Ubisoft, Sony or Microsoft) could afford to take the risk. Here’s to hoping that this horrible premonition never becomes a reality.

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