A breakdown on company expenses when making games
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Posted 22 November 2012 - 02:25 AM
Now I understand every company is different, but I feel theres a pattern in expenses that sadly I just cant see. Are there any example or pie charts of real expenses companies have made producing a game. I just want to know the % amount spent on advertisement and if that is typically the 'primary' expense, it doesnt have to be actual amounts either.
Thanks in advance
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Posted 22 November 2012 - 02:46 AM
The developer doesn't spend any money on advertising.
A publisher wants to make a game, they approach several developers. The developers "bid"/"pitch" for the job of making it, by preparing some demo material and a production schedule with costs. The publisher picks the cheapest one, and starts paying for it in instalments (milestones).
Meanwhile the publisher is also planning their marketing / advertising campaigns. They'll probably spend an equal amount of money on advertising as development. Possibly more on advertising, because it's what actually makes them money
Edited by Hodgman, 22 November 2012 - 02:47 AM.
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Posted 22 November 2012 - 02:57 AM
Software development costs are usually less than 1/3 of the total costs.
I just want to know the % amount spent on advertisement and if that is typically the 'primary' expense, it doesnt have to be actual amounts either.
As you pointed out, advertising is probably the biggest single expense. In one game we had a $2M development fund, and I learned they spent $3.5M on advertising.
I've seen similar ratios on expensive games, with development costs in the tens of millions and non-development costs about 2x more than that. A global advertising blitz in game magazines, web banners, in-store displays, promotions, and so on gets expensive very quickly. Just getting in-store product placement can cost millions by itself.
In the grand scheme of business, writing software is the easy part. Making it profitable is difficult.
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Posted 22 November 2012 - 11:54 AM
Do the development team cover server purchases / renting, like say if it were an online game, not the software used on it but the actual hardware etc?
If the developer is self-publishing the game, yes. If there's a publisher involved, then the publisher likely has an infrastructure in place for hosting their games.
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