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A breakdown on company expenses when making games


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#1 Memories are Better   Prime Members   -  Reputation: 769

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Posted 22 November 2012 - 02:25 AM

At present I can only assume what a game company would spend money on but with so many expenditures I could be wrong.

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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#2 Hodgman   Moderators   -  Reputation: 30378

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Posted 22 November 2012 - 02:46 AM

In the traditional developer/publisher model:
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 Posted Image

Edited by Hodgman, 22 November 2012 - 02:47 AM.


#3 frob   Moderators   -  Reputation: 21224

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Posted 22 November 2012 - 02:57 AM

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.

Software development costs are usually less than 1/3 of the total costs.

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.
Check out my personal indie blog at bryanwagstaff.com.

#4 Memories are Better   Prime Members   -  Reputation: 769

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Posted 22 November 2012 - 03:05 AM

Cool, thanks for the quick replies.

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?

#5 Tom Sloper   Moderators   -  Reputation: 9864

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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.
-- Tom Sloper
Sloperama Productions
Making games fun and getting them done.
www.sloperama.com

Please do not PM me. My email address is easy to find, but note that I do not give private advice.




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