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Structure of Development Costs for games


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#1 GameShack28   Members   -  Reputation: 103

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Posted 23 January 2014 - 02:03 PM

Hello,

I have one simple question, hopefully someone can help me out with a answer :)

I'm wondering all the time when i'm reading about developing costs for games, what excatly is so expenisve in developing games ???

Sometimes i read about good games but not really pro games like from EA or Ubisoft or whatever which has cost one or two million dollars to develop....

 

I understand that you need some good hardewear... sure... some expenisve software like 3Ds max or Maya and match more.... But isn't the biggest part of the costs the manpower ? like the coder, the graphicer... the 3d artist etc.... ????

 

would be nice if someone can explain me the cost structure, to light up my missing knowledge in subject of game development :)

 

regards

GameShack28



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#2 C0lumbo   Crossbones+   -  Reputation: 2500

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Posted 23 January 2014 - 03:56 PM

If you're trying to do back-of-the-envelope calculations, then you can do a lot worse than calculate one man-month as $10000 (http://www.altdevblogaday.com/2011/11/13/10000-is-the-magic-number/). This (in theory) covers the cost of hardware, software, wages, taxes, office rent, insurance, utilties, pensions, etc.

 

So if you hear of a game that cost $1000000 and was developed over the course of 10 months, then you can guestimate that the team size was about 10 people.

 

Of course, when you're doing it as an indie, you're going to be cutting out as many of those costs as possible, and $1000000 seems like an impossibly huge budget, but then you're probably using free software, working from home, not paying yourself a proper salary/pension, etc.



#3 Hodgman   Moderators   -  Reputation: 31920

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Posted 23 January 2014 - 04:01 PM

Isn't the biggest part of the costs the manpower ? like the coder, the graphicer... the 3d artist etc.... ????

Let's say that the average salary for one of those talented people is $80000 per year. Let's say you need 25 of them for one year (that's a reasonable budget for a small console game).
 
That's already $2M just by itself, not including all the other expenses (business costs, office space, utilities, hardware, software, legals, tax, marketing, travel, etc, etc).

(Talented) Manpower is expensive.

 

And that figure is also assuming that the developer is making zero profits, and is giving the publisher's money straight to the staff without keeping any for themselves! Keep in mind that many developers/studios do not get any money when you buy their games -- the publisher pays the developer/studio up-front to create the game, and then the publisher keeps all the money that's made from selling the game. In these kinds of arrangements, then the developer/studio of course has to add 10%, 20%, 50%, 200%, etc, onto their initial bill so that they actually make a profit from their work.

 

 

These days, I'd guess that $2M is a very cheap console game, $10M is your average console game, $50M-150M is your big AAA games.



#4 frob   Moderators   -  Reputation: 22779

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Posted 23 January 2014 - 04:25 PM

When looking at bottom line for game studios generally, the cost of a game is typically 3x the development cost. A development cost of $5M needs to recover $15M to start making a profit for the studio.


As was mentioned, for development cost look at the number of main developers, multiply it by $10,000, and multiply again by time. It will be off by some degree but is a reasonable estimate. Count the programmers, artists, modelers, designers, producers, and other major people in the game credits, don't count HR, accounting, legal, or others that support them Multiply as appropriate, for a professional smart phone game it may be $1M, for a budget title it may be $5M, a AAA game it may be $10 or $15M. That only covers development cost.

Then you have marketing, which is usually equal or greater than development cost. A game that costs $5M to develop will probably cost $7M for global marketing.

Then there are other cost, general management of the business, and there are costs of the studio starting from pre-production (before development starts) and manufacturing and shipping and returns and other business expenses. And you need to handle supporting the game when people ask difficult questions about tray holders, finding the 'any' key, and why they can't play the online game when the Internet is down, plus supporting any game servers, and this lasts several years beyond development. Then some money goes to IT and HR and legal and other business processes. Plus some money goes to titles that were pitched and researched but never actually developed. It is usually a bit less than total development costs, and these costs vary based on the company and the risks they are taking at any time.

With marketing being just above the cost of development, and all the other costs being just lower than development, they come together at about 3x the development cost.

Check out my book, Game Development with Unity, aimed at beginners who want to build fun games fast.

Also check out my personal website at bryanwagstaff.com, where I write about assorted stuff.


#5 ambershee   Members   -  Reputation: 528

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Posted 24 January 2014 - 03:40 AM


a AAA game it may be $10 or $15M. That only covers development cost.

 

No chance, not even close - a studio with 150 people, an average salary of $80k, and a 24 month development turnaround costs $24 million in salaries alone. A studio like 343 had around 350 developers at peak on their payroll during the development of Halo 4 and a development time of three years. With the studio based in Seattle and hiring top-tier staff, the average salary probably met $120k - salaries in that peak period would have cost a cool $3.5 million for just one month. If you're averaging just half that number across the entire project, you've spent over $60 million in salaries alone.

 

This doesn't include the enormous cost of their outsourcing operations - Liquid Development, Digital Extremes, Certain Affinity were involved (multiplayer content?). Other listed outsourcers include Axis Animation, Cynergy, Digic, Giant Studios, Pearl Digital, Sequence Group and Technicolor Game-Sound. It doesn't include the cost of running the actual studio, their hardware, software licenses for 350 developers.

 

Then there's the marketing.

 

Do a little research and just think about what was involved, then crunch some numbers. It's pretty mind blowing. I'd say the real world development cost of a game like that could very easily be in the region of $300 million.


Edited by ambershee, 24 January 2014 - 03:40 AM.


#6 GameShack28   Members   -  Reputation: 103

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Posted 24 January 2014 - 01:01 PM

Thaks for your answers guys!

I really didn't know that AAA Games can cost that much money, wow....

But as i thought the biggest part of the costs is the manpower, what is the average cost of one coder or a graphicer for one month?

I guess this value depends extremly on the experience or not  ?

 

What you thinkj would be the developing costs for games like GTA5 or Crysis 3 or a simulation like Sim City 5



#7 frob   Moderators   -  Reputation: 22779

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Posted 24 January 2014 - 01:52 PM

 


a AAA game it may be $10 or $15M. That only covers development cost.

 

No chance, not even close - a studio with 150 people, an average salary of $80k, and a 24 month development turnaround costs $24 million in salaries alone. A studio like 343 had around 350 developers at peak on their payroll during the development of Halo 4 and a development time of three years. With the studio based in Seattle and hiring top-tier staff, the average salary probably met $120k - salaries in that peak period would have cost a cool $3.5 million for just one month. If you're averaging just half that number across the entire project, you've spent over $60 million in salaries alone.

...

Do a little research and just think about what was involved, then crunch some numbers. It's pretty mind blowing. I'd say the real world development cost of a game like that could very easily be in the region of $300 million.

 

 

Having been a professional developer for about two decades, I've crunched the numbers quite a few times, thank you. 

 

While AAA games do include radically new designs, new engines, targeting new hardware, and sometimes taking three years and many hundred people, that situation is the exception. And it certainly does not reach the $300M range.

 

Most AAA games are incremental releases. They rely heavily on existing technology and can have development teams in the 20 person range with just a few months of development time. They can also have larger teams of 50, 100, or more people, and can last a year, two years, or rarely three years. For AAA game a development budget of $10 to $15 million is fairly common. 

 

Your estimate of $60M is interesting.  That was approximately the cost to develop World of Warcraft. (Various official sources have stated different numbers, most between $40M and $60M) WoW was one of the largest video game budgets at the time. A few of the more recent MMOs have begun to reach the $100M mark, but these are the largest and riskiest creations in the industry.


Check out my book, Game Development with Unity, aimed at beginners who want to build fun games fast.

Also check out my personal website at bryanwagstaff.com, where I write about assorted stuff.


#8 GameShack28   Members   -  Reputation: 103

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Posted 24 January 2014 - 03:32 PM

I just found this...

http://www.businessweek.com/articles/2013-09-18/grand-theft-auto-v-is-the-most-expensive-game-ever-and-it-s-almost-obsolete

 

really 150 Millions ? some hollywodd movies with AAA stars even didn't reach this budget..... I mean we are talking about a product which is not really "touchable" it is just virtual... pixels, letters and numbers :)



#9 Tom Sloper   Moderators   -  Reputation: 10163

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Posted 24 January 2014 - 05:47 PM


what is the average cost of one coder or a graphicer for one month?
I guess this value depends extremly on the experience or not ?

 

Yes. Read the Game Industry Salary Survey (you can simply Google it, and if there isn't already a link in this forum's FAQ, I'll add one).

Then again, here:

http://www.gamecareerguide.com/features/1108/game_developer_salary_survey_2012.php


-- 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.

#10 frob   Moderators   -  Reputation: 22779

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Posted 24 January 2014 - 06:59 PM

I just found this...
http://www.businessweek.com/articles/2013-09-18/grand-theft-auto-v-is-the-most-expensive-game-ever-and-it-s-almost-obsolete
 
really 150 Millions ? some hollywodd movies with AAA stars even didn't reach this budget..... I mean we are talking about a product which is not really "touchable" it is just virtual... pixels, letters and numbers :)


GTA V was not your typical game. The original question at the top of the thread was about typical costs of game studios to make games, and where those expenses were.

While many news sources tout that GTA V was probably the most expensive single title so far, it seems nobody has a primary source for the exact costs. I've seen a lot of "as much as", "reportedly", "industry sources say", and other handwaving. I so far have not seen any agency write along the lines: "Rockstar officials gave us these numbers."

Just look at the linked article article, it begins with "reportedly spent $115M" on development (note that it is USD), by linking to an article in The Scotsman which expressed the amount in pounds, who in turn were quoting an article from the Scottish Games Network, who got that estimate after interviewing a writer from another organization, who himself had interviewed people at the company. This is not exactly a primary source nor an affirmed cost.


Also notice that their estimated development cost was roughly $115M, the estimated marketing cost was $150M, support costs are undisclosed, and the game's profit is large. You may recall my posts above where marketing is usually a bit more than development, that support and other costs are generally less than development and are spread over a long time, and the total expense is usually about 3x development cost. The numbers still hold.

Check out my book, Game Development with Unity, aimed at beginners who want to build fun games fast.

Also check out my personal website at bryanwagstaff.com, where I write about assorted stuff.


#11 ambershee   Members   -  Reputation: 528

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Posted 27 January 2014 - 06:31 AM


While AAA games do include radically new designs, new engines, targeting new hardware, and sometimes taking three years and many hundred people, that situation is the exception. And it certainly does not reach the $300M range.


We all know that Halo 4 is right at the top end of the spectrum, but it's for the sake of example - it's the kind of game that can justify that kind of budget, as it doesn't even need to make a profit to be considered successful as far as Microsoft is concerned - it exists to perpetuate a franchise and to sell hardware by proxy. With a large studio located in Seattle (the second most expensive place to operate a studio in the US, with Microsoft's apparent average salary at $107k), with an associated R&D department building a new engine and working close to the hardware, creating a new set of assets (few assets were reused from the previous title) a high volume of content including an excessive outsourcing of material (like the Spartan Ops CGI cutscenes), it's going to be a very expensive operation to run. Let's not forget that development of that game was ongoing at the time of release, and incorporates a fairly heavy online component (servers and additional server side software don't run and maintain themselves, after all).

 

GTA V is another example of a game that could also easily have cost a typical Hollywood movie budget. GTA V is much harder to estimate, as the development of the game is split over a number of different studios (much like how Ubisoft's internal games are handled) - it is probably considerably cheaper simply by virtue of the studio locations themselves, Edinburgh as an example is a fairly cheap location, and browsing software developer job postings rarely sees them leave the range of £20-40k (junior to senior).

 

Thanks to recent law suits, we know that Too Human had a development tag of around $60 million. Skyrim is reported to have cost $85 million, though I don't know how reputable that number is. Thanks to Yerli's comments about Piracy, we now also know that Crysis cost $22 million and Crysis 3 reached at least triple that. Each of the Half-Life Episodes cost around $10 million each, and that relied on a lot of recycling.

 

Games no longer always have a single development cost and a single release now though, in the last five years this has changed dramatically and most games include additional content that may be a part of the initial purchase, and a significant online component - you now need to consider the ongoing development costs of this additional content and functionality as development isn't free after all (Halo 4's Spartan Ops, GTA V's online game and DLC).

 


Most AAA games are incremental releases.

 

Some games are incremental releases, some studios will do this more than others, and rely on their existing assets / pipelines / tools to varying extents. Even when this is the case, production costs can still vary wildly. Using Gears of War as a reference (whose development costs have been made public), the first game and second games were pushed out with a development budget of $10-15 million and teams numbering around thirty, however the third in the series is reported to have cost more than double it's predecessors and lists a considerably larger number of people in it's credits. We also have to remember that this only factors in the internal cost of the game, outsourcing is not included in these numbers though was heavily used, nor the cost of engine, tools and other internal resources such as software is not included in these budgets (already having been facilitated and absorbed by Epic's primary business.

 


have development teams in the 20 person range with just a few months of development time. They can also have larger teams of 50, 100, or more people, and can last a year, two years, or rarely three years. For AAA game a development budget of $10 to $15 million is fairly common.

 

AAA development teams numbering 20-odd people are now rare and an exception rather than a rule - iD might have had between 20 and 30 people on Doom 3, but they had ~75 working on Rage, and the studio now employs around 200 people, although we can only guess what those people are actually doing and responsible for. Studios with that few people in them are likely going to be heavily reliant on outsourcing.

Very few games have 'just a few months of development time'. The only thing I can think of that manages that would be the annually exploited sports franchises (EA, I'm looking at you), where the game hasn't changed much and really is just a minor iteration, or the tiny expansion packs for popular games like the Sims that do very little in reality (EA, I'm looking at you again). Games like those in the Call of Duty franchise still have a turnaround of around 18-24 months, with two studios alternating their main releases, and each maintaining more than one internal project in order to manage their annual releases, and this is a franchise that still very heavily recycles more or less everything. Only Modern Warfare 2's costs have ever found their way into the public domain, and it's reported to be a little under $50 million (with triple that spent on marketing).

 


Your estimate of $60M is interesting. That was approximately the cost to develop World of Warcraft. (Various official sources have stated different numbers, most between $40M and $60M) WoW was one of the largest video game budgets at the time. A few of the more recent MMOs have begun to reach the $100M mark, but these are the largest and riskiest creations in the industry.

 

It's important to remember that World of Warcraft was ten years and two game generations ago now - it's also important to remember that when it released it was a considerably smaller product than it is now. I would be surprised if post-launch development hasn't more than doubled the cost of the initial offering, and maintaining the online infrastructure involved must come with some insane costs. Modern MMOGs will certainly be reaching costs of $100 million by now.

 

The last console title I worked on for a full cycle licensed an engine, maintained a team of around 70 developers over an 18 month period, outsourced heavily and spent a fair bit on external user research, internal QA, motion capture and hardware orientated R&D. We genuinely struggled to ship the product on time and had to crunch heavily for a very extended period of time (which costs a lot in itself!). I'm told the combined development and marketing cost of the title reached nearly $90 million all told.

 

I don't believe that AAA games have had $5 million budgets for nearly a decade, and certainly not towards the end of the previous hardware generation, we won't see it in the current generation. $10 million budgets are where the AAA probably begins for development costs, and it'll explode outwards from there until you reach the $100+ million outliers.






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