Hi,

Quote:Original post by ForeverSilence
I have another question though, I don't understand why it costs so much to make a game. I've been trying to do research to find out everything, since i am just a beginner. But apparently I can't find out why it costs so much to develop a game, (maybe there is some sort of logical answer that I don't see) but where does the money usually go to for the game development part? (sorry for asking such amateur questions)

The reason costs are so high is because of time, and the number of staff required to make AAA titles. I am aware of teams of 100+ (peak - profile follows skewed bell-like curve) that work for several years to produce hit titles. Just paying these staff for their time is a massive cost - excluding middleware/SDK licences, outsourcing, building, development machines etc.

Cheers,
dhm

I must point out a few errors on your pricing. $7mil is not your average AAA game. I would say more along the lines of $3-4mil is quite sufficiant for the development of a game. That is to say that there are upfront costs that can be reused from title to title. And if he was going for a more budget title, it will be ALOT less. While the costs of your employee ranges were right, if not a bit lower then usual, A building to house those people will NOT run you $350,000 unless your in a prime location. I know office buildings where im at that can easily house 100 employees for no more then 8k a month, which includes all their utilities. Also, they dont have to go unreal 3, and could pick another suitable engine or develop for say... the XNA platform.

If hes going to op for a A or AA game, where its only going to take 4-5 people a year, and they are willing to work for $45k a year, lowkey management... your looking at a few houndred grand tops. And im not talking about a budget title either.

I know quite a few games that proclaim to be under the $5mil mark, INCLUDING the licensing of IP which costs them $1mil. And these were retail console games. We arnt assuming halflife2, doom, final fantasy, or any of the super-game expenses.

Quote:Original post by ForeverSilence
My friend and I want to start our own game making company, but we didn't make our first game yet, and actually we're still learning like the basics of game making. But should we first make our first game, and then create our game company, and find a publisher/investor or should we first create our game company, and find a publisher/investor and then after getting the money, make our first game?

Your first game is not going to be published by anybody notable. The sooner you disabuse yourself of that notion, the easier it becomes to come up with a sensible business plan.

• First, gain competence: learn to make games, complete games, distribute your games independently.



• Second, build a plan and enterprise to capitalize on that competence. Register a company, secure some initial funding (your own money, plus probably loans from friends and family) to found your startup, hire core employees and start building the game.



• Third, secure financing/publishing. Get your game playable as soon as possible and prepare some high-res, glossy and glitzy promo materials with which you will pitch various publishers/distributors. Make sure you hire legal representation for the negotiations! Secure funding that guarantees you can complete the game and keep running the company until royalties come in.



• Fourth, reinvest and grow. It's going to take a few cycles to reach the point at which your company is significantly buoyant, unless your first game is a smash hit - which you shouldn't plan on! Reinvest in your company judiciously, and look for opportunities to expand, whether by taking on some outsourcing work for other companies, doing ports to handheld platforms, etc. Constantly expand your company's competencies and seek to move to higher margin and better marketed areas in the industry. (Right now, that's the console space, but Microsoft alleges it is seeking to boost PC gaming, and I've started seeing "Games for Windows" branding and ads. Keep your ears to the ground.)

Have modest expectations and a contingency plan for the worst. Then, if the best happens to you, it's all gravy. Good luck.

Quote:Original post by PaulCesar
I must point out a few errors on your pricing. $7mil is not your average AAA game.

You're right - these days, $10 million is about the minimum, and that's pretty bare bones.

Whenever you work on anything with another person that you hope to make money with, always take care of the financial/ownership issues first.

Let's say you guys work together and put together some neat concepts. They might involve coding, characters, game concepts, anything. But nothing really comes of it and you go your separate ways. A couple years later, you create a game using some of those concepts and start making money. Does your friend get some of it? How much?

I guarantee your lawyer and his lawyer will have much different opinions.

-Dan Verssen
www.dvg.com