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Dynamo_Maestro

A breakdown on company expenses when making games

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Dynamo_Maestro    769
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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Hodgman    51342
[i]In the traditional developer/publisher model:[/i]
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 [img]http://public.gamedev.net//public/style_emoticons/default/unsure.png[/img] Edited by Hodgman

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frob    44976
[quote name='Dynamo_Maestro' timestamp='1353572758' post='5003165']
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.
[/quote]
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.

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Tom Sloper    16063
[quote name='Dynamo_Maestro' timestamp='1353575150' post='5003173']
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?
[/quote]

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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