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GameShack28

Structure of Development Costs for games

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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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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.

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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.

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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.

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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

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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

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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.

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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.

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