Interesting article on the economics of game design

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What's killing the video game business? Hint: It's not the economy

Quote:
At a conference in the spring of 2006, then-Midway developer Cyrus Lum sounded the warning, telling his audience that game development budgets could rise as high as $15 million to $25 million for a single title—previously unheard-of averages. "We need to rethink how we're financing games," Lum concluded.

When a newspaper quoted this frightening view, Lum found himself in hot water with his employer for making such sensationalist comments. It turned out that Lum's prediction was too low: Midway would go on to spend between $40 million and $50 million developing This Is Vegas, an action title set for release in late 2009.


An interesting piece about the structure of the industry. The author's advice is to adopt a "Hollywood" model of a floating workforce (to reduce overhead) and more reliance on cheap, low-cost games like Portal rather than incredibly expensive extravaganzas like Grand Theft Auto.

Worth a peek.
bratboy so sorry I schooled you
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Something's killing the video game business?
GTA IV has sold 8.5 million units

Average price of new video games today is what, 50?

So they've made 425000000$
bratboy wrote:
Something's killing the video game business?

Well, executives are no longer running around with their fingers in their ears screaming "we're recession proof! we're recession proof!" like they were just right before Christmas.

FWIW, while ridiculous budgets for AAA titles will still exist for some time, I think those companies that realize that it's their own platform they should be promoting and not the console for a one-time entry fee for their title are the ones that will healthily survive out there.

Rock Band, for example, is a game, but I don't consider it to be a software-based game in the traditional sense. It's a platform for doing something. You put in an initial amount, and instead of going out and buying all of the competitor's products to complement it, you make a microtransaction in the form of a song or song pack or album, you've instantly added replayability without having to rebuy everything.

Same goes for something like Burnout: Paradise. Some paid $60 when it launched, and all the content they worked on for it made it worth that price. But now it's a year later, and instead of working on another project that wouldn't get released for a year beyond that, they're focusing on downloadable content this year and selling the game for less than what they sold it for for the recoup earlier. Because they're selling at a 1/3d of the price and now selling some premium DLC to add value and entertainment further to the game, they're getting the most out of the engine and initial design elements that they had already spent millions on. And since it's being delivered as DLC over MS or Sony's networks, there's no packaging costs. No manual print costs. No cost of delivery to stores. MS and Sony get a smaller percentage than they would through the licensing, meaning that Criterion selling all the downloadable content this year will probably make them money pound for pound than with their original launch.

Halo 3? Game is a year and 3 months old and people are still playing it. It's partially because every six months or so they have a new map pack that adds hours of gametime to the multiplayer. There's even a map pack slated for the game's two year anniversary. That's some staying power.

Further, in order to satiate people inbetween releases, they release map creation tools with the game so that the laborious task can be handed off to the userbase. A high initial development cost in time and money spent initially that can guarantee that people will hang around to see what you and they can add to the user experience together.

There's more to it these days than making product, distributing product, consuming product and repeating the process. The process no longer just ends at a predetermined time, it can last as long as your audience will allow it.
Conner Of Gallifrey
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Phydeaux wrote:
Same goes for something like Burnout: Paradise. Some paid $60 when it launched, and all the content they worked on for it made it worth that price. But now it's a year later, and instead of working on another project that wouldn't get released for a year beyond that, they're focusing on downloadable content this year and selling the game for less than what they sold it for for the recoup earlier. Because they're selling at a 1/3d of the price and now selling some premium DLC to add value and entertainment further to the game, they're getting the most out of the engine and initial design elements that they had already spent millions on. And since it's being delivered as DLC over MS or Sony's networks, there's no packaging costs. No manual print costs. No cost of delivery to stores. MS and Sony get a smaller percentage than they would through the licensing, meaning that Criterion selling all the downloadable content this year will probably make them money pound for pound than with their original launch.


FINALLY found a copy of Paradise @ Target - $19.99! Such a steal. :D
I got my copy back last night. Let me know when you want to do some online challenges.
Robert B. Dandy Highwayman
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The floating model and outsource work has already been going on for several years. My friend's game company has splintered off an art division to do just character creation and design for other industry clients.
chikie The same deviled egg
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ukimalefu wrote:
GTA IV has sold 8.5 million units

Average price of new video games today is what, 50?

So they've made 425000000$

fascinating analysis
chikie wrote:
ukimalefu wrote:
GTA IV has sold 8.5 million units

Average price of new video games today is what, 50?

So they've made 425000000$

fascinating analysis

I knew you would come around to seeing things my way
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Interesting article on the economics of game design