Why do games cost so much to make?
Give it up for Jason Schreier!
Jason Schreier recently started a YouTube channel and the first video I’ve seen of his was a banger! It’s linked below and worth a watch, but here are some numbers I learned spun up into examples I care about.
Let’s say you’re a game dev living in the US. You get a job working remote and it pays $100K a year. That’s an incredible gig if your city has low cost of living, pretty mid if it doesn’t. After yearly licensing fees, hardware upgrades and benefits packages, the company is going to spend an extra $20k to keep you working. That’s about $120K a year or $10K a month for your ‘burn rate’.
Your team is 6 other people similar in skill as you and things are expected to take 3 years to launch and you’re guaranteed 6 months to polish/present DLC — that’s 42 months of production cost. Each month is $60K times 42… not bad! Just over $2.5M if all goes according to plan! Not including marketing and taxes, of course. You can probably raise that yourself, right?
If that’s an indie project, let’s move into the AA space. Imagine relocating to a bigger city to join a 50-person development team offering $150K annually and great benefits. Over an anticipated four-year timeline, you’ll be building an support a live service (3 years to make it, 1 to support it — we’ll draft new contracts after that.) At an individual monthly burn rate of $15K, the team costs $750K a month or $9M a year, totaling $36M. Congrats, you might have just made Fall Guys!
Here we go, the big leagues just asked you to join! You’ll earn $200K a year to live in an overpopulated city with a decent commute, working alongside 300 of the brightest minds around. At an individual monthly burn rate of $20K, this massive team costs $6M a month, or $72M a year. Though they estimated a four-year timeline, it has already taken five; let’s call it six years of total production. That is a staggering $432M just to get data on a disk to publish—and that is not even factoring in long-term support or DLC!
In his video, Jason talks about how in some cases these numbers are still low-ball guesses because cost of living in these major cities makes for expensive employees.
What I think is most fascinating is that a smaller game might generate a couple million — which could be tremendous seed money for your next project if you’re a solo dev, or a part of a small team of bedroom coders/artists.
As for the big budgets stuff, we started seeing 6-digit budgets being common in the AAA space around the Xbox 360 era. Famously, 2009’s Modern Warfare 2 by Infinity Ward/Activision cost about $50M to make and another $200M to market! I heard Tim Cain say in one of his videos something like, ‘Whether you like it or not, the correlation between how much a game spend on marketing versus how much revenue it returns line up all too well!’