Yesterday I was in Anaheim giving a talk called “Industry Lifecycles.” It was intended to be a brief summary of the blog post of the same title, with a dash of material from my recent post on game economics.
Now, that latter post resonated quite a lot. There was lengthy discussion on more Internet forums than I can count, but it came accompanied by skepticism regarding the data and conclusions. If you recall, the post was originally replies to various comment threads on different sites, glued together into a sort of Q&A format. It wasn’t based on solid research.
As many pointed out, getting hard data on game costs is difficult. When I did my talk “Moore’s Wall” in 2005, I did some basic research using mostly publicly available data on costs, and extrapolated out an exponential curve for game costs, and warned that the trendlines looked somewhat inescapable to me. But much has changed, not least of which is the advent of at least two whole new business models in the intervening time.
So the Casual Connect talk ended up being an updated Moore’s Wall. Using industry contacts and a bunch of web research, I assembled a data set of over 250 games covering the last several decades. This post is going to show you what I found, and in rather more detail than the talk since the talk was only 25 minutes. (You can follow this link to see the full slides, but this post is really a deeper dive on the same data.)
Each game has a reported development cost which, importantly, excludes marketing spend. So this is mostly the cost of salaries and various forms of overhead such as tools. When costs were reported in currencies other than the dollar (Euro, yen, even zlotys) I went back to the year of release, and converted the cost to a dollar value using the exchange rate prevailing in December of that year. I then took all dollar values and adjusted them for inflation so that we are comparing actual cost in today’s money.
As should be immediately apparent, it’s pretty hard to read the costs, because the vast majority of games cost under $50 million US dollars to make. Outliers are AAA console and PC titles that have enormous budgets, and you have probably heard about them because costs like that tend to make the news.
The chart gets a lot easier to read if you plot it on a log scale; in this chart, each vertical box implies costs going up by a factor of ten.
The trajectory line for AAA games is very clear. You can just eyeball that the slope of the line for console and PC releases goes up 10x every ten years and has since at least 1995 or so, and possibly earlier (data points start getting sparse back there). Remember, this is already adjusted for inflation.
We can also clearly see the appearance of indie games and mobile games on the chart. I have a lot less data points for these, as you can see, and a truly staggering number of them are released with basically no budget whatsoever. But the vast majority of those are also done at a loss; most of the mobile figures come from games that were at least nominally successful.
I took an average of the data per year, but it only tells us so much given that the data is weighted towards AAA games, and they pull up the average so dramatically. So I wouldn’t read too much into this graph except to say that even with the lack of really recent data points and older data points, the line is shockingly straight. I will say that a couple of the recent top of the line mobile games have budgets ranging from $5m to $20m — the bottom end is not as low as people think, when doing “AAA mobile.” Even PC indie games with high polish hit multiple millions.
All in all, given reporting bias (crazy expenses are more fun to talk about), and given that exponential cost differences mean the median or “typical” game is certainly not climbing at the same rate, and given the lack of enough mobile and indie titles in the data set, this average line is certainly over-reporting for games as a whole. You may find that somewhat reassuring, especially if you’re working on a $50m AAA game right now.
On the other hand, this picture is actually far too rosy in another way: it doesn’t include any marketing costs. As a rule of thumb, you can say that an AAA game’s marketing budget is approximately equal to 75-100% of its development cost. So costs of getting an AAA game to a consumer’s hands are actually more like double. In mobile, it’s not uncommon to hear savvy shops set aside three to ten times the development budget for marketing, because the market is that crowded.
Looking closely at the data points, there is rather an upward trend to the mobile titles and the indie titles as well. This isn’t surprising, given that as markets mature production costs tend to go up. But it raises the question as to whether there is some way we can compare apples to apples and see if there are global trends. After all, costs rising is fine if revenue and audience rise to match, right? It all comes out in the wash.
So I went looking for something that would correlate. I expected something like hardware power and capability to introduce “steps” in the graph, for example, and I wasn’t seeing that. Finally, I settled on one simple thing as a proxy: bytes. I went back and for each game, I located the actual install size, space taken up on disk (or on device) after a full install and all sideloaded, streamed, or first day patches were applied.
Needless to say, this also had to be plotted on a log scale, because the earliest games on the chart were only a few K in size, and the latest were many gigabytes. The result was this.
So, needless to say, bytes go up. Surprisingly, they don’t tend to go up in stepwise fashion as platforms are released, even back in the midst of console wars. Early on, carts with extra memory were slipped into production midway through the lifecycles of consoles, and later on, new run-time decompression techniques enabled disks to literally just have more bytes on them. For example, the NXE update to the 360 reduced install sizes using compression techniques by up to 30%. Given the addition of various forms of streaming that aren’t cached, for lots of types of games that require a connection, and it’s likely that the byte count here is, unlike costs, rather under-reported.
Either way, we now have a simple way to baseline. How many dollars does it cost a developer to create a byte? We know what we want to see: costs falling. In my earlier Moore’s Wall talk, I had looked at costs and costs per byte for the window of 1985 to 2005, and had arrived a simple conclusion (one which I repeated in several later talks such as “Age of the Dinosaurs”): game size went up by 122 times, costs rose by 22x, and therefore we got six times more efficient at creating content.
So here is the simple division of dollars and bytes, on a log scale.
Suddenly what become apparent is that there’s about 10x variability in costs within a given year, most of the time. Looking at the specific data points, I can tell you that most of this can be chalked up to whether the game is content-driven or system-driven. A story-based game, an RPG, something with tons of assets, will just naturally have a higher cost. There are also some famously troubled productions on in the data set; no surprise that they tend to sit towards the upper end of the range for their respective years.
The real eye-opener is that the $5m indie mobile title and the giant $100 million AAA cross-platform extravaganza cost the same to make in terms of megabytes. (They were actually off by only 3/1000’s of a penny). That’s likely because salaries are salaries, and don’t move that much when you change segments within the industry.
More troubling to me was that eyeballing the average cost per byte, it looks like we have plateaued.
Unreal Engine 3 and Unity both launched in the 2004-5 window. I would have expected these two amazing toolchains to have hugely helped the cost per byte. Instead, it kind of looks like it went flat.
It raises the disturbing possibility that maybe standardizing on these two engines has actually blocked faster innovation on techniques that reduce cost. I don’t know what else might be contributing to the flattening of the curve. Maybe the fact that Unity and Unreal are designed around static content pipelines, and don’t do a lot more with procedural content affects this? Maybe this is actually the good result, and costs were going to boomerang back up? There’s no way to know. I even unrolled the yearly average and simply sorted the games by release year to see if I was seeing things, and if anything it looks flatter because it reduces the impact of those outliers.
Data complexity in games is a real thing, and it is something that players, I think, routinely hugely underestimate. This post by Steve Theodore on Quora is illustrative. In it he shows a 1997 character that took ten working days, then one from ten years later that took 35. His estimate for a character today is a hundred days. What used to be one 256×256 texture is now authored as many 4096×4096 textures, for specular maps, bump maps, displacement maps, etc etc.
If we take the step back, though, the real issue here is whether we can, as developers, cover that cost. So I went back through the data set and where I could, plugged in the retail MSRP in inflation-adjusted dollars. For mobile games that were pay-once titles, I used the price; for older MMOs, I ballparked it at box cost plus six months subscription on average, and where I had actual LTV for users, I plugged that in. The result told me how much players have paid for a megabyte of game over the years. Spoiler: they’re getting a deal.
“Wait!” you might say. “We don’t pay for megabytes! We pay for fun! We pay for gameplay! Not raw install! We pay for value!!!” Yeah, yeah. But in practice, development costs are correlated with bytes, not Metacritic, I think (no graph for that, but it was an easy eyeball test, plus it makes obvious sense — a bad big game still costs).