The Impact of Skyrocketing Game Development Costs on External Development - Part 1: The Numbers

Game development costs are skyrocketing! The number of games platforms keeps growing, new business models continue to emerge, and expectations across different generations of players are broadening.? Plus, players are more vocal than ever before about what they want and don’t want.? And here's the kicker - while games are being held to higher expectations than ever before, people are playing fewer games for less time.? I’ll cover those stats in Part 2, alongside more details on what is causing costs to mushroom. Already a bit of a data overload in this first part.??

In September, I headed up to beautiful Vancouver for XDS 2024 to talk more about this topic across a couple of roundtables. Brilliant event that Chris Wren and I founded way back when at EA that's continued to grow leaps and bounds each year. Not many conferences can claim to be sell-out events year after year!

At XDS, I gathered with the top game developers/publishers and service providers from across the globe to chat about the forces driving up the cost of development at their studios. In this article, I'll give a peak at some of the data we looked at as evidence for skyrocketing costs, alongside the reasons why it has become such a hot topic in 2024.?

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In Part 2, coming soon to a Linkedin page near you, I'll dive into why these costs are increasing, based on input shared from attendees. Then, in Part 3 (because everything has 3 part sequels nowadays… hopefully it will be better than Ant-Man Part 3, Quantumania though. Still love you though, Marvel), I’ll wrap it up with a bow and cover some thoughts on how external development can be leveraged to reduce the costs of development, based on what we heard at XDS 2024 and GamesBeat LA.??

These articles aren't meant to be a deep assessment of the numbers or an analysis of the reasons people cited for increasing costs. Instead, think of them as a summary of what we covered in the various conference sessions. Let's get into it!? Hopefully you are still with me.?

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Game Development Costs Are Skyrocketing… The Stats

One topic that keeps coming up repeatedly over the past couple of years, whether mentioned in industry news or during conversations at games industry conferences, is this: games are expensive to make - and those costs are only going up.

In the 2023 CMA report on the acquisition of Activision-Blizzard by Microsoft, it was reported that:

“AAA franchises like Call of Duty have development budgets already exceeding $300 million, and the next GTA and other future tent-poles are also expected to hit $250 million or higher.”??

The Spider-Man franchise, developed by Insomniac Games and published by Sony Interactive Entertainment, is a perfect example of this trend.? Spider-Man in 2018 had a development cost of $100 million, while Spider-Man 2 in 2023 came in at around $315 million - more than triple!? To put it in perspective, Spider-Man 2’s dev cost doubled that of Miles Morales in 2020, driven by additional content needed, including:

• A bigger map that extended beyond Manhattan to Brooklyn and Queens
• 7 hours of mocap cinematics
• 5.25 hours of cinematics with a cost of $40M

Brilliant games though, but I’m still rubbish at web-slinging and traversing buildings at speed.

One of the latest games to hit the news with startling dev costs is PlayStation's Concord. The game reportedly cost $400 million to develop, not including the cost for PlayStation to acquire Firewalk Studios in 2023 or the cost to market the title. Two-weeks after launch, the game servers were shut down after it only seeing 697 concurrent players on Steam. Five days after launch, sales were sitting at around 10,000 on Steam and 15,000 on PlayStation

For games, the cost of pre-launch development is only the start though!? Yes, marketing costs can be equal to the cost of development. Anonymous testimonies were given by other publishers for the CMA report, with Publisher 1 saying it spends $164 million on pre launch development and $55 million on marketing, Publisher 2 saying budgets range from $80-$350 million with marketing costs adding up to $310 million, and Publisher 3 saying recent releases cost $110-$350 million for development.??

One publisher in CMA’s report cited that its most expensive game cost $660 million to develop and $550 million to market

Not only are there marketing costs, but players today expect the content to keep flowing and keep them entertained for years.? The Sims 4, 10 years after initial launch, still sees a regular influx of new expansion packs. Fortnite Battle Royale sees new seasons launched every 2 to 3 months. Battlefield 5 had an immense post-launch roadmap covering expansions, new maps, new modes, new weapons, and other content.? All of which was absolutely free for players. The cost of creating all this new live services content means costs continue to grow post launch.?

Genshin Impact, launched in 2020, is a perfect example of the costs to create this additional content. The game had an initial budget of $100 million.? In 2021, a year after launch, Cai Haoyu at HoYoverse stated that Genshin Impact’s development budget now runs $200 million annually. That puts total dev costs at over $500 million to date. Luckily, it paid off as Genshin Impact is the fastest mobile game to reach $5 billion in global consumer spend. My friends and I certainly contributed to that pot.

* Development costs only, does not include marketing costs

So I know the article started by saying we wouldn’t cover the reasons for increasing game costs in Part 1, but I will briefly mention that one obvious reason is simply that bigger teams are needed and the cost of talent is increasing.

Looking at game credits to get a sense of the number of people working on franchise titles with each release (not a perfect data source, but a good finger in the wind indicator) shows team sizes are becoming enormous to release AAA games.??

Call of Duty: World at War, released in 2008, had around 657 involved in the title.? However, Call of Duty Modern Warfare III, released in 2023, had 9,201 contributing to the title. That’s almost the same as the population of my little town of Half Moon Bay! Not only has the number of people increased, but also the complexities of distributed development. Call of Duty: Black Ops in 2010 leveraged around 5 external partners for art and engineering, whereas the latest Call of Duty had over 40. Not only that, but it's reported that 15 internal studios also supported the title's development.

Far Cry by Ubisoft, a franchise I have been very addicted to alongside Assassin's Creed, also shows a similar story with 351 working on Far Cry 1 (released in 2004), and over 7,000 contributing to Far Cry 6 (released in 2021). Far Cry 6 had almost 24 hours of main story content and kept a completionist busy for almost 64 hours. In comparison, Far Cry 4 had 19 hours of main story content and 49 hours of total content. Back in 2004, the main story could be completed during waking hours on a Saturday with 11 hours of main story content and just over 13 hours for a completionist.??

Finally, some numbers from another popular franchise that launched its first game in the series in 1987. These numbers are just for the main Final Fantasy releases and not the remakes, remasters, or smaller editions. The Final Fantasy team sizes were relatively stable up until 2010, after which numbers tripled to 2,307 for Final Fantasy XV in 2016. This was the third title in the franchise on PlayStation 4 and Xbox One, but the first to also appear on Google Stadia (in 2019, 3 years after the initial release).??

…I’ll take a break from the data there as I’ve thrown a lot at this page. Stay tuned for Part 2 (hopefully you will be back) which will dive into the feedback from over 25 world-class game developers on what they see driving up the cost of game development.