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Default Opinion - Rising Costs & Mid Tier Studios

October 16th, 2017, 15:25
Gamesindustry ask Brian Fargo and Jeff Pobst about rising game development costs and how they are putting the squeeze on mid-tier studios such as inXile and Turtle Rock.

Rising game dev costs put squeeze on mid-tier studios

inXile's Brian Fargo, Hidden Path's Jeff Pobst and Turtle Rock's Steve Goldstein weigh in on the growing gap between gaming's haves and have-nots

Making games is expensive. Let me rephrase that: making games is really, really expensive.

Obviously, that's no secret, but the numbers involved are even surprising to those of us who follow the industry every day. Last month, Kotaku reported many studios budget around $10,000 per person per month to cover salaries plus overhead. Considering that many of the more polished games on the market can take years to create, budgets can spiral out of control very easily and this has a impact on the entire ecosystem.

Moreover, that $10,000 figure is actually lower than many studios spend, industry veterans Brian Fargo (inXile Entertainment) and Jeff Pobst (Hidden Path Entertainment) tell me.

"I used $10,000 per man-month [for budgets] when I was a producer for Sierra online in 2000," Pobst notes.
brian

Fargo concurs: "I would say [$10,000 is] on the low side. I think Tim Schafer pointed out a couple of years ago that this is why these things cost so much to make. There's a big difference between small developers cutting their teeth that have no overhead versus a team of people who've been in the business for two decades. They have families and expect medical insurance, and so it's not going to be something that costs less than $10,000 on average for my people.

"That's on the low end by maybe 20% or 30%. I don't think we're seeing double that, but certainly it's the trajectory we're all going towards. I think that's a fair number. It's always been a funny disparity. We talk about making a game with a budget of, say, $10 million and the smaller developers tend to look at it and go, 'How do they waste so much money?' And then the triple-A guys say, 'How do they do it for so cheap?'

[…]
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October 16th, 2017, 16:44
Opinion: the price tag on mid-tier and lower games is completely divorced from development costs.

Battle Brothers (to pick one out of the blue) took 5 years to develop and sells for $30. People who have played the game for 300+ hours are on the forums advising potential buyers that $30 is too much, wait for a sale. Pick any indie game asking for more than $10 and you will find an army of people pissing and moaning about the price point being too high.
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October 16th, 2017, 16:56
The same moaners buy $100 package gems/diamonds/gold/tokens whatnot in their phonegames.

Anyway, I don't think Fargo is completely sincere here.
When planning funds, does a game sequel really need multiplayer component? And does a developer studio really need to go VR?
He'll say yes. I say no.
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October 16th, 2017, 17:08
I think game prices are starting to go too high for the AAA premium games. You now have to spend $100 for a premium game, if you want all the extras and the season pass.

This is one reason I usually don't pre-order games, because I can wait and eventually get the game at a fraction of the original cost, because of steam sales, which regularly offer fantastic discounts on most games after they have been out for awhile.

I am not one of those gamers who always is pre-ordering games or is so anxious to get a game that they must buy it the day of release. But I understand why this mentality is so prevalent in our consumer-culture, most people have no patience and want what they want - right now! That said, on the rare occasion, the hype and/or my excitement for a particular game overloads even my defenses, and I buy it early. But that is pretty rare.
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October 16th, 2017, 17:15
Originally Posted by joxer View Post
The same moaners buy $100 package gems/diamonds/gold/tokens whatnot in their phonegames.

Anyway, I don't think Fargo is completely sincere here.
When planning funds, does a game sequel really need multiplayer component? And does a developer studio really need to go VR?
He'll say yes. I say no.
Like you I have no interest in multiplayer or VR, but I am not a businessman, and cannot say if these things will pay off or not. For example, how much extra will Mage's Tale cost if its just reused assets from Bard's Tale 3 and VR programming? How much will it net? Obviously they think its a risk that will pay off. I'd prefer that they continue making the kind of games I like, and that doesn't include MP or VR. If they do these as side projects to continue to help fund SP games, then great. I just hope this doesn't turn into their focus.
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October 16th, 2017, 17:19
Originally Posted by Arkadia7 View Post
I think game prices are starting to go too high for the AAA premium games. You now have to spend $100 for a premium game, if you want all the extras and the season pass.

This is one reason I usually don't pre-order games, because I can wait and eventually get the game at a fraction of the original cost, because of steam sales, which regularly offer fantastic discounts on most games after they have been out for awhile.

I am not one of those gamers who always is pre-ordering games or is so anxious to get a game that they must buy it the day of release. But I understand why this mentality is so prevalent in our consumer-culture, most people have no patience and want what they want - right now! That said, on the rare occasion, the hype and/or my excitement for a particular game overloads even my defenses, and I buy it early. But that is pretty rare.
I think people who don't preorder games often wait for a sale. I rarely buy games new, but I do if I think it will be a great project, and if I don't I usually wait for a sale. I think that's why AAA studios try to pack so many goodies into their preorders. Also many of these companies are public, and usually a game's success is measured in the quarter after its released. So the bottom line is a game has to show good profits within 3 months of release.
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October 16th, 2017, 18:25
I used to pre-order my games. Then the whole DLC thing caught on like wildfire and I stopped. Now I wait for final editions that included everything to get released and to go on sale. If a company never does a version like that, then it is unlikely I buy the game unless the game *and* DLC go on sale (assuming any of the DLC is well received). I have always found it awkward to go back to a completed game to try and play DLC. Even knowing this model helps to keep mid tier studios alive between big titles doesn't sway me.

Also, games from bigger studios tend to take games away from my tastes and toward a more general audience. I've no problem with that really, but when the mid tier studios start doing the same, I just buy fewer games. I won't be surprised if in 5 or 10 years I'm the guy trying to maintain a 10 year old PC so I can still play "decent" games and don't buy any current games. Just part of getting old I guess.
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October 16th, 2017, 18:45
About 10 years ago the term "backlog" was unheard of in gaming circles so I think we are getting too many games in general and most people are struggling to find time to play. Unfortunately this means price of games have to come down or some game companies needs to go out of business….
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October 16th, 2017, 18:52
Software developer salary (esp in California) are high; that why xile opened an office in New Orleans where salary is close to 1/2. No clue what salary are like in Poland.

My problem with AAA are (a) MICRO-TRANACTIONS and (b) huge % of the budge on advertisment.
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Anyway if you are a software developer move to San Fran area or Boston area; if you are a game developer and want to spend a bit less stay out
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October 16th, 2017, 18:56
$10K per month is ~$60 per hour. That's on the low end for a decent software developer in the US. As with other tech. industries, it'll probably lead to more s/w development in lower cost locales.
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October 16th, 2017, 19:32
Rockstar and Blizzard didn't just snap their fingers and presto become development behemoths with revenues to match. If development costs in CA are too high and everybody has to live in a cardboard box because houses are too expensive to even rent, then relocate to a state that isn't a rigged collectivist hellhole.

That all said, I'd be willing to pay higher prices for single-player games if the industry stopped cold with all the stupid monetizing… loot boxes, Day1 DLC, frivolous DLC, DLC cut from the game and sold as DLC, paywalls of various shapes and sizes… all that nonsense would need to end. But then I'd be open to the $100 AAA single-player game.

So much whining in that article, I need a shower.
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October 16th, 2017, 21:15
A few comments…

1) I would gladly pay $100 for a great big huge game, like TW3. It was playable upon release, used cutting edge tech/visuals and had loads of content. On the flip side, games like ME: Andromeda et al have continued to teach me that collector's editions, season passes, and even pre-ordering are pretty much a fool's bet when you're looking at AAA games, regardless of cost.

I want more games that are worth $100, but instead we're seeing more crap rushed out the door that isn't worth the $50-60 they're asking. My concern is that the more we're willing to pay $100 for a game, the more companies like EA will use that to continue to shovel out crap-- but now at twice the price. If ME:A had taken another year (or two) and come out with an amazing game at $100, I'd be less pissed than paying $60 for what we got.

2) One thing that always bothers me when game studios complain about overhead is that they don't seem to factor that having a 30,000 square foot studio in one of the most expensive areas in the world is part of the problem. I get that Hipsterville, California or Coffee'Nstuff, WA is a 'cool' place to live, with personal bike trails between your office and condo apartment, along with street-side sushi vendors and a built-in Starbucks next door, etc, but that shit costs money. And you're going to need to pay your people twice what you normally would to come work for you, because their shit is going to cost twice as much as anywhere else, too.

It's great that there are 3 lounges in your studio, and a cafeteria and a fitness center and blah blah… Everyone wants to work at Yahoo anymore, and not just get paid a reasonable salary for making games. If they really wanted to save money, they'd have a rented warehouse with cubicles outside of Indianapolis, IN or Jackson, MS. Boom! Half the cost of production for your game is GONE! Stop whining about overhead.
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October 16th, 2017, 23:58
Yeah, the wording is hugely misleading, its not the cost of development, it's the cost of labour, two completely different things. If someone had genuine integrity for their craft then once they'd made their millions they'd be more interested in the craft than the paycheck. Yeah, yeah, yeah, wife, 10 kids to feed and educate, mortgage on a mansion to pay for, private health care, dining out for breakfast, lunch and dinner, fine wines, holidays to Monte Carlo, tailored clothing, yeah man, gotta think of the all the 'costs' that go into making… a video game…
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October 17th, 2017, 01:12
As a former developer, I can tell you, being in an area where only 1 or 2 major studios exists is a bad thing. No one is going to open a studio in East Bumsville just for the lower overhead. And serious/talented developers aren't going to apply to work there unless they're new/young/mobile. As people get older and want more stability in their life, they want to be in an area with options that help them ride out closures, downsizings, and buyouts. It doesn't help that (for programmers at least) you can instantly get a probably significant raise by changing industries and working a boring job with more normal hours. The competition for game development jobs is beyond insane, and the processes used by the companies to arrive at their hiring decisions generally reflect this. They can complain about overhead all they want, but the companies generally spring up where the talent to fill the jobs lives. There are a few areas that are not quite as bad as CA, such as Austin, but those areas are not as densely populated with options like CA and Seattle.
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October 17th, 2017, 02:52
Originally Posted by screeg View Post
Opinion: the price tag on mid-tier and lower games is completely divorced from development costs.

Battle Brothers (to pick one out of the blue) took 5 years to develop and sells for $30. People who have played the game for 300+ hours are on the forums advising potential buyers that $30 is too much, wait for a sale. Pick any indie game asking for more than $10 and you will find an army of people pissing and moaning about the price point being too high.
There really is no point discounting your game aggressively anymore. You are just advertising the fact that the game isn't worth a purchase for the full price (lots of indies do this and get ignored). Factorio and Rimworld are good examples of indie games which are worth full price and won't be discounted ever. That is the developer projecting confidence that the game is worth it and in return the dev keeps patching and refining the game (with help from community feedback).

You really have to engage with the community if you hope to succeed as an indie.
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October 17th, 2017, 14:24
Rimworld is still in alpha or beta stage or whatever. It is not completed and therefore will keep being patched.
Beside, for a long time, it relied on direct sales with no share to be given to Steam.
The degrading of the product happened when it launched on Steam to appeal to another customer base.

It was also for a long time a one man effort that sold well enough not to think of discounting.
Later, the team was expanded with outsourcing the grunt work to one guy located in Eastern Europe.

The price is not discounted because they have enough treasury to afford the move.
The product was downgraded to fit in Steam library.


Factorio is another story that pertains to sponsored education.
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October 17th, 2017, 15:24
That's why I sometimes cringe when I see some Kickstarter company explaining why they need such and such money, or why their initial successful project ran out of money, when they mention things like salary and rent being high in their San Francisco office… sheesh, no wonder you ran out of money!
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October 18th, 2017, 14:26
Originally Posted by screeg View Post
Opinion: the price tag on mid-tier and lower games is completely divorced from development costs.

Battle Brothers (to pick one out of the blue) took 5 years to develop and sells for $30. People who have played the game for 300+ hours are on the forums advising potential buyers that $30 is too much, wait for a sale. Pick any indie game asking for more than $10 and you will find an army of people pissing and moaning about the price point being too high.
No. BB is big on dilution of content. It is UgoIgo and quickly turns into battle involving thirty to fifty characters. There is nothing else but battles in it.

300 hours in this context is not much as it takes so long to muddle through a battle (like half an hour or more)
The time to assess the content and the lack of gameplay is swollen by a ten factor.

Same song as for early access and stuff: participating to the early access stage means spent hours. Since it often takes ten to twenty hours to get to new content, it quickly stacks.

At the end of the day, reaching 300 hours on an early released product is achieved without noticing and this before even playing the final release.

BB was also released early. Coupled with the UgoIgo massive load, players are easily over the 300 hours mark.

Now it could mean something if they hit 600 hours after the final release. So unlikely as players dropped out once the product finally released.
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October 19th, 2017, 05:08
Originally Posted by ChaosTheory View Post
It's great that there are 3 lounges in your studio, and a cafeteria and a fitness center and blah blah… Everyone wants to work at Yahoo anymore, and not just get paid a reasonable salary for making games. If they really wanted to save money, they'd have a rented warehouse with cubicles outside of Indianapolis, IN or Jackson, MS. Boom! Half the cost of production for your game is GONE! Stop whining about overhead.
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