It is actually very much like Movies ...

Between the box office, dvd sales, pay-per-view and TV broadcast it is very difficult to make movies that lose money anymore; this is often argued as one of the reasons why movies are so bad lately because when produces lost money they were less likely to fund really awful movie ideas. The interesting thing is that producers still find a way to lose (a lot of) money by producing "Big-Budget" Blockbusters. If you look down the list of movies that lost money in any given year you will see that almost every movie was a "Big-Budget" Blockbuster and quite often they were not bad movies.

@ HappySqurriel

Sure. Many expensive movies bombed (Poseidon, Basic Instinct 2 etc.) but it works both way. The most successful movies are the most expensive (Spider Man, Pirates, Bond etc.) it doesn't mean you can't generate a huge cash without huge budget (lets say Passion of the Christ) but it's definitely easier to attract people with great setting. Good games sell. Resistance was the closest to the expectation of gamers. Heavenly Sword would be a first huge success of PS3 game.

I agree, kber81.

No way Ridge Racer cost 15 million for development and marketing. The game's basically RR6 with some mild improvements. Anyway, the key to nex-gen development will be creating versatile game engines that can be used in multiple games. I'm not just talking about sequels either, even though that's the obvious way to reuse an engine. For example, Sony's London studios are reusing the Motorstorm engine to create a new Wipeout game. They'll probably also use it to create the inevitable Motorstorm sequel. I bet that 500,000 sales figure only applies if you create a brand new engine for every game. This sort of business model obviously won't work anymore.

This could hurt smaller devs who don't have the resources to create that initial engine in the first place. But that's where companies like Epic come in and save the day by selling the Unreal Engine. This is nothing new, companies have been doing this for ages. The most famous example I can think of in the console world is Rockstar using Criterion's Renderware platform to create the PS2 GTAs.

If anything, smaller devs have more opportunity now than they ever have before. With the popularity of XBLA, PSN, and VC, devs have a whole new cheap simple avenue to show off their skills. Not to mention that they can also develop for the DS, GBA, or PSP and prove themselves in those arenas before getting the funding from a big publisher to create a full game for one of the nex-gen systems. No one system is going to kill a developer because the gaming market is so diverse nowadays; there's such a wide range of platforms with such a wide range of associated development costs.

That being said, spending more money and having more effects doesn't make a better movie. I'll watch the low budget Serenity over any of the newer big budget Star Wars films any day of the week.

 You're confusing money with talent. It's talent that makes great graphics, great FX, and a great cast, regardless of how much you spend. Yet those are still not guarantees of financhial success in a game or movie, which is where the big flaw of your argument is. Throwing a lot of money doesn't sell a game or movie. Name recognition  or good hype does. Gears sold because of great hype. Only after that died down did the quality of the game sell it through word of mouth. The game was still a risk in developing, no matter how you try to spin it as guaranteed because they trew money at the graphics.

     I know this is off-topic, but FishyJoe, your Serenity comment melted my heart, I've been preaching that for quite awhile. What's really aggravating is that a lot of detractors said that Serenity was like a "cheap Star-Wars prequel" when it had more heart and soul than all of the prequels combined!

In terms of Gross Revinue the most successful movies are usually the most expensive, in terms of return on investment successful movies usually have very modest budgets. Consider that Spiderman 3 will have to Gross over $500 Million to match the return on investment of Snakes on a Plane, over $5 Billion to match the return on investment of Good Will Hunting , or over $200 Billion to match the return on investment of the Blair Witch Project.

I'm not saying that I know what the strategy of producers is, but it seems to me that it makes more sense to create 25 movies at $10 Million a piece than a $250 Movie...

maybe it isn't all about money. maybe people have visions in mind. did you ever think about that? to a lot of people this is a form of art and not just some way to make money. 

and to the OP:

this article is sooooo old. are you trying to start trouble? someone trash this thread please. I'm tired of mods not doing anything.

man this article was dated back to November,2006.

Geez mods do something.

RR7,GUNDAM WORLD and GUNDAM MUSOU have sold around 600k in total.(cumulative worldwide)

the production costs of each of these games were not even 5 million.

RR7 is basically a beefed up port of rr6.

Gundam world is rubbish.

Gundam Musou despite being good looks a little better than the ps2 versions in terms of both gameplay and graphics.

all those games have made atleast 10 million dollars in profit for ps3.

an easy count 600k*65 =36+  million.

production costs =5*3=15

net profit = 36-15 =21+ million

there you go a net profit of 20 million

"an easy count 600k*65 =36+ million." Why times $65? The developers aren't getting nearly $22 per game.