naznatips estimated that the devs see $25 per game sold. At 500,000 games sold, that is $12.5 million, dodece. So even if they were $15 million as in your estimate (which I find low for a next gen game that spans four discs) they still lost money with the prime selling period behind them. that is for LO, btw. For Blue Dragon, which I can see being maybe around the $15 million mark from the very little bit that I know, 470,000 copies and $25 per game is $11.75 million and a loss. then you got to remember that there seemed to be a LO commercial during every commercial break on a station like G4 and other channels that appealed to the gaming audience, these guys seem to have a hard time making money.

edit: and the little bit that I know is that Killzone 2 is supposedly around $60 million and Uncharted cost $20 million and MGS is supposed around $40 million. 

You know why bother let me give you a hand.

http://www.gamesindustry.biz/content_page.php?aid=13019

London 16th November 2005: The launch of the next generation consoles will see games publishers' development costs increase dramatically. The current cost of console games development typically ranges between $3 and $6 million per title. This is set to increase to $6 to $10 million for the forthcoming new machines from Microsoft, Sony and Nintendo, with extreme cases surpassing $20 million.

However, set against this background of increasing development costs, the games industry is in rude health, with forecast growth of 9-10% over the next four years, though 2005 is forecast to be flat whilst the industry waits for the arrival of the next generation consoles.

According to a new ground breaking report from Screen Digest - Games Software Publishing: Strategies for market success - games publishers will have to choose their development strategies carefully as the cost of a failed title becomes even more pronounced. Screen Digest estimates that the number of profitable titles per year could fall as low as 80 as developers and publishers are forced to focus on fewer and higher quality titles.

The report predicts continued industry consolidation and the demise of smaller publishers which lack viable growth strategies. Currently, the large American publishers seem best placed and most capable to succeed. Japanese and European publishers, although creatively successful, will need to get their houses in order and focus on other key aspects of running a games business - strategy, marketing, finance, licensing and human resources.

This new landscape will undoubtedly force publishers to carefully consider their development strategies. Titles which are based on third party IP such as that owned by the movie studios, sports associations and sports personalities have traditionally been considered a safer bet than original content titles which are more volatile, either selling very well or very poorly.

Screen Digest's analysis shows that in the US in 2004, titles based on licensed IP, such as Madden NFL 2005, sold 23% more units than titles based on original content. However, the short term revenue gains of licensed IP, does not necessarily translate into greater profits. Licensing costs are rising as IP owners become increasingly aware of the growing importance of the games medium.

While the majority of games released in 2004 and 2005 by the major publishers will have been profitable, looking ahead new revenue streams will take on increased significance for games publishers. The total online PC games market topped $1bn in the West in 2004 and is expected to exceed $2bn by 2007. Mobile and digital distribution also offer growing new incremental revenue streams for publishers.

The author of the report, Marc de Gentile-Williams, states: "At 30 years of age, the games industry still suffers from an endemic lack of professional management compared to less mature industries such as the mobile telephony and the internet industries. The high number of bankruptcies - despite favourable market conditions - is testament to this fact. Games companies must complement their formidable creative and technological achievements with strong business planning and analysis in order to reap the benefits of the next phase of console market growth".

Q: Editors' Notes

The research and analysis contained in this press release is taken from the new Screen Digest report: Games Software Publishing: Strategies for market success. The report is the first study to identify the world's most profitable games publishers and reveals the strategies that have lead to their success. Employing analytical techniques never before applied to the games sector, the report critically examines a range of operating and growth strategies for games publishers.

To find out more about this please contact sales@screendigest.com or call +44 20 7424 2820

Screen Digest is the pre-eminent source of business intelligence, research, and analysis on global audiovisual media. Screen Digest the journal has been published for more than 30 years and is read in over 40 countries. Screen Digest is primarily a research company and publishes a rapidly growing number of major business reports on media markets. The company also offers continuous online research services providing searchable access to a vast database of global audiovisual market research information. Screen Digest also provides single client consultancy services and has undertaken a wide variety of bespoke projects on behalf of numerous national and international organisations.

For further information on this report or to arrange interviews, please contact:

Fay Hamilton

fay.hamilton@screendigest.com

Yes, a source from 2005 is accurate. Especially one that predicts 9% market growth *rolls eyes.* I have sources too....

Joystiq article says average PS3 game is $15 million
Barlog says big budget is double last gen (which he placed at $20-$30 million)
Rein in the same quote where he said Gears cost $10 million said other developers quote him dev costs of $20-$30 million.

The difference is your quote is 3 years old... whether these developers and sources are correct or not isn't something I or anyone else can really prove, but my estimations are obviously NOT baseless.  I have plenty of sources placing development far higher than your one 3 year old source.

@cwbys21

Honestly I cannot imagine either title alone costing more then ten million dollars to develop. The overwhelming majority of games do not cost over ten million dollars to develop, and frankly he actually has no clue about either games development. Most of the work was outsourced to Freeplus who was working on numerous titles. I know in his imagination he thinks that only two or three games were being worked on, but he should be thinking more along the lines of a dozen.

I feel actually kind of sad for the guy the best source he had was a meandering blog that was painful, and unpleasant to read. I hoped he would take the hint, but he obviously didn't. There are dozens of real links to be found, and there are some if you look hard enough that differentiate the average sales on a console to reach profitability of sales.

The last time I actually saw the figures sighted when developing a mid level game for the Wii you could reach profitability after a quarter million in sales. The 360 after four hundred thousand, and the PS3 somewhere at the time over 600,000. I honestly think the latter two have probably gone down more substantially then the Wii has.

60-70 million estimate may be too much, but 20 million is way too low. I am not familiar with development costs so I try to use some "gaming marks" as a referential. I remember reading in a game magazine a long time ago that FF8 was a 10 million game. Well, FF8 was one of a kind in its generation, but that proves that 10-20 million for PS2 games is not a ridiculous statement. Capcom also said they spent around 50 million to make Dead Rising (they did break even at 700-800k copies).

A 20 million AAA game project may be possible, but only if the developers have ways to cut the costs, like using an old game engine.

http://www.maxconsole.net/?mode=news&newsid=21099

Its everywhere, simply.. a million different places say that Halo 3 cost $30 million to develop. That was a signature game, expecting to sell over 5 million.

 Why would they make a game that cost say $15 million when they don't expect to sell much over a million anyway? At most combined cost will be about $25-35million for the two of them. I expect that they would have just broken even. Any more sales from now on in would be profit. They were published by microsoft and aren't the studios owned by microsoft as well? Correct me if I'm wrong, sorry.

Do I really need to keep doing this to you? *sigh* Fine, let's look at individual games now.

Stranglehold cost $30 million to develop.
Lost Planet cost a whopping $40 million to develop.
Killzone 2 over $40 million to develop and rising.
Uncharted as was already mentioned cost upwards of $20 million.

Lets compare these games shall we? Stranglehold was ceratinly big budget, but 3X the budget of either of these games? Lost Planet was a fairly basic arcade shooter... are you really suggesting it cost 4 times or more than Lost Odyssey or Blue Dragon? 40 hour + games full of AMV and orchestrated music composed by Nobuo Uematsu? Killzone 2 is its own beast... I'll give you that much. Uncharted was developed in 2 years, is a 12 hour game, and you are suggesting that it costs twice as much as Lost Odyssey.

Let's try and be reasonable here dodece. The chances of LO and BD combined costing less than $35-$40 million are extremely low based on what we know of other game development.

It was an estimation Dodece.  I'm not denying that.  I have no concrete numbers.  Just evidence and deductions that dev costs should be fairly high between the 2 games.   There is nothing left to debate. I don't care if you disagree with my estimate, but don't attack me.  I didn't "make anything up" and I had far more sources and far more recent sources supporting my claim than you did. 

I think the confusion is that for some big exclusive is synonymous with big budget. Which just isn't the case. Lost Odyssey, and Blue Dragon are not graphical giants pushing technical envelopes. They are games built on a average budget. They are big exclusives just not expensive exclusives.

You can't really use the exceptions to prove the rule. That would be like using the production costs for Titanic as a measuring stick for how much all Hollywood movies cost. While the overwhelming majority cost far less. Neither Blue Dragon or Lost Odyssey are going to even be remotely on par with these more intensively developed games.

I hope level heads find this thread in the morning this has turned into a wonderful thread.

If stranglehold cost $30 million we can kiss goodbye Midway Euro, that game didn't sell jack.  And capcom isn't to happy about their game either, only 1.5 million sold for it.

*sigh* well we're within more reasonable debate territory now at least. I'm trying to figure out what part of these 2 games was "low budget" other than the fact that one game licensed the Unreal Engine. I'm not saying these games top the high budget list. Not at all, and I certainly exaggerated to an extent in my original post, but less than Uncharted? Come on.

Uncharted was developed in under 2 years and had none of the big names like Uematsu attached to it. It was also a much shorter game (~12 hours) and had far less animation and none of the stunning visual effects, and I'm not insulting Blue Dragon and Lost Odyssey. To the contrary I think it's kinda ridiculous that you are trying to marginalize the production values of these 2 games that were clearly developed over a long period of time with great care and little expense spared.

Each game should at least have been as expensive as Uncharted on its own... you said exceptions can't prove the rule, but Uncharted is as average as they come in development cycle/production values.