That article might be worth a read if it didn't start with wrong facts..

Activision reported a loss due to accounting changes following the Blizzard acquisition.
They actually had their best year ever and made over 600 million $ of profit this past year.....

If you combine the profit and losses of every actor in the industry I woudn't actually be surprised if we didn't have a record year for profit.

The issue is most of the profits are concentrated among very few actors ( namely Nintendo and Activision-Blizzard).

The problem with the "Hollywood Model" is that games don't have secondary revenue sources (DVD sales, foreign markets, etc.).

It's an all-or-nothing proposition that is more and more often becoming closer to nothing.

Mike from Morgantown

You don't invest in HD systems.  You invest in a particular hardware platform.  Money put towards either HD box now will only pay out on those platforms, not on some HD platform of the future.  Invest the money where you'll make profit, don't do what you suggest here.

 I'm not expert on HD developement but I'd imagine the step up isn't something that will be irellevent in 10 years time even after the next consoles come out. It seems that the experience companies got from developing for the PS2 is being applied to make Wii costs much cheaper, albeit they're cheaper by nature but the point is still the same. It's again in similiar vain to the porting costs of PS3 to 360 and visa versa being much cheaper then one inidvidual game, the assets will all still be the same, just improving them, or whatever.

 Once the new systems come out they don't start all over again, unless whatever the PS4 and xbox 720 is something of an astronimical leap that we had this gen, which it isn't. They might need to upgrade engines or whatever but the core HD developement type scheme will be there.

 Of course I'm no expert so I'd be happy for anyone to correct me, don't think there are many articles on the internet about this.

I know, right!  That's exactly what I was expecting when I clicked on the thread.

I think you've got the attitude down cold, unfortunately. On the one hand I suppose I can't completely blame developers and publishers for having this attitude: wanting to improve, to reach beyond what you've already done, is something that I find admirable in many ways, and the desire to emulate the latest hit in hopes of striking gold seems to be hardwired into humanity. Plus, this attitude seems to be prevalent in many other industries, especially in entertainment. How many movies get greenlit not because there's an expectation of profit, but because someone wants to create "real art"?

That said, it's ultimately self-destructive economically, as far too many financial reports have shown. Revenues are at record highs, but profits are in the crapper, and the best excuse I've heard for continuing this behavior isn't that it will be profitable anytime this generation, but maybe it will help a bit in the next? Suffice it to say that I'm unconvinced: the long-term does you no good if you shut down tomorrow, and there's no indication that the tools and skills of the next generation will be sufficiently similar to what we've got now. Besides, if you're focusing on SD now, but need some HD experience a few years down the line, the unemployment lines are full of thousands of workers with HD experience, so give 'em a call!

I think it was Iwata who first analogized most developers to bodybuilders, i.e. folks who are there to amaze each otehr rather than the general public. I suppose that's a fair enough attitude to have if you're just making games as a hobby, or if such acclaim somehow translated into a better bottom line. But neither of those apply to publishers. They're supposed to be making money, not going out of business. And I know a few people would applaud them for sticking to their guns, rather than catering to the lowest common denominator (as they see it), but an environment in which fewer and fewer games are being made is not an environment that benefits any gamer. Soon enough, this will be obvious too all but the most obstinate...

And as a sidenote, I hate even the idea of Radiant AI. I'm not sure if that's what's responsible for quest-characters in my Fallout game dying before I reach them, but I suspect it is, and I have to say that it adds nothing to the game.

Cool, thanks. I'll send off that e-mail soon. Hope he replies.

Some of the numbers he's using seem fishy, or at least like they're only part of the story. The prime example that came to mind was the one about Activision. The figure quoted isn't incorrect, but it neglects to mention that much of it is due to their shifting the money from that timespan throughout the rest of this year (i.e. each month gets 1/12 of that, rather than having it all accrue in one month). The $10k "man-month" figure is also something I'd never heard before. That doesn't mean it's wrong, mind you, but it's another part that I'd like some clarification on.

That type of thing.

I'd add to that the fact that the movie industry has a consumer base in the billions, whereas gamers make up a much smaller figure (and would be even more miniscule, if some fools on the internet had their way).

The experience companies have from PS2 development is applicable to *all* current consoles.  There is nothing magical about HD vs. Non-HD. This is experience in managing a game project, managing the flow of assets, etc.  But nothing other than that helped out, certainly not technically, with the Wii.  Except you might have art assets that can be more easily re-used.  Now if you want to re-use graphics again, in 10 years on the PS4 then I suppose there will be some savings.

The expenses in a new generation are tied to learning new hardware, the API that's made available on the boxes, and general additions of things such as built in physics.  A lot of these learning curves are present in the Wii, while some are not due to its Gamecube heritage.

The big expense re:HD graphics (I assume you mean graphics here, and not the other features of the HD consoles) is mostly a matter of size.  The overall number of pixles has been increased by around a factor of 4.  That means a lot more assets to be created.  It means more detail is present, in textures as an example.  This all has a cost in terms of time.  A car in Project Gotham for the XBox might have taken a couple weeks to model... one in a newer version might take a couple months.

Most of your "savings" points deal with porting.  That's re-use of assets, not something "learned" from HD development.

 So the main added expense has been quite simply the increase in pixels - that's ramping up the arts and graphics bills right? Well, surely next gen it shouldn't be so bad, as the pixel count won't increase? Just the details I guess. I'm no expert so I can't argue this very well tbh, I just can't beleive every major publisher would be investing in systems that are killing the industry without some long-term reason or logic.

 When you hear that Gears of War games are being made for $10 million that to me suggest just what can be done with a sensible budget, once the game engines are made and middleware is produced etc. Epic are probably some of the tech engineers and programmers and so when making can do it for less - because they've got the talent. For me where companies like Midway are blowing $30 million on average games is that their developers arn't good enough to work on a low budget? Which is where my whole point of 'adjusting' to HD developement comes from...the costs are overblown because current the studio's they're getitng to produce these games simply can't.

 Personally for me when revenue is high and profits are suffering you can't blame the systems but the publishers. They're obviously not yet adjusted to the new markets of this gen and need to adjust to buying trends, which is what they're in the process of doing. As long as revenue is record breaking then profits can be too, it just requires suitable management, not blowing $50 million on a game like This is Vegas which is never going to recoup that sort of figure.

 It still amazes me Capcom are posting profits this year... no 'big' HD game released in the first 3 quarters and 7 in developement... with the strong Yen too. Confusing.

I have recently heard that $100k per man per year was a decent figure to use to estimate the costs of a game.  That would be $8,333 per man per month.  Not so far off.

@jammy2211

That $10 million figure for Gears of War is a bit misleading. It does not include the cost of the Unreal Engine 3. Most developers would have to license it or develop their own engine, but since Epic owns UE3, they didn't have to pay for it. I'm also going to guess that it was much easier for them to use the engine since they should know it inside and out.