WHEN Activision, a big games publisher, released “Destiny” on September 9th, it was not just covered in the gaming press. Many newspapers commented on the game’s eye-watering budget, reported to be around $500m. How could a video game cost half a billion dollars to make? The truth is, it didn’t—Activision hopes that “Destiny” will become the first game in a long-running franchise, and $500m is the amount the firm has set aside to make that happen. But game budgets are, nonetheless, swelling. Developers and publishers are coy about releasing specific numbers, but budgets of tens of millions of dollars are not uncommon. The biggest, most polished games can cost hundreds of millions. “Star Wars: The Old Republic”, an online game released in 2011, is reputed to have cost between $150m and $200m. “Grand Theft Auto V”, which came out two years later, reputedly cost $265m. These are numbers on the same scale as blockbuster Hollywood films. Why have games become so expensive to make?
One reason is Moore’s law. Computer graphics have come on enormously in the past 20 years. The picture above compares the graphics of “Doom”, a seminal shooter released in 1993, developed by a handful of friends, with those of “Destiny”, which was developed by Bungie Software, a firm that employs around 500 people. With a few exceptions (such as “SpeedTree”, a piece of software that automates the creation of realistic-looking trees), all of the art in a video game is hand-crafted. As characters, items, levels and visual effects have become more intricate and detailed, developers have had little choice but to throw more and more artists at the problem. Another reason costs are rising is the increasing professionalism of the industry. These days, Hollywood actors are hired (and paid handsomely) to voice characters. The biggest developers market-test their products to destruction. Like political parties honing a slogan, they offer snippets of gameplay to focus groups. If anything is found to be too difficult, too obscure or simply not fun, it is sent back to be re-done. That kind of quality control costs serious money.
Though my write up consisted of several pages of math, the Globe & Mail went for the (important) bottom line 🙂 as you can read here:
The price bidders submitted made up 40 per cent of the final score for each finalist. “The money amount was not given a proportionate weight,” suggested Michael Soltys, a professor in McMaster’s computing and software department (Mr. Soltys is also a consultant for a company that is owned by Reilly Security).
Other newspaper stories on the Pan Am bidding process:
Plenty of big software firms—and ones in other industries—are developing cloud strategies too. But few have been as bold in their approach as Adobe. “The transformation of its business model has been pretty drastic,” says Brent Thill of UBS, an investment bank. So has the transformation of its bottom line. Instead of forking out up to $2,600 for Creative Suite, its flagship design package, on a disc, customers can now use its Creative Cloud service, which offers the same applications (plus a few additional ones) online, with a 12-month subscription costing $50 a month, or a month-by-month fee of $75. This has caused Adobe’s profits to crater in the short term, but investors are betting that they will rebound over time, as the subscription model attracts many new customers who had balked at the prices of its packaged software.
THESE are halcyon days in Silicon Valley and other hives of entrepreneurship around the world. Barely a week goes by without some newly minted billionaire hitting the headlines and some bizarrely named young company getting an eye-wateringly high valuation from financiers. But for every starry success there will be a multitude of failures, and it is easy to forget that the job of an entrepreneur is often nasty, brutish and in danger of being cut short by impatient investors, rebellious co-founders and other hazards.