The Economist explains

Why video games are so expensive to develop

Hiring more graphic artists and Hollywood actors has swollen wage bills, while marketing budgets have ballooned

By T.C.

WHEN Activision, a big games publisher, released Destiny in September 2014, it was not just covered in the gaming press. Many newspapers commented on the game's eye-watering budget, reported to be around $500 million. How could a video game cost half a billion dollars to make? The truth is, it didn't – Activision wanted Destiny to be the first game in a long-running franchise, and was prepared to spend $500 million 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 $150 million and $200 million. Grand Theft Auto V, which came out two years later, reputedly cost $265 million. 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 improved enormously in the past 20 years; the graphics in Destiny, which was created by a team of around 500 people, are streets ahead of those in Doom, a seminal shooter released in 1993 that was written by a handful of friends. With a few exceptions (such as SpeedTree, a piece of software that automates the creation of realistic-looking trees), all 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.

But comparisons with the film industry can be misleading. Movie budgets typically include only the cost of actually making the film. Game budgets often include marketing costs, too. As games have become a mainstream pastime, those have become enormous. A blockbuster game such as Battlefield 3, released in 2011, will be advertised in newspapers, on television, on billboards and online. Publishers throw glitzy launch parties featuring stunts like driving a tank down London’s Oxford Street. All that can cost more than paying the coders and artists who produced the game in the first place. That said, when it comes to quantity of entertainment, games are bigger than films. The biggest-budget games tend to be those that deposit their players into giant, open-ended worlds and invite them to explore. Whereas film sets are seen only from a few carefully chosen shots, game worlds must survive inspection from every angle, by millions of players who can roam around at will. And while few films run much beyond three hours, even a short game will offer ten or more hours of play; many offer several times that.

Rising game budgets have created breathtaking, cinematic experiences. But not everyone is happy. Higher costs have made publishers timid, preferring to serve up more of what their customers like rather than risk tens of millions of dollars on something new and untried. Lists of bestselling games have come to resemble Hollywood blockbuster charts: full of sequels, reboots and minor variations on old, reliable formulas. Dissatisfied developers have left to strike out on their own, recreating the garage atmosphere of game development 20 or 30 years ago. With smaller budgets, and less design by committee, indie games companies are where much of the industry's innovation is taking place. Many make a virtue of their lo-fi graphics (the blocky visuals of Minecraft being the most famous example). Mobile games, played in short bursts on tiny screens with limited interfaces, don't need big budgets either. But it is still the big-budget games that rake in the cash. Grand Theft Auto V earned around $800 million on its first day – three times what it cost to make. And with the latest games consoles capable of rendering even more detailed graphics, expect budgets to keep climbing.

Dig deeper:
PlayStation, Xbox, SNES: which console sold most? (May 2013)
Moore's Law, a golden rule of microchips, appears to be coming to an end (November 2013)
Facebook makes another expensive bet on the future with the purchase of Oculus (May 2014)

Update: This blog post has been amended to remove the news peg.

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