Video Game Development Costs Continue to Rise in Face of Nearly 12K Layoffs Since '08

By Jeff Mattas, Jan 12, 2010 7:00pm PST Industry magazine Develop reports some rather depressing data about the increase in industry-wide layoffs found in a recent study conducted by entertainment analyst group M2 Research. Coupled with the results of another M2 Research report about the increasing cost of game development, the data indicates that the average cost of game development is on the rise, despite the trend of many studios thinning their herds.

According to M2, "...the final count for layoffs since the economic meltdown in late 2008 reached 11,488 worldwide, with the majority of the losses coming in 2009." Apparently, most of the layoffs from the 95 reviewed studios are felt at the ground level. That makes quality assurance staffers often the first ones out the door.

Studio closings like Pandemic, Grin, and 3D Realms have been all-too-common occurrences in the past year or so but studios don't have to be closed to feel the impact. We reported the most recent spat of such layoffs earlier today in which Warner Bros. Interactive let go employees from its studios Monolith, Snowblind, and Surreal.

However, average game development costs tell a much different story. Amidst the industry-wide whirlwinds of downsizing, restructuring, and layoffs many studios are spending more on development than ever before. M2 Research also reports (via Develop) that games developed for a single platform cost an average of $10 million. That said, the average cost of a multiplatform "nex-gen" game is currently reported to be around $18-$28 million.

Of course, there are almost always exceptions to the rule. Infinity Ward's Modern Warfare 2 is rumored to have cost around $50 million to make, and Polyphony's Gran Turismo 5's budget is rumored to be around $60 million.

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  • Yes, computer graphics have continued to get "spiffier," and technology continues to march forward. Unfortunately, the quality of games has continued to slide downhill. No, that's not quite right. There are still good games released, but for every excellent game on the market, there are a slew of others that are boring, bug-ridden, painful-to-play wannabe's. Why? Because the factors which determine high-quality games are being stamped out by "Big Money."

    The same disease which has permeated the movie and TV industry has now infected the computer gaming industry. As soon as there's one big hit, everyone wants to make a clone and ride that same wave of success. From a business standpoint, the desire to invest money in a successful "formula," and create a spin-off or copy-cat of what worked in the past seems like a solid idea. The problem is that we are dealing with an ART FORM. It is not the technology or materials used which determine success, it is how the audience embraces the attempt and takes ownership of the experience. The reason I conitnue to play Diablo 2, Neverwinter Nights, and Warcraft III is because fun gameplay trumps shiny graphics, new technology, gameplay options, and pretty much everything else.

    The failure of businessmen to understand what makes good art is why the movies, TV, and computer gaming industries are throwing more and more money away to turn out weaker and weaker products. Now that I think about it, this has happened in every industry which has become a big money-maker. As potential returns have climbed higher and higher, businessmen have bought their way to the head of the creative process in an attempt to turn a profit. Their focus on making money while being blind and deaf to what makes good art has caused them to throw increasingly large piles of cash into production while stifling the artistic talent which makes the product worth buying.

    This is why you see production values plummet as soon as things turn lucrative. Whether it is in literature, graphic novels, movies, TV, or computer games, as soon as investors take over the production of an art-form, art itself is handed a pink-slip. The result of that is more money spent to generate an inferior product.