News Report Says Rising Development Costs “A Nightmare”

A report by the BBC says that the rising costs of next-gen videogame development is creating a “nightmare” for many of the studios that produce them.

The development cost for Pacman in 1982 was $100,000, according to the report, while the average PlayStation 3 title today requires an investment estimated at $15 million, and revenue derived from game sales has remained largely unchanged despite a tripling of production costs brought about by the introduction of next-gen consoles. While releases like Halo 3 have no difficulty with the changing conditions, it does make things much more difficult for smaller developers.

Blitz Games CEO Philip Oliver says the increased complexity of the gaming platforms is driving the cost increases. “The costs have risen most sharply on the graphics side,” he said. “We have entered a new era of high-definition videogaming. This has led to team sizes having to increase in this area, for new tools to be created for this and generally the costs are rocketing. This is actually having a severe hit on the industry.”

But according to Professor Danny Quah at the London School of Economics, the trend is simply a reflection of the changing economy. “Because of these very high upfront fixed costs, the risks that these entrepreneurs have to undertake are likely expanded from before. That’s not necessarily a bad thing, though. The fact is that with risk comes reward and the two go hand in hand,” he said.

“What we see is that the economy becomes much more in-your-face, much livelier, much more real for the people who are engaged in it.”