‘This Is Unsustainable Madness’: Modern Video Game Budgets Are Out of Control

The cost of making AAA video games on America’s west coast, where some of Sony’s most prestigious first-party devs like Naughty Dog and Santa Monica Studio are based, is out of control.

Musing on social media site BlueSky, reliable Bloomberg journalist Jason Schreier said that while it’s “tough to corroborate […] the numbers I’ve heard floating around AAA game dev these days are $300 million or more – sometimes much more – which I think helps explain the current state of the industry”.

He went on to clarify that these figures primarily encompass salaries and overheads, and have nothing to do with executive compensation. (Which, you’d imagine, also has to be accounted for.)

Schreier put the situation into perspective:

“If you sell a game at $70 and pocket $49 on every sale (30% goes to the store, assuming all sales are digital), you’d need to sell more than 6 million copies just to break even on a $300 million budget, and that’s before marketing.”

Sony’s business model obviously differs from third-parties, because it’s able to reap maximum value from sales on its own storefront, and development costs can be partially offset by the income generated by its overall ecosystem.

But this still piles immense pressure on its studios to deliver. A game like Intergalactic: The Heretic Prophet, for example, simply cannot afford to fail.

And that’s without even mentioning third-party studios, who can cast a wider net across multiple platforms, but don’t necessarily have the advantage of a platform holder backing them.

This is a multi-tiered issue, because simply reducing the scope and scale of titles is not a guaranteed solution, and it’s one that will lead to layoffs regardless.

On the other hand, it doesn’t feel like consumers are willing to stomach another price increase, as the rise to $80 software has already been met with strong resistance.

With economic pressures on pretty much everyone these days, is there even enough disposable income around to support $90 or $100 games?

Whatever the case, these kinds of budgets seem utterly unsustainable. If you need to sell many millions of copies at full-price to even break even, then what chance do the vast majority of titles even have?