“The Rising Costs of Game Development Exposed – Why Some AAA Games Could Cost Over $1 Billion to Create”

The big news this week was the prevention of Microsoft’s $68.7 billion merger with Activision Blizzard as the UK Competition and Markets Authority (CMA) blocked the deal, citing cloud gaming concerns. In publishing its final decision in a 418-page report, the UK Competitive Markets Authority released a number of noteworthy details, the latest of which reveals the ever-increasing costs of game development.

In its huge report, the CMA revealed that some major publishers claim their AAA game budgets could exceed $1 billion. The costs associated with the development of AAA games are growing exponentially, and the details really amaze the imagination at how much money is being invested in these games.

There is nothing outlandish about this. For example, the development cost of Call of Duty exceeded $300 million, and the next Grand Theft Auto will cost the same. The recent The Callisto Protocol cost $162 million and CD Projekt Red spent a staggering $316 million on Cyberpunk 2077, which recently led one of the quest directors to respond to comments that AAA RPG development was hitting a wall. It is important to note that these costs, while high, are only development costs and do not include the cost of marketing games.

According to a CMA report, one major studio reported that a major franchise cost $660 million to develop and nearly $550 million to market. This means that the total budget for AAA games could be as high as a billion dollars, or even exceed that huge figure. While it’s not revealed what the franchise is, it doesn’t go beyond plausibility. For example, it has been estimated that Genshin Impact has cost the developer approximately $500 million to date. While these are huge numbers, these investments are nothing compared to the profit HoYoverse makes from gacha titles.

The CMA document also quotes from a market intelligence report compiled by IDG, which received information from an Activision source. “We have to make so much content for Call of Duty that we can no longer rely on even one leading studio,” a source at Activision said. “Now we need almost 1.5 lead studios for every yearly CoD release. This kind of bandwidth pressure is forcing us to outsource more and more. I don’t think that’s going to change anytime soon.”

All of this should raise questions about how sustainable game development is. While AAA games can return on investment and more, this is a high-pressure environment as they compete against each other, and games that don’t live up to expectations can lead to financial disaster for their studios and publishers.