“The Unsustainable Trend of Rising Development Costs in AAA Game Industry”

Publishing companies are spending more and more money on their blockbusters, which goes not only to development but also to marketing. They reveal a worrying trend documents of the British Competition and Markets Authority (CMA for short), which recently blocked the acquisition of Activision Blizzard by Microsoft for almost $69 billion.

The CMA documents cite a report from market research analyst firm IDG. According to her, development costs for modern AAA games recently greenlit and scheduled for 2024-25 range from over $200 million. However, five years ago it was on average 50 to 150 million dollars. For example, survival horror The Callisto Protocol as of December last year, it cost $162 million.

The report also lists the latest installments Call of Duty, for which the development budget is expected to exceed 300 million dollars. Activision should have stated that due to the large amount of content, it cannot rely on one main studio for development, but needs 1.5 studio heads for each installment of CoD. That him forces to use external suppliers more and more. Rockstar Games’ new Grand Theft Auto is expected to have a development budget of over $250 million.

But then you have to factor in the costs of marketing and promotion. Unspecified publishers state this: The first publisher said pre-launch development costs are $164 million and marketing costs are $55 million. For another publisher, budgets range from $80 million to $350 million for development and marketing for the biggest games, reaching up to $310 million. For the third publisher, the cost of the latest titles ranges between 110 to 350 million, and for the fourth it is 90 to 180 million dollars for development and 50 to 150 million dollars for marketing. Of course the publisher’s most expensive game cost $660 million to develop and had a $550 million marketing budget.

The CMA takes this as evidence that it is unlikely that any other company can reasonably generate revenue for Call of Duty in the foreseeable future. But at the same time shows how unsustainable big budget game development has become. It’s also another scarecrow for players’ wallets – there could be further increases in the price of games or subscription services.

The enormous increase in the development budget was confirmed by Shuehei Yoshida, who is in charge of independent developers at PlayStation. He recently revealed that the development of God of War 3 cost 44 million dollars, but currently God of War Ragnarök for the PS5 and PS4, it cost nearly $200 million.

Given all this, we can’t be surprised that publishers don’t want to take risks and invest in new brands. These are very risky for him considering such huge budgets.