Tag Archives: monetization

Game Development and the Cost of Dreams

This post will likely be very dry, and at an extremely high view as it concerns the business of games as a commodity and how it pertains to employment, budgeting, and forecasting. Do not take me as an authority on this, rather an impassioned individual who has been burned by the lackluster business acumen of the game industry first hand. I will always defer to hard numbers which are not anecdotal on this subject.

The game industry is very much that, an industry, and an industry must profit. This is oft forgotten and overlooked because we enjoy it as an art, a sport, a social event, a tool, and a puzzle, so it comes as quite a shock when a studio shuts down. This post is not to defend any particular action, but rather to provide a little more detail to the overall financial situation of a game studio, with some topical anecdotal exploration in the conclusion.

Games are not made in a vacuum, but rather part of a larger studio budget. This budget includes the administrative staff, facilities and IT staff, HR staff, legal counsel, and the many other positions we take for granted that are part of any company. Their salaries and benefits, as well as the cost of the office space, utilities, hardware, software licenses, and more, are part of the base budget. Within that we have the game team(s), which has a similar structure but is comprised more so of the people you think of when it comes to game development.

The largest portion of any budget is the cost of the labor, and that is a factor of the local cost of living. Where your favorite game is made is a substantial factor in its profitability. The higher the cost of living, the tighter the margins, and even if a game is profitable, more work on that same scope is risky because of the location. I’ve written about this before with The Costs of Kickstarting in Expensive Cities and it still applies here, as many games are made in California, which is in general expensive.

An aside to that is the subject of outsourcing, as the reason outsourced labor is so much cheaper is typically due to cost of living differences, and in many cases, the outsource is located on the opposite side of the globe, Poland and India both being common locations, which is very convenient to tight deadlines as it allows for around the clock work on the project, though due to the difficulties of time zone differences, this labor is usually constrained to QA, art, and isolated engineering components that require little synchronization with the primary developer.

Already we are looking at a large amount of expenditures to overcome with sales of the game, but people won’t buy your game if they don’t know about it, and thus enters marketing. Marketing is never cheap, but always necessary. At a minimum, take the game’s budget, and allocate it all over again as a baseline for marketing, though it can easily go higher, say, four times as high for a large project like Call of Duty, or something akin to Blizzard’s partnership with Yum Brands. It isn’t cheap to get Soldier 76 on your large soda at Taco Bell, and the game is going to have to recoup that as well. Continue reading

The Devil is in the Delay

On March 28th, Joystiq posted a brief news article where they discussed Diablo 3 with Jay Wilson, the Game Director for its development as well as much of the time post release. The main piece of information is his statement that both the real money and gold auction houses “really hurt” the game. A statement many people would agree with, and many people had echoed through the past leading up to the release, and afterwards.

It isn’t news that the auction houses hurt the game, but it is news that a historically vocal defender of the game would concede such a major point against it within a year of its release. This combined with Wyatt Cheng’s admission that co-op is not the dominant mode, leaves Diablo 3 with only the pillar of piracy fears to stand upon for its troublesome implementations and mechanics.

The heavens did not tremble upon Diablo’s return, the gamers did, and their points are being slowly conceded by the developers, once it is out of their hands.

Diablo III is Better on PS4

Destructoid reports that the PlayStation 4 version of Diablo 3 will not have the Real Money Auction House, or DRM in general. It will be fully playable while offline. The Real Money Auction House was at least at one point used as the justification of the always online requirement, a requirement enforced by remotely executed game logic, turning your experience into one of playing OnLive but with your machine having to do the rendering. With that gone, PlayStation 4 users can experience the game as PC users had hoped to, in a responsive form.

Let us not forget that the Real Money Auction House does not bring necessarily new functionality to users, item trading for cash has been around much longer than Diablo 3, rather this loops Blizzard in on the activity. It is a feature that is primarily for an additional monetization loop, one that does not add any content to the game. Remember that PC users were restrained in both device and experience for the sake of this monetization scheme, and PS4 users will be receiving the game without such restraints. PC sales were insufficient for Blizzard, but PS4 sales are. Continue reading