Why is it so expensive to make games in the United States?
gamedeveloper.com
gamedeveloper.com
Games don't bring in enough revenue to sustain employees in high-cost-of-living areas ($7B revenue for EA versus $305B for Google in 2023). From the business perspective it doesn't make sense for a game company to pay SF Bay Area tech salaries when it's making so much less revenue, so the result is more and more game development shifts overseas.
Then from the employee perspective, it's already a brutal nights-and-weekends industry. "Crunch time" is normal. If you add to that poor relative pay for where you live, it's just not worth it anymore to chase a dream you once had as a kid.
I personally am much more satisfied with my life as a result of the shift. But it is a sad trend for the US.
In that environment, who rises to the top? It's the studios who are willing to make it their life's purpose to make the best game possible, which means 70+ hour weeks. What they produce is awe inspiring but it's a sweatshop.
I literally interviewed once at a game studio that told me, "You will not do well here if you have a family." Kudos to them for being upfront about it. A friend who took their offer told me they expected him to work Thanksgiving and Christmas day.
Japan is on a whole other level of "crunch" however. Not in the case that they rush last minute (but it's not unheard of, far from it), but in that the regular is 60 hours a week, along with any "workplace activities" that take place after work. They will almost never have layoffs in the tradiional sense due to their labor laws, but they have kind (very big severance) and creative (isolate you from the team to do useless busywork) ways to make people quit if pushed to that point.
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Look at the level of scale between EA (who's about as far on the "unethical scale" as you can get) and even mid-tier tech companies. There's just too much money in factors like ads to ever bridge that gap with "just good games". That's why mobile makes more money than console/PC. There just aren't enough of the latter to support an entire studio whlie expecting each devs to have cushy 6 figure salaries.
more napkin math: for a $60 game, every $100k/yr dev would need 2000 sales a year to break even on their labor. multiply it by 100* and that's 200k sales a year. add in platform cuts and health care and we're easily breaking 400k sales a year for this break even point. and of course we're talking about 4-5 years cycles of no game revenue, so you need 2m sales just to pay back the initial dev cost.
There's simply no "ethical" way to reliable hit those kinds of figures. So outside of "making a good game", the "ehitcal" choices are:
1. Make games more expensive
2. Reduce platform cuts
3. Make games faster (aka, smaller and/or leaner, if we're talking ethically)
4. Reduce costs of living (which can help justify lower dev salaries since they have less expenses)
1) already happened with the $70 price increase, and that's still irritating to gamers despite being a mere 16% increase after 16 years (an increase that doesn't even keep up with inflation). 2) happens behind closed doors all the time with platform holders so that does help alleviate some of the sales needs. 3) isn't popular in AAA productions but a few (like Obsidian, in this article) do employ this strategy of making smaller games between the big releases. 4) is basically a pipedream that's far outside the industry, unless the industry starts hiring in lower CoL areas.
But some of these do imply some grey area solutions:
5. make games with less people
6. make studios located in cheaper areas
5) is basically trying to happen right now with the same elephant in the room as the rest of tech: AI. Generative AI in the case of games. This can be exciting, but the way early adoption has happened so far isn't much better than all the lawsuits being brought forth due to OpenAI's reckless abandonment. Companies don't want to streamline their current talent, they want to replace them, and that only spells bad news if you don't like the current slop out there right now. It will get a lot worse before it gets better, and I can only hope that when the dust settles that there's at least some proper attribution solution (at a moral minimum, there'd be some sort of kickback/residual based on what the AI prompt sources to generate. But that's far from certain).
6) is the same. A great opportunity to not have this industry turn into Hollywood by expanding and nurturing talent nationwide or globally. But they aren't giving modest wages to lower CoL states, they are using it to drive costs down to salaries that high CoL states would barely be able to live on. There's
So yeah, it's a lost cause beyond the fault of even the industry, let alone a single gamer. But 5) does have a healthy caveat: actually smaller but more tightly made games. AKA indie teams or studios. 1m sales may be a bust for a AAA title these days, but it'd be absolutely life changing for a team of 5-10 devs staying lean. So take some steps to at least explore your favorite genres past the most popular releases. Support smaller teams whose individual sale goes a lot further (even $5 for a team of 10 is a more money than $70 for a team of 500. And the former doesn't usually ask for more money unless it's a decent expansion). Follow their feeds and wishlist and comment about your excitement for interesting upcoming indies. You can't help everyone, but collectively more attention and demand to indie productions would at worst show a path as a side hustle for more potential developers.
And as a maybe controversial piece of advice: try looking outside Steam as well. Steam has had a bit of an unhealthy counter effect as of late on indies, and their strategies make it clear that they are focusing on relieving AAA studios of platform cuts instead of smaller game. Basically the reverse model of what unity/unreal engine do with their compensation schemes. Many games are on Steam only, but it's another note of consideration that can put more money in an indie's hand. Itch IO has a "choose your own cut model" and its default cut is only 10%. GOG still has a 30% cut but they offer (or at least, used to) offer a few other payment options.
*(so a sizeable but still "small studio", compared to the hundreds in a AAA title. I believe Destiny 2 had at least 600 devs on boat at one point)
Meanwhile, the technical work is very sophisticated and game engineers can work elsewhere, so they justifiably want to be paid well or they will leave to adjacent industries. Plus life is expensive in America. Six figure salary ain't what it used to be. People overseas, including western Europe, will do comparable work for peanuts. Article basically gets it correct. Not sure the problem can be solved. Joe in Seattle wants $150,000. Jozef in Poland wants $50,000. Case closed.
Still, I'm grateful to get to make games with cool people every day. Carpe diem!
Probably 45? It isn't like USA is dominating the video game space, unlike most other IT sectors, you find talented video game engineers in many places.
Earlier this year, a firm named "Embracer Group" bought up a whole bunch of studios, including Cryptic. Their approach was to create a new studio headquartered in Berlin that uses remote workers living in cheaper areas of the globe. They're having Cryptic train their replacements at the new company before they are, in turn, laid off.
Long story short, the business types believe that software developers are a fungible commodity and see no difference between a home-working Mumbai developer and someone living in Silicon valley, except for what they must be paid.
Only time will tell if this view will result in bigger profits or the death of everything firms like Embracer Group touch.
PS. Why is the above comment being downvoted?
Adjusted for inflation, SNES games cost over $100. Now games are 100x larger in terms of content, and while the market has increased, the price is halved at best. $100 got you a game made by 1 or two people. Now $50 gets you a game with a thirty minutes credits roll. Microsoft and Sony offer games for a monthly price, and budget consumers buy games used - such that GameStop captures the additional value.
In 2000 I was paid just over $100k as a game developer. Adjusted for inflation that's $182k. I'd be almost tempted to go back if someone could pay that much, reliably. They don't pay that much and they certainly aren't reliable.
Underlying it all is that the USA is no longer the only industrialized nation in the world, as it once was after everywhere else was bombed flat. So just as countless TV shows are made in Canada and elsewhere, so too games can be made elsewhere.
It seems crazy to discuss gamer salaries without discussing how normally dysfunctional game studios are, with crunch time all year round, intense burnout of young employees, terrible working conditions, and rarely hitting schedule or budget constraints. In other words, there's a huge opportunity cost in reforming the process by which studios make games, and all they need to do is look at TV to see how to do it. Hell, just hiring some television producers would probably bring a level of sanity as-yet-unseen.
Part of what drives high salaries in gaming is the terrible working conditions. You could pay less just by saying "we work 9 to 5 and value quality of life."
TV and movies are produced by people who understand storytelling. This is something that has been discussed in the game dev industry ever since the arrival of CD-ROMs. Suddenly, free of the constraints of floppy disks, devs thought they could create huge fantastic worlds to roam in. They sure did, but they have lost the plot. CD-ROM and then DVDs removed one of important constraints that forced creativity; cheap 24bit 3d cards removed another. And yet, one of the most fun games in recent history is Minecraft, a game that does not need gigabytes of textures or fancy 3d hardware.
Some oft quoted statistic states that the average game dev is in industry for 5 years. The churn is insane and it doesn't surprise me that there's a lot of chaos slowing matters down. This is sadly a common thing across all of America, but it may hit creative endeavors working in cutting edge tech even harder. Some non-tech office working on crud and IT can probably operate for years, decades before its too late. A bad release can tank a studio right there.
As a contrast, look at Nintendo. an absolutely unthinkable (for America) 97% retention rate. IIRC 4 of the 6 people who worked on the original 1980 Super Mario worked on the 2023 Mario Wonder. They may have a few delays but only in crazy circumstance and very rarely a significant one once they lock in (Animal crossing is the biggest example). On the contrary, They pushed up Xenoblade Chronicles 3 a few months, meaning they had a game either ahead of schedule or sitting and waiting to release (again, unthinkable seeing western studios). They are far from perfect (their Western branches more r less work the same way as any other), but it's clear that their investment in talent has given them a portfolio and reputation that has endured decades.
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Anyways, I'm not a producer, so I don't have the answers on how to fix this. My only recourse is to setup a structure to make my own games, and make as complete a game as I can before recruiting a few (and only a few) hands to get it across the finish line. Smaller staff means lower bars to success, recruiting late means there's not much creative clashing on what/how the game plays. a focus on shipping over vast scales and maintaining a service.
No innovation in this market. EA continues to milk the sports series with minimal to no improvements in underlying engine (ie, Sims, FIFA and whatever the American Football one is called now). Epic Games just milks Fortnite (again with microtransactions). Mobile game studios are more like nanotransaction based “games” using tactics from casinos to get older and younger populations to spend money. Activision/Blizzard hasn’t pumped out anything new in a long time and continues to milk their cash cows (Call of Duty, Overwatch “2”).
Riot Games building off predecessors with F2P w/ microtransactions. RG produced games are _okay_, but really only LoL and Valorant are the ones I play.
Indie game studios sort of gaining traction but often overshadowed by larger game studios.
Also let’s not forget the monopoly that Microsoft has over gaming. Want a AAA game? Got to use their proprietary shit (DirectX) to build it and ship it. Probably need to obtain Windows licenses as well for dev purposes.
Some advancements in agnostic APIs such as Vulcan and alternative game engines (bevy). But so far haven’t seen them used in AAA games.
And while UE/Unity power a lot of games, many studios do opt for some propreitaty engine. All the big studios are still maintaining their own tech for sure. But I agree, I am waiting for that "third pillar" to emerge, ideally an open source one to prevent the possibiliy of a Unity mishap. We'll see how that dust settles.
While this is true - in Poland the difference between IT and non-IT salaries are higher than in US, so it's not a good comparison for cost of hiring programmers in particular. The differences won't be as big.
Funnily enough the higher taxes in Poland are the main reason cost of development is effectively LOWER here - because you don't have to save for crazy expansive medical insurances or university funds for your kids - cause it's provided for free by the state - and the private alternatives have to compete with that - so they are cheap as well.
- The country nixes Universal Health care but companies then complain about needing to fund healthcare benefits.
- They kill Pension decades ago and slowly shift to a attrition oriented recruiting and they wonder why workers leave after 6-18 months.
- College becomes 3-4 times more expensive than 40 years ago, and then companies complain that entry level wants more money coming out to pay the unbankruptable debt (thanks Sallie Mae!) they had to take at 18 just to get noticed by recruiters at 22-23.
- Then instead you ask for "3-4 years of experience with a shipped game" for "entry level", but college doesn't count for experience. All while being unwilling to train juniors and just hope they hit the ground running.
Yes, the system is broken and companies have been hammering at the window for decades to help. No wonder it eventually broke.
https://news.ycombinator.com/item?id=32998091
It's a javascript snippet that you stick in a bookmark and click on when you encounter a site like this. Results vary, but it did a great job of making this site readable.
If American studios could find publishing contracts leaving them more than 50% of equity like they used to in 1990s-early 2000s they would be making games much cheaper. Even though you might get cheaper developers elsewhere, few have skills and spend most of the time on learning how to make games through trial and error, running costs up.
I remember how expensive Killzone appeared to the American game developers: the Dutch studio, apparently had hundreds of staff and tens of millions cost in early 2000s, when a better selling American game had been usually developed by a couple of dozens staff for under 10mil.
Was the question about Killzone being expensive or was it that they had a large team so it was assumed to be expensive (because US devs got paid more)?
>Was the question about Killzone being expensive or was it that they had a large team so it was assumed to be expensive (because US devs got paid more)?
The rumored budget for Killzone (not 2, not Shadow Fall, the plain old PS2 game) was ~40M dollars. Guerrilla had over 200 people at the time it shipped and the development time was well over a AAA game normally took in that generation. Just looking in credits you can see 18 engineers, something that nobody has seen until PS3 generation. It might have been that they have already staffed up for the KZ2 and PS3 development but nevertheless American developers were shocked by the waste of the resources on the game that barely sold.
Sequels and Horizon or whatever else you like are irrelevant to the financials. Sony game business does not seem to be doing well now but how is it related to the financial performance of an European studio from 20 years ago? (Even though I can see how acquisition of Guerrilla eventually led to the current sad state of affairs, the Guerrilla's boss had been in charge of Sony's first party development during the period of Sony's decline).
Funnily enough, they are doing this again, but with Fortnite, given buying Destiny and working on Concord and publishing Helldivers. Helldivers seems fine, but I'm not sure if Firewalk and Bungie will get the same graces Guerilla did back in the day. The game has definitely changed for the worse in that regard.
Ofc this model doesn't work with GaaS, which isnt the new golden goose. They try for 6 months, realize they didn't get fortnite money (even though Fortnite had to do a lot just to get off the ground) and shut down in a year to try the same insanity again. This is what happens when you have Business driving games instead of creatives, and I'm not quite sure when they'll learn the lesson (or go back to non-GAAS where this strategy works).
1. It's too expensive to make a game
2. Employees in the industry don't get paid enough
Similar industries include childcare, where you hear politicians decry the cost of childcare in the same breath and how little the workers in their field are getting paid.
Maybe the costs are somewhere else, not employees? Nope. From the article:
> That cash flow is essential because a studio's operational costs remain fixed (or even increase) while revenue fluctuates up and down. Like most software companies, game development operating costs are derived almost entirely from salaries. And in the United States, there are dozens of factors that drive salaries upward.
So I guess the article is arguing salaries are too high, which is not something you hear too often in the game industry context.
But universal healthcare is one way we can really fix our labor market: by making it a public benefit with mean-based contributions, labor markets would relax a lot: more jobs become viable even if they otherwise don't economically meet the bar to provide healthcare, because they don't need to. No one stresses about losing their healthcare when they lose a job, or want to switch, or have to switch. Similar support for retirement savings would help also.
That's not nothing, or even bad per se, but those same people have much better options. Even for normal people at a normal startup and not fishing around till they get lucky they ought to be in the $140k-$200k range, working 30-60hr weeks.
Separately, it's slightly bad. Working at Trader Joe's and McDonald's double full time gets you better pay and benefits than the $80k/yr game dev, especially if they still have any student loans. After taxes, getting lucky with a cheap apartment, and utilities, they're banking $22k/yr. Their chunk of healthcare, either car expenses if they drive in or extra rent if the live close to work, food, ..., makes the situation a lot worse. It's mostly fine starting out if you're single, pretty good even, but adding in any other dependents puts them under water, and they definitely don't have the financial headroom to weather any kind of financial emergency.
No, no they don't: people seem to forget that at a game company, the minority of people are engineers. The extremes are designers: there is pretty much no equivalent to, say, level design outside of the games industry. Other design disciplines - it takes a bit of mental gymnastics to find a way their game work could translate into something out of that industry.
Art? There's a bit of fleeing of hollywood VFX going on - it's no more attractive for 3D artists that the gaming industry. Other forms of art in games as well pretty much only have an overlap with hollywood as well (audio too).
Game industry QA? Doesn't really exist in that form anywhere else, but it's a minimum wage job either way.
All this to say that many of the jobs in the games industry don't translate to much outside of it.
Countries with mediocre economies often afford child care and gamedev without much trouble, since their productivity is also mediocre hence their wages and spendings don't run off.
But if you choose to chase that cutting edge tech unchecked, the tech available is growing faster than the tools nor talent needed (especially when you can't retain your talent).
For the same price you can watch a pre-made movie out (granted, usually movies have higher production value and it's a night out), or two nice hamburgers.
Even if there's randomly generated world (roguelike-like), you can usually see all the content in the first 20 hours or so. Sometimes faster than that. Even if the game was amazing, there's no reason to play it once you've figured out ins and outs.
For some reason people keep paying for that stuff, incidentally I've never enjoyed it and only recognized that fact in my 30s - I've never played these most popular genres at all!
Some games like Factorio have minimal content but endless combinations of it in interesting ways.
One that stands out is Europa Universalis, which both encodes and presents a crazy amount of history.
But even a paper-thin game with 20 hours of value is cheap at $50. That's $2.5 per hour, ~one-third the rate of a movie, and kind of on par with a new book.
Also, imagine what world looked like when books were as hot sell as games two decades ago. Any books, really, were inifinitely sellable because they provided a dozen hours of mild entertainment and often were the only option.
pricing philosopies are really the only difference. That's why no one sells you a $200 game. They sell a $30-70 game and then sell you 5 $20 expansions along the way, and maybe 10-20 $5 skins (and sadly this is very conservative. Just check out prices in the mobile sector). Gives more time to develop (or cut your losses) and it drip feeds more money out of customers without necessarily making a whole new game.
Some movies can also sell you some merchandise and a poster and perhaps a second go to cinema. More important, they can also sell IP rights to make a game out of it.
And people seem to forget that The Witcher is, first and foremost, a great book series.
sounds like you're talking mostly about the AAA industry. And I don't think we ever really got that "infinite content" in AAA. They have the staff to craft more content over time. Maybe the Sims or city builders? But those also release DLC regularly.
It's the completely opposite in the indie realm. rougelites can be argued to be oversaturated, but the power of such games means that you can play for 5 hours of 500 hours if the loop is good.
>Even if there's randomly generated world (roguelike-like), you can usually see all the content in the first 20 hours or so.
You can argue the same for old school open world games like Skyrim, but people sink thousands of hours into there. It's not a rouge-lite, but people play different builds, roleplay different characters, mod to add in variety, etc. Mods are rarer in indies but you'll still find them for the popular ones. A few have native mod support as well.
>incidentally I've never enjoyed it and only recognized that fact in my 30s
A shame to hear. I'm in my 30's and I love games more than ever. But I have much less time to I have to be choosy by necessity.
After all, HoMM3 HotA got an update just this year.
Childcare is heavily regulated, so it is impossible to increase productivity. In fact, local childcare boards tend to force lesser productivity by reducing the number of kids one staff can look after, while crunches are impossible. There really is no way to cheaper more accessible childcare because it is legally not allowed (for perhaps well justified reasons).
Game development is the opposite of that, GenAI could take over and as long as ChatGPT can produce a fun game, it is allowed to do so.
But yes, inflation + rising housing costs + a lack of retention + a lack of governmetn interest in the arts are all indeed "a problem with capitalism". You should read those words a bit more closely.