Blockbuster Game Development Costs Are Out Of Control

The production of big-budget games has felt unsustainable for a while now, and all evidence points to major blockbusters only getting more expensive in the years to come. Testimony in the regulatory fight over Microsoft’s acquisition of Activision Blizzard shows that game publishers are spending more than ever to make new entries in their biggest franchises, from Call of Duty to Grand Theft Auto VI. One publisher even claims to have spent over $US1 billion on a recent release when both production and marketing costs are taken into account.

The recent decision by the UK’s Competition and Markets Authority (CMA) to block Microsoft’s merger was accompanied by a 418-page report outlining its research and reasoning, including a section devoted to ever-rising game development costs (via IGN). It cites research by market analyst firm IDG projecting blockbuster game budgets would grow from an average of $US50-150 million last console generation to over $US200 million for games released in the next couple of years. Back in 2014, it was closer to $US60 million.

The CMA, referencing the report, writes:

Also, the report says that some AAA franchises like CoD have development budgets already exceeding $US300 million, and the next GTA and other future tent-poles are also expected to hit $US250 million or higher. Activision is also quoted in this report saying with reference to CoD: ‘We have to make so much content for Call of Duty, that we can’t even lean on one lead studio anymore. Now we need almost 1.5 lead studios for each annual CoD. That kind of bandwidth pressure is forcing us to use outsourcers more and more. I don’t see that changing anytime soon.’

The regulators then cite testimony from other publishers about their own hit franchises that reinforces this trend. While some of the ranges differ, they’re all going up:

• One publisher said it spends $US164 million on pre-launch development costs and $US55 million on marketing
• Another publisher said budgets range from $US80 million to $US350 million, with marketing costs of up to $US310 million for the biggest games
• A third publisher reported costs of between $US110 million to $US350 million for recent releases
• A fourth publisher said budgets ranged from $US90 million to $US180 million, with marketing ranging from $US50 million to $US150 million. Its most expensive game cost $US660 million to develop with a marketing budget of $US550 million.

The CMA points to this as evidence that it’s unlikely another company could reasonably make a replacement for Call of Duty anytime soon, but it also shows just how unsustainable big-budget game development has become. With blockbusters like Suicide Squad and Starfield costing a ton and taking forever to come out, the pressures and risks associated with them succeeding or failing are great than ever.

It’s a recipe for disaster, and also has publishers continuing to retreat into their most trusted franchises. Ubisoft has been upfront about doubling down on Assassin’s Creed and Far Cry, while nearly halfway through the current console generation, PlayStation fans are still waiting for Sony to take a swing on new IPs.

Shawn Layden, former chairman of Sony Interactive Entertainment Worldwide Studios, predicted back in 2020 that the PS5 era would push this maths to the breaking point. “I don’t think, in the next generation, you can take those numbers and multiply them by two and expect the industry to continue to grow,” he said at the time. Some of the biggest game companies appear determined to try and do just that.