Ep 57: Video Games and Money

2020-05-11

Topic: Video Games and How to Make Money As a follow up to last week's discussion, Mom wondered how people make money in video games, and being the clever nerd that has actually spent along time in the meta narrative on Video Game creation and process, I came back with some information to offer. What does it cost to make a Video Game? This namely depends on the complexity of the game. A game with Side Scrolling or 2D graphics will usually cost less than a game with 3D graphics. But ...

Topic: Video Games and How to Make Money

As a follow up to last week's discussion, Mom wondered how people make money in video games, and being the clever nerd that has actually spent along time in the meta narrative on Video Game creation and process, I came back with some information to offer.

What does it cost to make a Video Game?

This namely depends on the complexity of the game. A game with Side Scrolling or 2D graphics will usually cost less than a game with 3D graphics. But the nature of the game’s content and desire to fulfill it is also necessary.

Staff

There are a core number of elements you need to make a game:

Game Designers

Basically the person who designs the world, mechanics, and fun of a game

Programmers

Individuals that make the Game Designer’s vision possible via programming and developing tools or systems for the game

Graphic Design and Animators

Video Games being a primarily visual media, requires people who will be able to create characters, worlds, and animate them in a game. It can also include menus, UI layout, and ensuring the game’s information is easy to understand

Sound Designers

Every good game needs a sound track, or atleast needs to have an audio feedback to express what the character is doing, if it’s a successful fit or a critical miss. Sound Design relies on giving an audio cue to know you did something

Testers

These are individuals who test your game to ensure that they catch bugs and errors in your game, ensuring that your game is as polished and presentable as possible. Depending on the complexity of game, they can also offer balancing and ideas to further the game.

Producers

These are people who help keep the game in line: whether they ensure every member of the team has the tools necessary, coordinating deadlines and completed tasks, ensuring the game’s vision isn’t lost during development, being a fellow visionary on the game, and much more

Beyond that, you can have more specialized roles and staffs, including an Human Resources, Sales and Marketing, Integration with various console platforms, and so many more positions. Some people may have varying roles or multiple roles, but these are the kinds of people you will needs, and each one will need a salary or compensation for work completed.

Technology

Most games are built in various software engines, on various computer products, and may need various tools and multipurpose libraries of useful assets or information.

Software

Depending on complexity of the game, you may need to buy or license a game engine to run your game and develop for it, which in of itself is not cheap. Some engines are free to use, like Unity, but more powerful engines often cost in the thousands to millions to license and develop on. This is even before the powerful computers necessary to program in. Less complex games can get away with reduced costs.

Services

Depending on your game, especially in an always online world, you may need local and cloud based services like Maps, weather conditions, server space for save data, or a place to host multiplayer games. Services like this will certainly require additional money, especially if your game is popular and takes off.

Templates, Libraries, and Plugins

Most video game elements are not created in a vacuum. Everything from characters and sounds, to how they and other objects have already been built once before. So if you don’t need to rebuild the wheel, why not buy the assets you need for your game. Especially if you’re aiming for certain elements of game play in your game, you can buy assets online that mirror or give you a starting point to develop your own game elements, which can save more time and money down the line.

Time

All games take a period of time to make. This will always be dictated by the scope of the game and the size of the team. So the bigger the game, the more staff, thus more time to produce the game, meaning more money. Some games might also have tighter time constraints, as games based off of movies might need to come out around the same time as the movie, leading to rushed game development. Games with a smaller scope can get by with less staff, but it still takes time.

Typically, games with bigger scopes and large teams will take around 2-3 years to develop a game, as where games with smaller teams can probably take around 10-12 months. These can be quicker or shorter depending on the game complexity and scope, along with the team working on it.

Retail/Revenue

In Sum

Simple games like Angry Birds as an example, might cost around $10,000 to make, while games like Grand Theft Auto 5 might cost $100 million dollars or more. Games that cost more are also expected to sell more too, so a game costing a $100 million dollars needs to sell upwards of 2 million copies before it ever breaks even.

How Game Companies Make Money:

While it’s intended that all games are built to have fun, they are also primarily built to make money. There’s lot of ways game developers and their companies make money off of video games:

Basic Box Retail

This is the most basic version of how a game makes money. Thinking back to the days of the 80s and 90s, where you went to a store, bought the game, and went home and played it. Basically, the act of purchasing the game in question.
Interestingly, most game consoles sell at a loss in the first few years of production. IE, an Xbox 360 might retail for $399, but the same of its parts and labor to put it together might be around $500-$600. The logic being that while the technology is expensive, most people won’t buy multiple consoles, thus locking you in to preferred console. From there, video games themselves can be expensive, $50-$60, and can only be played on that console
Depending on the platform it will be played on, there will likely be fees/costs associated with publishing the game on that platform. Major Gaming Consoles like Playstation, X-Box, and Nintendo will take a small portion of revenue to be able to be played on their systems, but your game will certain reach a wide market. Platforms like computers may have platforms like Steam who help sell your game, but take a portion of the profits from you as a result. If you’re on a mobile platform like Android or Apple, there’s likely a fee to be on the store.

Subscription

This is a pay to play model, where you pay a monthly/yearly fee to play the game. The game itself can have an entrance fee to purchase the game, or require you pay just the Subscription to play alone.
These are typically games that are intended to be played for over several months/years. These are also games with social aspects, whether working with or playing against other players. Typically any game with online play will require a subscription.
Major consoles Xbox, PlayStation, and Nintendo all have subscription services as well to be played to play online with their games. Namely since these companies host the servers connectivity with the games and their developers/publishers, subscriptions to play online are not unusual. Though if you pay a subscription, you won’t be paying them additionally for each game.

Free-To-Play

These are games which are free to play themselves, but may require that you watch/view material outside of the game, or pay to progress through it the game quicker.
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- A game can be free to play, but will require watching or viewing of advertisements.
Freemium
- These are games that are free to play, but take a long time to progress, namely due to the gating of content or progression. The gating can be shortened or eliminated entirely by the purchase of game currency or unlocks, allowing progression of the game to continue.
- Games that rely on this model are looking for gamers they term as ‘Whales’. These are games that will spend lots of money to unlock, progress quicker, or collect rare items in the game. These are the type of people who will spend hundreds or thousands of dollars on game.
Free-To-Play are more common amongst mobile games.