How much does game production cost? From development to marketing

Like any other business, game development is about making money. And making good money with your game requires a certain amount of strategic thinking. Knowing the cost of making a video game is crucial for businesses in the gaming industry. Developing a video game in 2023, especially for multiple platforms, is a composite process that requires solid investment, with costs ranging from various factors such as:

• salaries;
• equipment budgets;
• required software fees;
• marketing expenses.

Understanding the cost of making a game is essential for ensuring a profit and avoiding financial losses.

Knowing game development costs allows businesses to make budget-allocation-related decisions based on data and numbers. From determining the scale of the required works and target platforms to planning the development timelines,  estimating the cost of game development with high accuracy can also help businesses secure funding from investors or publishers.

Moreover, knowing the cost of game development is essential for pricing decisions. Game-making businesses need to set a price for their games that is attractive to customers and profitable for the publisher and developer. If the price of development for a game is too high, the game’s price may be too high for customers, leading to poor sales and revenue. Alternatively, low prices can harm profits, mainly if development costs are high. A lot of good games showed insufficient numbers due to incorrect pricing and monetizing decisions.

Why is there so little information about the game development cost?

There are some reasons for a lack of readily available information about the cost of game development:

Game specifics

Firstly, the cost of developing a video game can vary widely based on a multitude of factors, including the amount of required work to be done due to the scope of the game, the amount and type of the game mechanics, the size of the required team, and their skill level, the technology stack applied, and the expanse of the development cycle. This makes it challenging to provide accurate and standardized estimates of game development costs.

Informational security

Secondly, the gaming industry is highly competitive, and companies are often reluctant to disclose specific details about their development costs. Companies do this due to concerns about protecting trade secrets and confidential information and avoiding giving competitors a strategic advantage.

Risk management

Thirdly, video game development costs can be unpredictable and challenging to forecast, particularly for independent studios or not big companies. The reason for it is the inherent risks and uncertainties that go along with the creative process and external factors such as market trends, changing consumer preferences, and technological advancements.

Random factors

Finally, the cost of game development can also be influenced by factors outside of a studio’s control, such as government regulations, taxes, and economic conditions.

Overall, the issue of the need for more information about game development costs is influenced by several factors. However, with the increasing importance of transparency and accountability in the digital gaming industry, we may see more efforts toward standardizing and disclosing development cost information in the future.

Factors that Affect the Cost of Making a Video Game

Despite all the secrecy, we can easily name factors that directly influence video game budgets and can be counted in money with some degree of accuracy. These factors are:

Salaries

Salaries, obviously, have a significant effect on the general cost of a videogame. The development process involves various roles, including programmers, designers, artists, animators, and writers, each with its salary range. The salaries of these professionals can be significantly different,  depending on their level of experience, location, and the company’s size. As a result, the cost of wages can make up a significant portion of the total development budget. Studios must carefully balance hiring and compensation decisions to ensure they have the talent they need to create a high-quality game while managing costs effectively. Failing to do so can lead to project delays, poor quality, or financial losses.

Check out our latest material to find out the game development salaries worldwide.

Software and hardware expenses

Making a particular game requires a specific set of software and hardware. On the side of the hardware, it might be development kits for consoles, testing devices, various sets of game controllers, different mobile device models, servers for developing online services, etc. As for software, you will need a set of licenses and the coding software and game engine, which will most certainly require some paid adjustments for your game. All these factors should be considered when counting the cost of game development.

Marketing and distribution costs

The promotional and distributional expenses are significant factors that affect the cost of making a video game. Developing a game is only half of the equation; it must also be marketed and distributed to reach its target audience effectively. Marketing costs can include advertising, influencer partnerships, and promotional events, among others, and can be quite expensive. Distribution costs can consist of fees charged by digital distribution platforms or the costs of producing physical copies of the game. These costs can add up quickly, especially for games with a high marketing budget or a broad distribution reach. As a result, studios must carefully consider their promotional initiatives to ensure they are cost-effective and align with their overall business objectives. Failure to manage these costs effectively can lead to poor sales and financial losses.

Other expenses

Some more conditions should definitely be considered when counting the required money for  making your game. These are:

1. rent budgets for the offices, server facilities, and other spatial needs of game development companies;
2. legal fees for licensing for various markets, passing the age restriction tests, taxes, insurance, etc. Legal fees associated with licensing intellectual property, securing trademarks, and navigating legal regulations can add up quickly and impact the development cost.
3. localization costs – If a game requires localization for multiple languages and regions, the development cost can increase significantly. This can involve hiring translators and voice actors and adapting game mechanics to suit cultural preferences.audio and music: T game sounds can impact development costs, particularly for games with complex sound designs or significant musical scores. This can include hiring audio engineers, composers and purchasing or licensing audio and music assets.

How much can an indie game cost to be developed?

Naming an exact number may harm here because some companies fall into the “we have X dollars, make us a game for X dollars” trap, which ruins many ambitious indie games. And it’s also worth defining an indie game before counting budgets. Among Us and Hades are indie games, but their costs drastically differ.

The development costs for indie games are generally lower than those for AAA games, which can have budgets in the tens of millions of dollars. Indie games typically have smaller development teams, more simpler game mechanics (which might also be more creative than in more mainstream games), and lower production values. However, this does not mean indie games are less innovative or enjoyable than their AAA counterparts. In fact, many indie games have gained significant popularity and critical acclaim in recent years.

While the development costs of indie games may be lower, the marketing and distribution costs can still be significant. Indie developers must rely on crowdfunding, self-publishing, and social media marketing to get their games noticed, which can require significant time and financial investments. As a result, the overall cost of developing and launching an indie game can vary widely and depends on various factors.

What Is the Development Cost of an AAA Game?

Again, we’re not trying to guess the numbers here. Both Hogwarts Legacy and Call of Duty are considered AAA, but their budgets differ rapidly. But here are some things you can keep in mind while counting a budget for developing an AAA game.

• The budget of a modern AAA game of a trending genre can equal a Hollywood movie budget.
• The average AAA game takes a significant time period to develop: from 2 to 5 and more years. The longer development takes – the more expensive it gets.
• The budget for the average AAA game can vary significantly depending on factors such as the type and genre of the game, whether it has multiplayer or not, its complexity level, and the development team’s size.
• AAA games often have extended development teams which require expensive tools and technology, which can drive up the cost of development. Also, making big games often requires outsourcing companies’ assistance, development help, sound production, localization, etc.

Here are some examples of budgets for famous games:

• Battlefield 2042 budget is reportedly $2 billion.
• Elden Ring’s budget is around $200 million.
• Marvel’s  Spider Man cost $100 million to develop.

How to Manage the Cost of Making a Video Game?

• Planning and Budgeting

These are critical aspects of managing the cost of making a video game. Right before development begins, studios need to create a detailed plan outlining the project’s scope, the key milestones and deliverables, and the resources required to complete the game. This plan should include a comprehensive budget that accounts for all of the costs associated with development, including salaries, software and hardware expenses, marketing and distribution costs, and any other expenses related to the game’s production, part of which are listed above.
Studios should regularly review their budget and project plan throughout the development cycle to ensure they stay on track and within budget. This includes identifying potential risks or issues that could impact the project timeline or budget and developing contingency plans to mitigate these risks. It is also essential to track actual spending and compare it to the budget to identify any areas where costs exceed expectations, allowing corrective action to be taken promptly.

Effective planning and budgeting can help studios manage costs, avoid financial losses, and ensure the successful completion of a high-quality game. By carefully considering all the factors that can impact development costs and regularly reviewing and adjusting the budget and project plan, studios can maximize their chances of success in a highly competitive industry.

• Outsourcing

Outsourcing is a common strategy studios use to manage the cost of making a video game. By outsourcing certain aspects of game development, such as art or sound design, porting, or Quality Assurance, studios can access specialized expertise and resources without hiring additional in-house staff. This can reduce salary and benefits expenses and allow studios to focus on their main competencies and strong sides, such as programming or game design.

Outsourcing can also help studios manage their workload and improve project efficiency. By outsourcing a part of tasks, especially those requiring significant time or expertise, studios can free up internal resources to focus on high-priority tasks essential to the game’s success. This can help ensure that the game is ready to be released on the announced date and within budget, which is crucial in a highly competitive industry where delays or cost overruns can significantly impact a game’s success.

Outsourcing can effectively manage the cost of making a video game and improve overall project efficiency. Of course, outsourcing can also come with some risks, including communication and quality control issues. To mitigate these risks, studios must carefully vet and select outsourcing partners, establish clear communication channels and quality standards, and closely monitor progress throughout the development cycle.

• Agile Development

Flexibility and ability to adapt in modern game development can save a lot of energy and time, which leads to saving money.  Frequent iterations and reviews during the development cycle may help discover smarter and more resource-friendly ways to develop your game.  This allows development teams to respond quickly to changing requirements or feedback and adjust the project plan and budget as needed.

One of the key benefits of Agile development is that it is helpful in reducing unnecessary budget waste and improving efficiency. By breaking down the development process into smaller, more manageable tasks, teams can focus on high-priority tasks and deliverables, which helps to keep the project on track and within not overuse the budget. Agile development also allows teams to quickly identify and address any issues or challenges, reducing the risk of delays or cost overruns.

Overall, Agile development is a valuable approach for managing the cost of making a video game. By emphasizing flexibility, efficiency, and collaboration, Agile approach to development can help studios meet the deadlines within budget with no loss of quality.

The Bottom Line

In summary, understanding the cost of making a video game is critical for businesses in the gaming industry. It enables informed decision-making, efficient resource management, and effective pricing strategies, all vital for achieving financial success and sustaining long-term growth.