Big Budget Games - Input needed

[Sprony]

Hello guys,

 

Yesterday it was reported that Activision is spending 500 million on the development and promotion of Destiny. The discussion here was very interesting and I think it's a topic, for me personally, that's worth exploring. However, I need industry pro's for that. I will not exclude anyone from sharing their views, in fact, I encourage it. But, I would like to hear from insiders how they feel about big teams/huge budgets and what this means for the industry.

 

Even though I'll use Google to find relevant articles feel free to mention them here as well or share whatever else you feel is relevant.

 

I appreciated all input and be aware that this topic will probably be used for a future article (if it's deemed good and relevant enough).Last but not least, for the insiders that would like to share but not do this publicly, feel free to PM me instead.

 

Thanks!

[marks]

I would like to hear from insiders how they feel about big teams/huge budgets and what this means for the industry.

Edited May 7, 2014 by marks

[Thrik]

Haha, very succinct but true marks.

I think that putting money into exceptional games is commendable, but this industry is unbelievably unpredictable. Even the next Call of Duty game could end up being a complete flop if everything lines up a certain way, never mind something completely new and unknown like Destiny. Plus there's the quality and fun of the game itself to consider: you can throw endless marketing at a game, but if it gets sub-par reviews and doesn't have something that makes people desperate to play it (i.e. extremely well-known IP) then it counts for nothing.

Another thing to consider is that a studio isn't necessarily going to produce gold every time, even if it's experienced huge success in the past. Angry Birds is one of the most successful games of all time, but I bet you that Rovio will never release another hit that comes close without using the Angry Birds IP. I have no idea whether or not Destiny will be a great game, but can any game be guaranteed to be amazing? Is it really smart to bank so much money on the hope that it will?

Personally, what annoys me about so much money being spent on one game is that it means there are numerous smaller games that aren't getting green lit. If something like Uncharted 2 can be developed for about $20m, what kinds of games are we missing out on when $300–$500 is laid down for a single game? Imagine if we could see what games weren't developed as a result of such costs being put aside for Destiny — can any game really be worth the sacrifice of all those others?

What's interesting is that on a game-by-game basis, the development costs means nothing to us; we'll play the game and we'll either like it or we won't. If we go and spend £45 on a game and we enjoy it, we're happy. But if Uncharted 4 came along and cost a BILLION dollars to make and we know the kind of effect that would inevitably have on peoples' livelihoods and the development of games in general, at what point do we say 'this is a bit too much'?

I guess the film industry should be looked at here because they've gone through a similar situation there and things have more or less balanced out I think. They bank huge budgets on things they think will sell like crazy (e.g. Marvel films), but when a film doesn't do so well they seem to survive. I wonder how many jobs and such are lost though, and what kind of effect it has overall. I guess unions protect people?

But let's not forget that these film studios are massive, and simultaneously fund both small-budget indie films and blockbusters alike; even though they put huge sums aside for epic films, they also produce (via different brands) low-budget 'art' films and other such things. Does a comparable company exist yet in the games industry? EA and Activision are no Disney or Time Warner.

[blackdog]

you can throw endless marketing at a game, but if it gets sub-par reviews and doesn't have something that makes people desperate to play it (i.e. extremely well-known IP) then it counts for nothing.

The marketing budget accounts also paying for good reviews 3:-D

[Sigma]

Bear in mind that the $500 MM is spread out over 10 years and is inclusive of short-term and long-term milestones, infrastructure, customer care, and marketing on top of the development costs of a whole IP. In terms of where Bungie itself is sitting, if analyzed as an investor might, it suggests a strong investment. With anticipated domestic (US) video games sales exceeding the previous year's $21 billion (ESA), the strong history of Bungie to produce record breaking sales, and increasingly beneficial conditions to consumers to gain access to video games (lowering barriers) as well as recent historical sales revenues exceeding the $500 MM (easily) for single titles-- through the use of initial sales, micro-transactions, and DLC sales--I can see the 500$ MM mark being hit relatively easy. First 24 hour sales will likely exceed expectations (if not records due to name brand alone) and propel further sales. The cash flow for the 10 years will be the determining factor, and the large investments up front will reduce costs down the line freeing up future possibilities of development. Of course good reviews and fun is a factor, but Destiny is already receiving good press (although the same was said for Aliens: Colonial Marines??).

Edited May 7, 2014 by Sigma

[FMPONE]

 

I would like to hear from insiders how they feel about big teams/huge budgets and what this means for the industry.

 

 

All that really needs to be said

[AlexM]

Bear in mind that the $500 MM is spread out over 10 years and is inclusive of short-term and long-term milestones, infrastructure, customer care, and marketing on top of the development costs of a whole IP. In terms of where Bungie itself is sitting, if analyzed as an investor might, it suggests a strong investment. With anticipated domestic (US) video games sales exceeding the previous year's $21 billion (ESA), the strong history of Bungie to produce record breaking sales, and increasingly beneficial conditions to consumers to gain access to video games (lowering barriers) as well as recent historical sales revenues exceeding the $500 MM (easily) for single titles-- through the use of initial sales, micro-transactions, and DLC sales--I can see the 500$ MM mark being hit relatively easy. First 24 hour sales will likely exceed expectations (if not records due to name brand alone) and propel further sales. The cash flow for the 10 years will be the determining factor, and the large investments up front will reduce costs down the line freeing up future possibilities of development. Of course good reviews and fun is a factor, but Destiny is already receiving good press (although the same was said for Aliens: Colonial Marines??).

 

It's spread out over 10 years? I thought Bungie was just bound to Activision for 10 years. If that's the case then 50 million a year is actually not that much, 

[Castle]

 

you can throw endless marketing at a game, but if it gets sub-par reviews and doesn't have something that makes people desperate to play it (i.e. extremely well-known IP) then it counts for nothing.

The marketing budget accounts also paying for good reviews 3:-D

 

 

On that note, the side effect of this is that word of mouth inevitably ends up being the biggest influence for a games success. At least, that is what I have been told. ;D

[Sigma]

 

Bear in mind that the $500 MM is spread out over 10 years and is inclusive of short-term and long-term milestones, infrastructure, customer care, and marketing on top of the development costs of a whole IP. In terms of where Bungie itself is sitting, if analyzed as an investor might, it suggests a strong investment. With anticipated domestic (US) video games sales exceeding the previous year's $21 billion (ESA), the strong history of Bungie to produce record breaking sales, and increasingly beneficial conditions to consumers to gain access to video games (lowering barriers) as well as recent historical sales revenues exceeding the $500 MM (easily) for single titles-- through the use of initial sales, micro-transactions, and DLC sales--I can see the 500$ MM mark being hit relatively easy. First 24 hour sales will likely exceed expectations (if not records due to name brand alone) and propel further sales. The cash flow for the 10 years will be the determining factor, and the large investments up front will reduce costs down the line freeing up future possibilities of development. Of course good reviews and fun is a factor, but Destiny is already receiving good press (although the same was said for Aliens: Colonial Marines??).

 

It's spread out over 10 years? I thought Bungie was just bound to Activision for 10 years. If that's the case then 50 million a year is actually not that much, 

 

 

Per: http://uk.reuters.com/article/2014/05/06/us-activision-destiny-idUKBREA4501F20140506

 

"Bungie's very ambitious plan is designed to unfold over a 10-year period, "said an Activision spokesperson. "The depth of creative content, scope and scale is unprecedented and is required to bring Bungie's vision to life."

 

This leads me to believe the $500 MM will be used over the course of the 10 years and not just the initial launch period--although if all of it is used at the launch period I still believe that Activision will recoup the costs inside of 1 year for the title--especially considering the possibilities of DLC and micro-transactions even if sales numbers do not hit the GTA V level. Demand appears to have lessened -- but I attribute that to consumer tiredness with the Call of Duty brand and not necessarily the FPS (or MMO) genre. 

[Izuno]

Investment spend.

 

Activision probably looked back at Call of Duty history and realized if they could have somehow invested more earlier on it might have grown bigger earlier.  But that strategy has risks of creating quicker franchise burnout.  Call of Duty took a few years to peak and has had an amazing run which is still going, just its biggest years are behind it.  They just want Destiny to go on a similar run and it's going to take a huge upfront investment.  

 

Also, if you have to bet on someone, Activision is rationalizing that betting on Bungie is hopefully "safe" even though it too still has risks.

 

tl;dr: I understand Activision's thinking but the plan is not without risk. 

 

Dead horse beating!

[text_fish]

It's a toyBox exclusive, isn't it? Fourteen year old boys would throw their pocket money at a picture of a turd if you put $500m behind it and slap positive reviews all over the marketing material, conveniently quoted from the official platform magazines that have a vested interest so you don't even have to bribe them! Then, once it's reached "critical mass" the slightly less gullible consumers start pissing cash all over it because if it's sold X amount and the publisher can afford to show the trailer during the world cup it's GOT to be the best damn picture of a turd EVER!!11 And then once you've got the slightly less gullible consumers on board their friends will need to buy it as well so that they can all sit around in their living rooms looking at the picture of the turd and calling each other fagn00bzors over their headsets because, y'know ... that's what they do, isn't it?

 

Not that I'm cynical or anything.

[FrieChamp]

It's a toyBox exclusive, isn't it?

 

You mean XBOX? No, it's not.

[text_fish]

Yeah I know, I was being facetious about the fact that they've said they won't be releasing a PC version (I guess they don't have enough money to produce the kind of highly polished, not-at-all-half-arsed PC ports they did for Halo  ).

 

Not that I'm bitter or anything.