Space Invaded: Video Game Developers Go Hollywood

Slate tackles hard times in the video game biz:

...how can publishers lose money amid such incredible sales and record growth? The answer is simple: They're spending more than they're bringing in. Game development budgets have ballooned, and publishers are reeling because they can't keep the costs under control.

Games weren't always expensive to make: In the early days, a boy with an Apple II could rule the world. While there are still scads of cheaply made games on the market, all of today's big publishers employ hundreds of professional developers per game. These projects take years to complete, as each new generation of hardware allows for unprecedented advances in graphics, sound, and everything else. The greater the complexity of the game, the larger the development team. The larger the development team, the bigger the budget.

While industry leaders anticipated that budgets would creep higher, the shift to high-definition gaming with Microsoft's Xbox 360 and Sony's PlayStation 3 has proved to be more expensive than estimated. At a conference in the spring of 2006, then-Midway developer Cyrus Lum sounded the warning, telling his audience that game development budgets could rise as high as $15 million to $25 million for a single title--previously unheard-of averages. "We need to rethink how we're financing games," Lum concluded.

One thing I wonder about, from a PC perspective at least, is whether there are diminishing returns for ramped-up graphics. Clearly they help, that's not in dispute--but some of my favorite old video games are still great and enjoyable, mostly because they're great games. Everyone knows WoW isn't exactly pushing the boundaries in terms of hardware. And my kid still enjoys Pac-Man...