Irrational Games shutting down (Gaming)

by Durandal, Wednesday, February 19, 2014, 18:19 (3725 days ago) @ Kermit

I don't think this is a comment on "games" or the "gaming industry". You have these huge studios that employ hundreds, work for two to three years on a project before seeing any money, and heavily rely on that project doing well to succeed.

I compare it to big industries. Auto manufacturers take three years to design, build and test a car before it goes into production. There are billions invested in thousands of salaries, parts and infrastructure. If the new design doesn't sell, a small company will go under. The bigger groups like Ford or Toyota need to have multiple designs coming out every year or every other year just to cover for the flops. Even if something does sell, there is stiff competition and you cannot always charge what you want for it, which means you can't really use a minor success to compensate for a major fail.

Game studios are even more vulnerable. Most have one or two flagship projects which most of the studio rides on. If they don't perform well, or only perform ok, there may not be enough to float the studio for the next two years while they work on a new concept. News gets around for the big flameouts like Silicon Knights, where the leadership drove things off a cliff, but studios can also be shuttered or disrupted due to bankruptcy by their owners like THQ selling Relic.

None of that has anything to do with the people who play the games. You can still make cool games, I see kick starters for old school stuff all the time. Just the big studios with hundreds of staff can easily get too large and fail. A 5$ shareware game made by two people for 140,000 over two years only needs to sell 28,000 copies to break even.

If Bungie pays 106 employees CA minimum wage (76k/year), they need 8 million per year of development just to cover staff costs. Add in hardware, subcontractors, and the fact that not every employee is a disembodied soul and the costs balloon even higher. At 60$ per game box sold, they probably need to sell over half a million boxes total just to break even with my estimate above.

Now consider that I am woefully underestimating costs. I truly have no idea how much I'm missing. But again, you have 60$ per box, and Halo 3 sold 15 million copies. If Bungie expects to repeat that, they have 900 million to pay for everything over the 10 year life cycle and still have enough left over to start developing their next great game.