In 2008, Americans spent more than $21 billion on video game hardware, software and accessories, up from $18 billion in 2007, according to market researcher NPD Group. And sales continued to rise in January and February of this year.

 

Recession my shiny fleshy ass.

The recession hits games developers more on the costs side than on the sales side. Games take a lot of up-front, fixed cost investment before the first dime in revenue is produced. This means that financing is a huge component of developers' business plans. The current recession has developed starting with a huge crunch in credit availability-- loans are just harder to get than they were a year or two ago, and require significantly higher interest rates to cover the risk involved for the lender. Those higher risk premiums can kill a developer or publisher's efforts to keep the lights on.

OK, I see what you mean. But wouldn't that simply make it a case of either:

 

- Convince the publisher to finance the thing off tehir increased revenues

 

or

 

- convince the bank with the same

 

Of course, we don't know how that sales increase breaks down. Maybe RPGs aren't up as far as shooters etc.

When costs are rising, higher sales revenues do not necessarily mean higher profits.

http://www.neogaf.com/forum/showthread.php?t=356377

 

Sega's director speaking on Sega's current status. The explanations given might provide some insight of the possibility why the Aliens RPG was canned(?). Could probably guess the development for the Aliens RPG games supposedly aimed at core gamers costed around 30 - 40 million. That is ALOT of monies.

 

Goodness, must games cost at a Hollywood budget now to produce it?

Edited March 25, 200916 yr by Zoma

Core games cost too much to make, so the solution is not to make core games, brilliant! How about lowering the cost, geniuses? Casual games will be their grave, as his own I-phone example illustrates.

Films aren't very complex, compared with games. You don't have to reinvent the camera every time you make a film.

The entertainment industry is also booming immensely here too, despite the (almost) recession. And unlike Europe and America, Australia still has an extremely liquid credit market. So here's to hoping the next few years see the Australian gaming industry emerge as a more competitive player.

Films aren't very complex, compared with games. You don't have to reinvent the camera every time you make a film.

 

Well, to play Devil's Advocate, here are two films off the top of my head that did have to reinvent their cameras:

 

Barry Lyndon

 

A lot of movies actually do have a substantial technology R&D component; especially animated movies and action movies. Take a look at who presents at SIGGRAPH and count just how many are movie makers.

The primary reason movies cost so much is the bloated salaries demanded by the talent. If the movie industry really starts to feel the pinch, everyone will suddenly discover that they can earn less money and live in smaller mansions.

I would have assumed the higher cost is due to movies needing hundreds of employees, gigantic studios and sets, equipment costing hundreds of thousands of dollars, special effects with much higher quality standards than games, on-location shooting including transportation and housing of cast and possibly crew...

 

Movies are much more logistically complex than games. Not to downplay the effort and expense of mocap and voice recording, but games are primarily developed by a few dozen guys in an office environment.

One of the biggest drivers behind the increase in motion picture development costs has actually been advertising. 20+ years ago, film studios knew they could depend on a regular clientele of habitual weekly moviegoers. Successful films grabbed a higher % of these viewers, and enjoyed a longer run in theaters, but they didn't have to spend much on advertising besides producing some trailers, printing some posters, running a few newspaper ads, and paying off a few critics. Now, cable/internet/DVDs/etc., have slowly eliminated the habitual moviegoer audience, so, to get people in the theaters, each individual film has to have a marketing push to make the audience aware of it and drum up enough interest to get people to buy tickets. And then they do another one to promote the DVD release. This is the reason that film studios love sequels and spinoffs-- when the audience already knows what the film is about, the film is cheaper to promote. (Note: Here is a Hollywood Reporter article on marketing costs from a couple years ago.)

 

I think we've been seeing a similar shift in game production budgets.