Are Big Budget Games Sustainable?

[Moonface]

I saw a Tweet from Tekken producer Harada responding to a criticism about Tekken 8 incorporating micro-transactions, and how the cost of game development going up means income has to be found by means other than just selling copies:

Development costs are now 10 times more expensive than in the 90's and more than double or nearly triple the cost of Tekken 7. Even the Fight Lounge servers are costly to maintain. In the past there weren't so many specs and there wasn't online. Plus they didn't have such high resolution and high definition. Now, So many people want the game to run and be supported for a long time. It costs money to continually update the game for that reason. However, he probably only keeps good memories of the old games he experienced as a boy and does not pay attention to these changing times and increasing costs. The economic situation and everything else is changing. If we simply do nothing as he suggests, the game will simply stop running in a few months. I think that is what he wants. So there is no point in talking to him about these realities. He wants us to stop economic activity and stop updating and supporting the game.

It's not really a secret that game costs have only increased as time goes on, with Marvel's Spider-Man 2 having a budget of over $300 million which is triple the budget of the first game. Xbox recently announced four games are coming to other platforms in the hopes of generating more revenue for other projects or sequels to those four games. Ubisoft meanwhile likes to think whatever money they're pouring into their games equates them to being AAAA games instead of AAA, and Square Enix considers successful games like Final Fantasy XVI as failures for not hitting lofty targets. On the other hand, Palworld, Helldivers 2, and many other smaller and/or indie games have generated large amounts of money on much smaller budgets than the typical budget a AAA game has.

But is the trend of AAA games having higher and higher budgets sustainable? Even with games costing $70 now it clearly isn't enough to just sell copies of a game anymore, and not every game can have micro-transactions stuffed into it to recoup costs that way and that's assuming people buy enough of those in the first place.

[Kyng]

Yeah... you'd think the budgets can only increase so far, before they reach a point where they just won't be profitable!

I suppose one thing that might help them is: as the poorer parts of the world become richer, more people living there will be able to afford video games - and therefore, the global market for these games will increase in size. That might help to keep these ever-bigger-budget games economically viable for a while - but, there should come a point where almost nobody is living in poverty any more (and the global population itself will probably start declining at some point in the second half of the 21st century) - so, it's not going to save them forever!

[Moonface]

I suppose one thing that might help them is: as the poorer parts of the world become richer, more people living there will be able to afford video games - and therefore, the global market for these games will increase in size. That might help to keep these ever-bigger-budget games economically viable for a while - but, there should come a point where almost nobody is living in poverty any more (and the global population itself will probably start declining at some point in the second half of the 21st century) - so, it's not going to save them forever!

The trouble with this is gaming has already grown significantly and ended up with games that cost more than they can make from sales alone. The market expanding because of economies in other regions in the world becoming better is just going to be kicking the can down the road when it comes to big budget games earning a profit. If they hit the problem once after the huge growth the industry has seen, they'll inevitably hit it again if and when another industry growth occurs.