Why Gears of War costs $60
polycounter lvl 18
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Forbes is running a neat little feature right now called "Why Gears of War Costs $60". It's a reasonable enough question, really -- and there's pie charts! What more could you want from the Internet?
Getting the straight dope on game development costs is, of course, difficult. Gamers know that prices have gone up about 20% for games coming out on next-gen hardware, but the companies aren't exactly forthcoming with specific reasons on how, or why.
Here's the skinny, as far as Forbes' article breaks it down:
ON A $60 GAME OF GEARS:
* 25% (aka $15) goes to pay the art and design guys.
* 20% ($12) goes to pay the programmers and the engineers.
* 20% (also $12) goes to your friendly neighborhood retailer. EB / GameStop, whoever.
* 11.5% ($7) goes to a "Console Owner Fee" - ie. whichever one of the Big Boys made your hardware (Sony, MS, Nintendo.)
* 7% ($4) goes to marketing, and puts Mad World and Marcus Fenix on MTV.
* 5% ($3) goes to "market development" -- paying for cardboard Standees of the Gears Crew and elbowing other games out of the way for shelf space at your local retailer.
* 5% ($3) goes to actually manufacturing and packaging the disc.
* 5% ($3) is spent paying the Man for IP licenses or maybe hiring some big name voice actors. If your game isn't an original IP, here's where you get dinged by Marvel, Disney, or Ray Liotta's agent.
* 1.5% (just $1) goes into the publisher's pocket.
* 1.5% (also $1) goes into the distributor's pocket.
* 0.3% (about 20 cents) goes into corporate costs. Management, overhead, lawyers, etc.
* 0.05% (less than 3 cents) go into the cost of paying for the Developer's Hardware. Who knew an SDKs can cost tens of thousands of dollars?
And there you go. $60 of Gears, a la carte.
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I am not sure that I completely buy this breakdown, or at least the way it was worded. Reading this would imply that the bulk of the cost of developing a game goes to paying the artists and designers while a mere .20 per copy goes to paying management. While I realize there are more artists and designers on a team than managers, CEOs at some of these companies draw the cost of paying several employees as their salary. Is this data skewed or am I missing something?
Forbes is running a neat little feature right now called "Why Gears of War Costs $60". It's a reasonable enough question, really -- and there's pie charts! What more could you want from the Internet?
Getting the straight dope on game development costs is, of course, difficult. Gamers know that prices have gone up about 20% for games coming out on next-gen hardware, but the companies aren't exactly forthcoming with specific reasons on how, or why.
Here's the skinny, as far as Forbes' article breaks it down:
ON A $60 GAME OF GEARS:
* 25% (aka $15) goes to pay the art and design guys.
* 20% ($12) goes to pay the programmers and the engineers.
* 20% (also $12) goes to your friendly neighborhood retailer. EB / GameStop, whoever.
* 11.5% ($7) goes to a "Console Owner Fee" - ie. whichever one of the Big Boys made your hardware (Sony, MS, Nintendo.)
* 7% ($4) goes to marketing, and puts Mad World and Marcus Fenix on MTV.
* 5% ($3) goes to "market development" -- paying for cardboard Standees of the Gears Crew and elbowing other games out of the way for shelf space at your local retailer.
* 5% ($3) goes to actually manufacturing and packaging the disc.
* 5% ($3) is spent paying the Man for IP licenses or maybe hiring some big name voice actors. If your game isn't an original IP, here's where you get dinged by Marvel, Disney, or Ray Liotta's agent.
* 1.5% (just $1) goes into the publisher's pocket.
* 1.5% (also $1) goes into the distributor's pocket.
* 0.3% (about 20 cents) goes into corporate costs. Management, overhead, lawyers, etc.
* 0.05% (less than 3 cents) go into the cost of paying for the Developer's Hardware. Who knew an SDKs can cost tens of thousands of dollars?
And there you go. $60 of Gears, a la carte.
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I am not sure that I completely buy this breakdown, or at least the way it was worded. Reading this would imply that the bulk of the cost of developing a game goes to paying the artists and designers while a mere .20 per copy goes to paying management. While I realize there are more artists and designers on a team than managers, CEOs at some of these companies draw the cost of paying several employees as their salary. Is this data skewed or am I missing something?
Replies
Got a link to that article? Or was that the whole thing?
I think it worked out that for a £30, the devs would get about £4 of it.
GoW = £50 = 97.93 U.S. dollars
So thats $25 per copy for the art fund.
1up article
Original Forbes article
Think of company's as a pyramid of sponges with production is at the bottom of that stack. You pour water onto the tip of the pyramid and only a little if any will get to the bottom. Now add a publisher into that and your basically looking at a big bole hovering over the pyramid collecting all the water before it can get to the company. Only when the publisher gets its fill does anything move on to the company.
Err... I think that analogy is correct. :S
Explaining "where the money goes" doesn't answer why. That just explains... where the money goes. Gee, our money goes to pay people. Thanks Forbes, I never could have thought that one out on my own!
You can charge $20 for a game and just scale down the numbers. Why don't we? Who knows? The article doesn't seem to care. Instead they just put on a flashy title which doesn't actually relate to the content.
I should note that I know why already, I'm just bashing the article for trying to completely dodge the subject.
mine actually cost $64 because i got the collectors edition.
GoW = £50 = 97.93 U.S. dollars
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Wow ! 98$ !! ..the only good thing about living in Europe is the hot European chicks ..man they rob you guys over there !
You just can't break it down like that. Sure, you can break down the cost of actual *DEVELOPMENT* into percentages like that, but as acc hints at, to directly translate that into the cost of the actual game is just misleading, confusing and completely non sensical in economic terms. The cost of the final product is not as intrinsically tied to the development costs as that article suggests.
To suggest that 25% of the pie 'goes' to the artists and designers is absurdly misleading, and blatantly not true.
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GoW = £50 = 97.93 U.S. dollars
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Wow ! 98$ !! ..the only good thing about living in Europe is the hot European chicks ..man they rob you guys over there !
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No America has just managed to fook itself over that much more than the EU and make the $ worth much much less.
Yeah America and unpopular wars!
Yeah horrible foreign policy!
Yeah free trade agreements that send jobs over seas!
Yeah for the #1 export in America, wealth!
Yeah for the cost of housing being so high people take wacky loans that should be illegal.
Yeah for the economy coasting along on the sale and refinance of these over priced homes!
Yeah ... ok I'm done lets not get off on a jag here...
25% (aka $15) goes to pay the art and design guys.
20% ($12) goes to pay the programmers and the engineers.
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How does this work? Are they paid based on royalties?
So if the game sells 1 copy the art guys get the split $15 and if the game sells 1 million copies they get to share $15 million?
I sure hope they get it since I thought the game rocked but it seems very odd to me that the dev staff gets way more than the publisher and distributor.
Ofcourse any publisher and distributor wants to get his hands on this game but they are still in it to make loads of money and need to recoup their costs too which are pretty high.
r.
as an Art director and long time computer graphic artist in the videogame industry, I read your recent article on the rising cost of videogames with interest and first hand experience.
Whilst interesting, I have to admit that I found one particular aspect of it extremely misleading, so much so that I felt the need to write.
Your pie chart makes a noble attempt at breaking down the development costs of a videogame. But I simply do not understand how you can fairly nor accurately precede that development cost graphic with the line Curious who is reaping the rewards from each $60 game sold .
So on the one hand you have a sentence questioning who is benefiting from profits, then you provide a graphic breaking down development costs. Sales profits, and development costs are of course as Im sure youll agree two entirely different things.
That sentence very much suggests that videogame company individuals are directly hugely financially benefiting from high sales which is simply not usually the case.
Whilst some companies out there do have profit share and royalties schemes, 95% of the industry operates on a fixed salary basis. An average artist salary is probably something like 85k per annum, so using the words reaping the rewards paints a very unfair picture of how things work, particularly given that hours can be extremely demanding. I hope you can appreciate that that particular sentence in conjunction with the graphic is extremely misleading to a reader.
Thanks for listening and happy holidays!
Sincerely,
-Darren Pattenden."
I think Daz's email stands on its own merits anyway. Well put good sir, well put.
BTW who does the web pages for Forbes, that monkey needs a good beating. The formatting goes right to the left edge of the window, making it a very annoying read.
Its a shame the article wasnt true though, then I could retire when the gears money comes in!!!
r.
Specifically, I take great issue with terms like 'reaping rewards' and 'The remaining $59 per game goes into many hands.' and ' we've broken down the dollars and cents of the console gaming industry to see who's getting the most action.' quickly followed by a pie chart depicting artists getting the biggest slice.
The reality is that for the most part artists see nothing like the financial benefits from huge sales that the forbes and the 1up article (which even further confuses the forbes data) imply.
But more than anything, her lack of distinction between development costs and profit sharing, is highly unprofessional from a journalist specializing in economics.
http://gamecareerguide.com/features/266/index.php?cid=GCG06_ENDEX3
The articles data and pie charts actually refer to dev. costs, but her poor wording suggests she is describing profit share.
If she was going to split hairs and carve the marketing department into two sections to make it look smaller than it actually is, then she needed to carve the art department into two section. But then that wouldn't make for a good article and she couldn't make the artists to look like giant rich sponges.
It also might be good to note that each artists slice of the pie is closer to 2-5 cents per copy because of increased staff, while other departments that might have a smaller slice have less staff and each employee gets a bigger slice.
Yeah, I appreciate that artists make up a large percentage of the workforce and thus a fair chunk of dev. costs. That wasn't my point really tho'. My point was mainly that the author of the article was blurring the lines between profit share and development costs. She made no clear distinction between the two.
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Not to mention that the way it is broken down it makes it seem as if the artist and designers are the highest paid people in the biz, which we all know not to be true.
(which is pretty much what Vig said in the post above