You can’t put a price on… game budgets?

Forum-goers may know that I recently picked up a Dreamcast for the first time, and when thinking about finally getting to play Shenmue, I remembered back a decade ago when Sega boasted that at a development cost of $70 million it was the most expensive game of all time.

We all know how well that worked out for them.  Barely selling more than a million copies, Shenmue’s budget was almost certainly one of the contributing factors that led to Sega dropping out of the hardware race. Since then however, publishers and developers have been reluctant to reveal how much they’re spending on creating the titles that we love.

This is a strange contrast to the film industry, where the exact budget and worldwide gross of almost every film from indie to blockbuster is publicly known. It got me thinking about why there should be secrecy around these figures. Do the game companies think that if the public discovers that a game has been a financial failure that it will impact their opinions of that title?

Games are obviously primarily judged on their critical success to define what makes a title a ‘good’ or ‘bad’ one. But we also make judgements based on the sales that a game achieves, saying ‘that game didn’t do very well’ or ‘that game was a great success’. But how can we make these distinctions without knowing how much was spent on creating that said game?

Brain Training, which was developed by nine people in less than three months, wouldn’t have needed to sell anywhere near a million copies to make a profit, and yet if it had only sold a few hundred thousand it would no doubt have been perceived as a failure. Now that it’s sold over 17 million copies it will probably be considered a success by any standards…

Killzone 2 has now sold around 1.7 million copies, which for many games would be great result, but considering it’s the most expensive Dutch media project ever made, with a rumoured budget of at least $40 million, Sony are unlikely to be celebrating anytime soon.

That pales into insignificance when compared to Too Human however, which over the almost ten years of its development cost a rumoured $80 million. Although current total sales figures are unknown it sold only around 560,000 copies worldwide in 2008. Although it was originally announced as the first game of a trilogy, the prospects of a sequel emerging are uncertain to say the least.

Not all expensive games fail to recover their budgets of course, with the best example possibly being the most expensive game of all time, Grand Theft Auto IV. Although it reportedly cost over $100 million to make, it generated $500 million in revenue in the first week of its release, and has gone on to sell over 13 million copies.

In comparison, the average game development budget of the companies that attended this year’s Game Development Conference was $8.8 million, and according to an analysis by Ubisoft last year – “a DS title costs between $785,000-$1.57m, PS3/Xbox 360/PC titles average $18.8m-$28.2m to create for all 3 platforms, and a Wii game is expected to cost $7.8-$9m to develop.”

It has also been calculated that for every $60 game that a consumer buys at retail, only $16 of that will make its way back to the publisher. That makes you realise that the hefty charges levied by Apple and Microsoft on digitally distributed titles might not be that bad after all.

With these figures we can work out that the average game nowadays needs to sell around 550,000 copies to break even. The average DS game only needs 100,000 copies, and the average current-gen multi-platform title needs around 1.2 – 1.75 million copies.

If there’s a point I’m trying to make with these facts and figures it’s that a game shouldn’t be judged by how well it sells or how much it cost to make, and that even if a game doesn’t break that hallowed million mark, it shouldn’t be considered a failure.