“In 2023 it could cost you $1 billion to develop a video game”

The video game industry is facing a new challenge: the rising cost of developing and marketing AAA games.

According to a recent report by the UK’s Competition and Markets Authority (CMA), which blocked the merger between Microsoft and Activision Blizzard, some major manufacturers report that their AAA games can cost over 1 billion dollars to achieve.

AAA games are the best and most expensive games in the industry, usually featuring state-of-the-art graphics, immersive gameplay, and extensive content.

They are also the most profitable, generating billions of dollars in revenue for manufacturers such as Activision Blizzard, Sony,  Sega, Nintendo, Microsoft, Electronic Arts, Ubisoft şi Take-Two Interactive.

However, as player expectations rise, publishers bear the financial impact as costs become higher year on year. The CMA report reveals that AAA games that are approved now with potential releases in 2024 or 2025 typically receive development budgets of $200 million or more.

By comparison, most AAA games had budgets between $50 million and $150 million five years ago.

Some of the most popular franchises in the industry, such as Call of Duty and Grand Theft Auto, already require more than $250 million in development costs.

Call of Duty has exceeded $300 million in development costs, while the next Grand Theft Auto title will likely require a development budget of $250 million or more.

But development costs are only part of the equation. Marketing costs they can also add hundreds of millions of dollars, making the total cost of producing a AAA game over 1 billion dollars.

The CMA report cites an example of a major studio reporting that a major franchise it cost $660 million for development and nearly $550 million for marketing.

The increasing cost of AAA games also affects the production process and the workload of developers. The CMA report quotes Activision as saying that they have to make so much content for Call of Duty that they can no longer rely on a single main studio.

“Now we need close to five major studios for every Call of Duty every year.”

The rising cost of AAA games also raises questions about the sustainability and innovation of the industry.

Will producers be able to recoup their investments and make profits, asks GN? Will gamers be willing to pay more for AAA games or subscribe to monthly subscriptions like Game Pass?

Will the developers be able to create new and original games or will they stick to safe and familiar formulas?

These are some of the challenges that the video game industry will have to face in the next 3-5 years.