Editing Video game development (section)

== Development costs ==
{{seealso|List of most expensive video games to develop}}
The costs of developing a video game varies widely depending on several factors including team size, game genre and scope, and other factors such as intellectual property licensing costs. Most video game consoles also require development licensing costs which include [[game development kit]]s for building and testing software. Game budgets also typically include costs for marketing and promotion, which can be on the same order in cost as the development budget.<ref>{{cite journal | last = Keogh | first = Brendan | title = From aggressively formalised to intensely in/formalised: Accounting for a wider range of videogame development practices | journal = Creative Industries Journal | volume =  12 | issue = 1  | year = 2019 | pages = 14–33 | doi = 10.1080/17510694.2018.1532760 | s2cid = 159319169 | doi-access = free }}</ref>

Prior to the 1990s, game development budgets, when reported, typically were on the average of {{USD|1–5 million}}, with known outliers, such as the {{USD|20–25 million|long=no}} that Atari had paid to license the rights for ''[[E.T. the Extra-Terrestrial (video game)|E.T. the Extra-Terrestrial]]'' in addition to development costs.<ref>{{cite web | url = https://kotaku.com/how-much-does-it-cost-to-make-a-big-video-game-1501413649 | title = How Much Does It Cost To Make A Big Video Game? | author = Superannuation | date = January 15, 2014 | accessdate = September 4, 2021 | work = [[Kotaku]] }}</ref><ref>{{Cite web|url=https://www.theintellibrain.com/coding-for-kids/|title= Complete Detail Game Development by Expert|website= ALLEN IntelliBrain|access-date=30 October 2022}}</ref> The adoption of technologies such as 3D hardware rendering and CD-ROM integration by the mid-1990s, enabling games with more visual fidelity compared to prior titles, caused developers and publishers to put more money into game budgets as to flesh out narratives through [[cutscene]]s and [[full-motion video]], and creating the start of the [[AAA (video game industry)|AAA video game industry]]. Some of the most expensive titles to develop around this time, approaching costs typical of major motion picture production budgets, included ''[[Final Fantasy VII]]'' in 1997 with an estimated budget of {{USD|40–45 million|long=no}},<ref>{{cite news |last1=Park |first1=Gene |title=Perfecting Final Fantasy 7's legacy, as told by its creators |url=https://www.washingtonpost.com/video-games/2020/04/03/final-fantasy-7-legacy-creators/ |access-date=9 April 2020 |newspaper=[[The Washington Post]] |date=4 April 2020 |url-access=limited |archive-url=https://web.archive.org/web/20200408100434/http://www.washingtonpost.com/video-games/2020/04/03/final-fantasy-7-legacy-creators/ |archive-date=8 April 2020 |url-status=live }}</ref> and ''[[Shenmue (video game)|Shenmue]]'' in 1999 with an estimated budget of {{USD|47–70 million|long=no}}.<ref>{{cite web|url=https://www.theguardian.com/technology/2014/may/02/shenmue-sega-classic-14-years-too-late |title=Shenmue – discovering the Sega classic 14 years too late |last=Diver |first=Mike |date=2 May 2015 |website=The Guardian |access-date=30 June 2015 |url-status=live |archive-url=https://web.archive.org/web/20150626163813/http://www.theguardian.com/technology/2014/may/02/shenmue-sega-classic-14-years-too-late |archive-date=June 26, 2015 }}</ref>''Final Fantasy VII'', with its marketing budget, had a total estimated cost of {{USD|80–145 million|long=no}}.<ref>{{cite web|last=Stanton|first=Rich|url=http://www.eurogamer.net/articles/2013-06-02-final-fantasy-7-retrospective|title=Final Fantasy 7 retrospective|website=[[Eurogamer]]|date=June 2, 2013|access-date=March 20, 2014}}</ref>

[[Raph Koster]], a video game designer and economist, evaluated published development budgets (less any marketing) for over 250 games in 2017 and reported that since the mid-1990s, there has been a type of [[Moore's Law]] in game budgets, with the average budget doubling about every five years after accounting for inflation. Koster reported average budgets were around {{USD|100 million|long=no}} by 2017, and could reach over {{USD|200 million|long=no}} by the early 2020s. Koster asserts these trends are partially tied to the technological Moore's law that gave more computational power for developers to work into their games, but also related to expectations for content from players in newer games and the number of players games are expected to draw.<ref>{{cite web | url = https://venturebeat.com/2018/01/23/the-cost-of-games/ | title = The cost of games | first = Raph | last= Koster | date = January 23, 2018 | accessdate = September 4, 2021 | work = [[Venture Beat]] }}</ref> [[Shawn Layden]], former CEO of [[Sony Interactive Entertainment]], affirmed that the costs for each generation of PlayStation consoles nearly doubled, with PlayStation 4 games have average budgets of {{USD|100 million|long=no}} and anticipating that [[PlayStation 5]] games could reach {{USD|200 million|long=no}}.<ref>{{cite web | url = https://www.bloomberg.com/news/newsletters/2021-09-03/ex-playstation-chief-mulls-future-of-gaming-and-his-new-job?srnd=technology-vp | title = Former PlayStation Chief Muses on the Future of Gaming | first = Jason | last =Schreier | date = September 3, 2021 | accessdate = September 4, 2021 | work = [[Bloomberg News]] }}</ref> 

The rising costs of budgets of AAA games in the early 2000s led publishers to become risk-averse, staying to titles that were most likely to be high-selling games to recoup their costs. As a result of this risk aversion, the selection of AAA games in the mid-2000s became rather similar, and gave the opportunity for [[indie game]]s that provided more experimental and unique gameplay concepts to expand around that time.<ref>{{cite magazine | url =http://www.pcgamer.com/from-shareware-superstars-to-the-steam-gold-rush-how-indie-conquered-the-pc/ | title = From shareware superstars to the Steam gold rush: How indie conquered the PC | first = Richard | last = Cobbett | date = September 22, 2017 | access-date = September 25, 2017 | magazine = [[PC Gamer]] }}</ref>

Costs of development for AAA games continued to rise over the next two decades; a report by the United Kingdom's [[Competition and Markets Authority]] regarding the [[proposed acquisition of Activision Blizzard by Microsoft]] in 2023. Costs slowing increased from 1–4&nbsp;million in 2000, to over $5&nbsp;million in 2006, then to over $20&nbsp;million by 2010, followed by $50 million to $150 million by 2018, and $200 million and up by 2023. In some cases, several AAA games exceeded $1 billion to make, split between $500-$600M to develop and a similar amount for marketing.<ref>{{cite web | url = https://www.ign.com/articles/major-publishers-report-aaa-games-can-cost-over-a-billion-to-make | title = Major Publishers Report AAA Games Can Cost Over a Billion to Make | first = Amelia | last = Zollner | date = April 28, 2023 | accessdate = April 28, 2023 | work = [[IGN]] }}</ref> In court documents from regulatory review of the Activision Blizzard merger, reviewed by ''[[The Verge]]'', the costs of Sony's first party games like ''[[Horizon Forbidden West]]'' and ''[[The Last of Us Part II]]'' had exceeded $200 million.<ref>{{cite web | url = https://www.theverge.com/2023/6/28/23777298/sony-ftc-microsoft-confidential-documents-marker-pen-scanner-oops | title = Sony's confidential PlayStation secrets just spilled because of a Sharpie | first1 = Tom | last1 = Warren | first2 = Sean | last2 = Hollister | date = June 28, 2023 | accessdate = June 29, 2023 | work = [[The Verge]] }}</ref>