The average AAA game costs $300 million or more to develop. And as Jason Schreier points out, all that money is for… salaries.

Exact budgets of video-game productions can be tough to corroborate (more transparency from publishers would be nice!) but the numbers I’ve heard floating around AAA game dev these days are $300 million or more — sometimes much more! — which I think helps explain the current state of the industry

To address some frequently asked questions:

• These are US and Canada productions. If you’re wondering why game X cost so much less, it was probably made elsewhere
• These budgets are almost entirely dev salaries + overheard and have nothing to do with executive compensation (which is mostly stock)

Schreier also has a potentially paywalled article that goes into a bit more in-depth, but the short version is that an employee in LA can cost $15,000-$20,000 per month, when considering the full compensation package (salary + benefits). Average that out and a 100-person team budget is $21 million per year. Double that for a 200-person team, etc. That’s your starting point. Now factor in that the game is going to take 5-6 years to develop, and there you go.

But the question we should be asking is: why does it take 5-6 years to develop a game?

The answer may surprise you!

…or not, if you’ve ever worked on a group and/or work project before. It’s scope creep, mismanagement, executive meddling, and a whole lot of hurrying up and waiting. And not anything about fancy graphics.

Everyone who’s worked in the video-game industry for more than a few years has their own horror story. There’s the feature that gets canceled because the CEO’s teenage kid didn’t like it, or the level that everyone knows is going to get axed but that they all have to keep working on because the cancellation hasn’t officially been communicated yet. Or maybe it already has been canceled and nobody told the audio team.

It’s worth noting that video games do need ample iteration to be good, and some of the most successful games have been the result of so-called “wasted” work. Cuts and cancellations are not always a mistake. But there are also countless examples of teams of hundreds floundering in pre-production as they try to figure out what a game’s “core loop” will actually look like.

The very latest example is Edios Montreal cancelling Wildlands, a game that made it all the way into the final debugging phase before being axed this week. Reportedly, it had been “struggling for years, with 4 different game engines used throughout development, narrative direction conflicts, and a budget that had exploded to several hundred million.” The boondoggle also caused a new Deus Ex game to be cancelled, which makes it extra tragic and dumb to me. Nobody asked for this.

The corollary are games in which devs just sort of muck around or go down blind alleys for 4+ years, and then suddenly a completely different finished product emerges 18 (crunched) months later. My favorite example of this is Mass Effect: Andromeda. Instead of following the winning formula of the epic sci-fi trilogy that created it, the devs thought it fruitful to… have the protagonist explore hundreds procedurally-generated worlds.

“They were creating planets and they were able to drive around it, and the mechanics of it were there,” said a person who worked on the game. “I think what they were struggling with was that it was never fun. They were never able to do it in a way that’s compelling, where like, ‘OK, now imagine doing this a hundred more times or a thousand more times.’”

Nearly all of the shortcomings of Andromeda originated from this outrageous scope, along with being forced to use the Frostbite engine. Plus, all the staffing changes, directors leaving, downtime from having devs in three different timezones working together, etc, etc etc. So maybe a lot of things.

Another example? The as-yet unreleased Subnautica 2. Sure, the obvious issue was Krafton’s CEO trying to personally sabotage a payout to the founders. But a hitherto unreported element to the overall story is how the team was floundering. This part was deep within the court records (PDF):

Despite their distance from the heart of the studio, Cleveland and McGuire’s involvement paid off. In the spring of 2024, McGuire teamed up with Cleveland to build a prototype of Subnautica 2 to help guide the team. When it became clear that the existing leadership structure was not working, the Key Employees made a change. The studio replaced Kalina and elevated Anthony Gallegos to lead designer. “[T]he progress of the game . . . completely took off.” This successful course correction set the stage for Cleveland and McGuire to formalize their new roles.

Now, I’m not going to sit and claim that game development is easy in a Rest of the Owl type of way. Any commercially creative endeavor involves a lot of throwing spaghetti at the wall and seeing what sticks. But what I think we as consumers need to start scrutinizing more is the volume of spaghetti, and why the throwers keep getting spun around a bunch of times before the toss. Or why people who can’t boil water and hate pasta anyway are making spaghetti in the first place.

The bottom line is that there’s not a good reason for games to cost $300+ million, nor is there a compelling reason consumers should subsidize these costs with higher MSRPs or microtransactions. Clair Obscur: Expedition 33, won 436 industry awards, including Game of the Year, on a reported budget of less than $10 million. It apparently still took 5 years to develop, so clearly the Sandfall devs weren’t making LA money. Nevertheless, try and argue with the results.

Or maybe we just… let nature take its course as the industry winnows itself.