Why Gears of War costs $60

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Peter Dwyer   (Dec 20, 2006 at 23:30 GMT)

Sadly if this was even remotely true instead of a very lame attempt to justify next gen game prices, the programmers would have walked away with 50 million between them for a payout and the artists around 55 million. The advertising budget would have been 6 million dollars.

This is based on gears 2 million in sales.

It would be impossible to ever break even, yet namco have already stated that they need 500k sales on each title to go in to profit. Reality then is that the breakdown is more along the lines of 15 - 20 odd dollars to the Developer, needs to cover those art and programmer costs. About a 5 note to the publisher. about a 5 note to the hardware dudes. Rest is retail mark-up. so like around 20-30 to the retailer!

This gives the retail shops a good leeway for sales, bargain bin etc. etc. and that's assuming a no returns policy on stock that doesn't sell.

Stephen Zepp   (Dec 21, 2006 at 00:05 GMT)

While I can't say yes or no to the total breakdown numbers (it seems very off to me as well given what I know are industry standard profit sharing agreements), the "artists" are going to make more than "the developers" as teams...because for any major AAA production title, the resource cost of the art assets is substantially higher than the code.

It's not that they get paid more, it's that there are more of them doing the work, and the total amount of work is more than the work needed from developers.

In most of your relationships, the "publisher" gets a TON more than what you see listed, so the total numbers seem very shaky to me.

Joshua Dallman   (Dec 21, 2006 at 00:13 GMT)

Wow, great screenshot. I can't believe it's TGE!

Jeppie   (Dec 21, 2006 at 00:15 GMT)

Here's what's wrong with this analysis: most of those costs are fixed (salaried employees) and are independent of how many copies of the game are actually sold. So breaking it down to a percentage of the MSRP is obviously making some assumption about the number of copies sold. Sell more or less, and those numbers will change radically.

As far as the Art vs Programming, yea, it's kind of interesting, but I think it's reflective of the size of the task, certainly not the salaries of the individual grunts :( I've always been kind of apalled that artists make so little relative to developers actually, especially given the impact that their contribution has on the final product.
Edited on Dec 21, 2006 00:22 GMT

Tom Spilman   (Dec 21, 2006 at 00:35 GMT)

These numbers are completely bogus. Let's just take the programmers...

$12 a game x 2 million units sold = $24M

Even if you assume a high number of programmers .... lets say 40 (Epic had 70 total employees as of March) that would average to $600K each for the duration of the project. Lets say Gears was 3 years of development with all 40 programmers on it (Sweeney says it was 2 years... but whatever).... so that's a salary of $200K per year... i don't think so.

The reality is that the publisher and retailer still get a big chunk of the box cost. Also not all the money goes into employees pockets. As a company Epic still has to keep some money in the bank for future development.

These numbers are a fantasy.

David Montgomery-Blake   (Dec 21, 2006 at 00:35 GMT)

Quote:

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* 1.5% (just $1) goes into the publisher's pocket.
* 1.5% (also $1) goes into the distributor's pocket.

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No wonder distributors and publishers never make any money. Artists and programmers are making millions while publishers are making a pittance!

EDIT:
Poor EA. Always getting such a bad rap!
Edited on Dec 21, 2006 00:37 GMT

Chris Labombard   (Dec 21, 2006 at 00:49 GMT)

Gears of War costs 60$ because people will pay 60$ to buy it...

Todd Pickens   (Dec 21, 2006 at 01:01 GMT)

Stephen is right, those numbers are simply B.S.

The proportion of artist to coder is correct only in the sense that art is always the long pole in the tent, aka, you typically have a much higher number of artist on a AAA project than you do coders. And generally speaking, the amount of work they do in greater numbers last for a longer portion of the development cycle.

Where development budgets are concerned, it ain't the guys that are in the trenches who design and develop the game at the cost of time with family, health, and happiness, that make the big cash. Its the VIPs at the upper end of the food chain.

Eric Johnson   (Dec 21, 2006 at 01:43 GMT)

I remember a few Sega games costing $70 waay back in the eighties...[crap just dated myself]

Okashira   (Dec 21, 2006 at 02:35 GMT)

@Joshua
lol! I really laughed out alot at that comment.

Okashira   (Dec 21, 2006 at 02:38 GMT)

Oh, and a side note - prices on video games have ALWAYS fluctuated. 3DO system for 700.00? NeoGeo games for 100.00-200.00? A crappy computer for 1500-2000? An Atari Jaguar game for 80.00(I think it was the Jaguar...)? A PS2 game for 50.00? And finally...A PS3 game for 59.99.

Ajari Wilson   (Dec 21, 2006 at 02:42 GMT)

Quote:

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I think it's interesting that the Art guys take a larger cut than the programmers

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I'm sure the term "artist" isn't dedicated to just those of us with a pencil, Photoshop, and Maya. I'm sure they clumped team leads, managers, producers, and maybe even the janitor in there as well.

Also, Nintendo's games are still $50 so I wonder how they will break down.

$12? Those retailers are taking way too big of a cut if you ask me. No wonder there's a Gamestop splurge spammed on every god damn corner in all of San Diego. If only $4 goes to something as big as marketing, and only $1 goes to the publisher, retailers can live with $5 to hand you a box and say "that'll be $60".

This online distribution thing is starting to look better and better everyday.
-Ajari-

AcidFaucet   (Dec 21, 2006 at 04:39 GMT)

Cliffy B is a man?

J Sears   (Dec 21, 2006 at 05:20 GMT)

I agree partially with the person who said it's that much because people will pay it, console systems have hit so big with college and older now that they know people can afford 60 bucks a game easy, and people definetly will pay it, if gamers didn't make such a big show of being important by being one of the first people to own a game it could help. Look at the crowds that sat outside for days just to get the chance to be a first person to get a ps3 (even if you say well most of them are just going to sell them on ebay well look at how much peopel are willign to pay on ebay instead then) that screams out how badly people will shell out money to get the equipment they're obviously going to shell out 60 bucks to buy a game.

It's the same reason as why a guy can get a pair of jeans for half the price of a woman. Women will pay top doallr for clothes most guys won't so they have to price it where the guys will pay.

But this will never change because there's so many die hard gamers who buy a dozen games a year at 60 bucks a pop without blinking that every new system will have even more expensive games.

Mincetro   (Dec 21, 2006 at 07:13 GMT)

I'd say Gears of War is $60 Because it's shiny.
Painting a satirical picture here - ~%10 goes to the store, ~%90 to the publisher, and the Publisher tosses scraps to the developers when they sit on command or do a really cute trick.
Personally, myself, I don't buy games if their over $30 AUD anymore, I just can't justify the money for rehashed shooters with rig-exploding graphics, yet-another-racing-game or even-shinier-rpg. A really good adventure game, though, can be hard to find where I am and are well worth my $40.

Chris Jorgensen   (Dec 21, 2006 at 07:58 GMT)

Now I'm always surprised people complain about a $60 game. When I was a kid, I had a super nintendo, and I seem to recall new games cost around $80. I know the manufacturing costs were higher, but point is my $60 that went to Gears of War was well worth it more than the $80 that went to Royal Rumble WWF Wrestling. :)

James Thompson   (Dec 21, 2006 at 08:58 GMT)

lol Josh, could be TGEA :)

Phil Carlisle   (Dec 21, 2006 at 09:16 GMT)

Who the hell is forbes? because he's a lunatic.

Stephan (viKKing) Bondier   (Dec 21, 2006 at 13:01 GMT)

Well, just a question: how good is Gears of War? anyone played the game?
(just for the fun of it: is the MACINTOSH version OUT? <evil grin>)

STef

Michael Hense   (Dec 21, 2006 at 14:44 GMT)

on looks alone i'd be tempted to pay the $60 to license the game... but fortunately common sense and an inate cheapness about me stops me from swiping the plastic...

just like Chris said above... they charge $60 for it, because people are so willing to pay $60 bucks for it...

keep this up and soon you'll see the prices edging up to $69.95... then 79.95... and before you know it the $99.95 dollar mark will be here...

i dunno if the figures are accurate, close to accurate, totally off in deep space, or what... the only figures i don't see there are my figures... property tax, increased almost 15% this year, cost of gas and heating oil, price of food stuff, auto insurance costs... cost of electricity to keep the lil hummer hummin' so i could run Gears...

Forbes didn't seem to be the least bit interested in my financial breakdown (literally as well as figuratively)... and neither do the publishers who market these games at these prices...

in all fairness though, besides the fact that it does look so damn good, this is a free market economy over here... so i vote not to pay absurdly high prices for this thing...

... for as long as i can resist :)

now if only the rest of the people out there would just hold back until these publishers come to their senses... we'd see a more sensible pricing on stuff like this...

just like the price of gas... stop buying it for one day... if everyone stopped buying gas for one day, you'd be amazed at what it would cost the next morning... they can't keep those tankers waiting offshore, the stores can't keep paying rent to keep those boxes stored in the warehouses...

hey... i haven't even started whining yet!!!

:)

--Mike

John Seguin   (Dec 21, 2006 at 15:29 GMT)

I would argue however that somewhere in there is the 2-5% they paid the sound design / composers (depending on the amount of work needed) which is about average for a AAA game. Perhaps they pulled that into the "art" cost -- interesting...

John Seguin
(Composer/Sound Designer)

Brandon Pollet   (Dec 21, 2006 at 16:12 GMT)   Resource Rating: 4

Interesting comments guys! I only have a couple things to throw into this. I wouldn't be surprised if Epic was able to take a much larger cut out of the publisher's pocket in this instance. Microsoft NEEDED this Gears,for anyone that hasn't played it you really should it's an amazing game; in fact it's the only thing I've played on my 360 in about 4 months. I obviously have no idea how this deal was drawn up but I can see Microsoft taking a much smaller cut on Gears if Epic would keep it exclusive and get it out before the PS3. Not only is it a great game, which Epic really is known for, but it also really shows that the 360 can keep up graphically with the PS3. If Gears hadn't come out when it did alot of people would think that to get amazing visuals you needed a PS3, now we know that isn't true.

While I do think that $60 for a game is pretty high it really just depends on how much enjoyment you get out of it. Was Gears worth $60? I'm not sure yet... but it was close, I really enjoyed playing it even though it was pretty short. On the other side of the coin if you look at Zelda: Twilight Princess there is definitely enough fun there to warrant its $50 price tag and probably alot more. I've put in over 30 hours already and I'm not done with it. Just don't tell Nintendo, I don't want to have to pay $60 bucks from the next Zelda ;)

Jonathon Stevens   (Dec 21, 2006 at 16:29 GMT)

Hmm. Well, I'd have to agree those numbers are way off. I do not agree that it's $60 just because people will pay that either. It's $60 becuase the company needs to pay all their bills and have enough left over to make a good profit for themselves (as a company) as well as enough to pay for the next title which is going to fail.

The thing you guys don't realize is that games tend to either be very succesful, or fail miserably. There isn't a lot (yes, there are some) of games that just pay for themselves. This isn't always the case, but usually. So they need to make enough off the good games to pay for the bad ones.

edit: forgot I wanted to comment on this:

Quote:

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just like the price of gas...

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You absolutely cannot compare something that is completely reliant on supply and demand like gas to something relying on a fixed cost they need to recoop like a video game.


edit2: bah, forgot about this one too:

Quote:

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While I do think that $60 for a game is pretty high

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Why is it too high? $60?! I don't care what club or bar you go to on a friday night, but you WILL spend $60 EASILY unless you don't drink and pretty much just stand around. Look at any theme park in the country (US) and you can't leave there for less than $100, $30+ just to get in.

$60 for a game that you will play for months on end and that's a lot? I think the problem here is that you guys are USED to $40 - $50 games and haven't realized that they haven't really upped in price in comparison to how much is spent on them. Back in the original playstation days games were $40 - $60 (rare few were $60), yet the cost to make them was 1/10th what it is now.

We're demanding higher quality and better gameplay, story, acting (and IMHO we're getting it) yet we dont' want to fork out a few extra bucks to get these things?

Hell, I can't even go to a damn movie with my wife without spending nearly $20 just to get in.


Edited on Dec 21, 2006 16:35 GMT

Brandon Pollet   (Dec 21, 2006 at 17:12 GMT)   Resource Rating: 4

I agree that the price to create a game is definitely much higher than it used to be but the problem is that we are paying higher prices for games that we DON'T get months of enjoyment out of. Gears of War is a great single player game but it only takes around 10 hours to finish. Multiplayer content will help it stay around much longer but the fact that game length is decreasing is what really makes the price seem higher to me. To be honest it really wouldn't be that much more expensive, compared to the cost already, to make the game 3 to 4 hours longer. There are SO many assets in that game that the levels could be made longer, or entire new levels could be created, that would require little in the way of new asset creation. I know there is still design, level dev, play testing, and other costs but after all of that art is created it's much easier to flesh out the game.

One thing to Epic's credit is their promise, and track record, of releasing additional content free of charge. Once I start to see extra content available on Live I'll feel much better about the price tag.

Jeremy Alessi   (Dec 21, 2006 at 18:51 GMT)

I think we can all safely call bullshit on those numbers. Unless of course we're just talking about it's development budget. That has nothing to do with how much Gears costs at retail or with how many copies it sold. This is a case of flawed logic. The percentages come from the initial development cost, what Gears makes at retail would essentially be a flip flop of those numbers where the publisher would be getting at least 25% and the devs getting 1% etc...
Edited on Dec 22, 2006 20:18 GMT

Alan Hembra   (Dec 21, 2006 at 20:00 GMT)

@Jonathan - It's been along time since I've found a game I want to play for "months on end". It's been several long dry years as a matter of fact.

Steve Flowers   (Dec 21, 2006 at 22:23 GMT)

$60 - worth it. The content is quality, the tech is quality, it's fun to play. Value is a subjective thing. I value it.

I think their numbers are off though... There needs to be a significant slice off the top going to distribution. By those numbers they are saying the development budget was over $50 Million.

It's a top quality title, but $50 Mill? I don't think so:) That's a monster size team, or a team with monster size paychecks:)

Mark McCoy   (Dec 22, 2006 at 00:42 GMT)

Here's some internal GarageGames numbers, based on our website sales:

For a $20 game of ThinkTanks:

* 56% (aka ~$11) Goes into paying for Awesome.
* 22% (~$4) for the Sweetness.
* 11% (~$2) for "LOL!!!!11" (Which GG buys wholesale.)
* 7% ($1.5) voice acting royalties to Engelbert Humperdinck.
* 3% ($0.6) Misc overhead costs, servers, bandwidth, hosting, equipment, Clark, etc.
* 1% ($0.20 paid in nickles) Skimmed off the top by and embezzled by John Quigley.
* 1% ($0.30) Lost in rounding errors.

Brandon Pollet   (Dec 22, 2006 at 00:54 GMT)   Resource Rating: 4

Awesome! How did you ever get a deal with Engelbert Humperdinck? ;)

Eric Forhan   (Dec 27, 2006 at 13:32 GMT)

Forbes would be forbes.com (link to original article).

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