Navok noted that if a game costs $100 million to make over five years, it has to beat what the company could have returned investing a similar amount in the stock market over the same period. “For the 5 years prior to Feb 2024, the stock market averaged a rate of return of 14.5%. Investing that $100m in the stock market would net you a return of $201m, so this is our ROI baseline,” he explained.
Besides production budgets, there are also marketing costs, platform fees, and other factors such as discounts to take into account.
If you're reading this and thinking "Then make cheaper games" oh boy, do I have a surprise for you.
So game companies have several ways to increase the ROI for their products: decrease costs, increase price, or increase audience size. As it is hard for single-player titles to signficiantly icnrease the number of players, Novak believes that publishers will continue to charge more for their games. The new $70 base price already seems too much for many customers, so companies try to come up with tricky monetization methods, including various deluxe editions priced at $100 or even higher.
Absolute imbeciles. We’re living in an era where customers have less and less purchasing power, where people can - and should - make more precise decisions when buying products, with wide availability of other options that aren’t AAAA titles, so what are execs thinking of? Charge more, obviously.
It is unrealistic to invest 150 millions in a game and expect a profit because you’re disconnected from your customer base. And you have the bare minimum of self awareness to consider that investing less and expecting less growth is an option, but choose instead to ignore it and push ahead with infinite growth. The development schedule of your average AAAA title is already almost as long as a console generation, there’s nothing that can be done if suits are staring at this wall and choosing to bash their head against it, rather than try alternative options.
On the flip side I want studios to be run by executives who are paid less to work more.
