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PlayStation is laying off 900 staff across Naughty Dog, Insomniac and other studios
(www.engadget.com)
this post was submitted on 27 Feb 2024
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Content generation is the largest cost. This means specialized labor with specialized tools from vendors that nickel and dime (Autodesk mostly). On top of that, the two largest contractor firms (KeyWords and Technicolor) are at capacity, and running on the margins.
Engine licensing is a negligible cost at this point, even if the pricing becomes predatory. That said, in AAA spaces, Epic Games owns the space and this means they can control the fate of almost all. Building game engines is extremely difficult even though the commoditization of x86 and ARM removes a lot of technical challenges that are being piled on by Nvidia.
It cost Take Two somewhere close to a billion to make GTA 5 (development, marketing, and sync rights) and not only did they make it back in three days, they turned around and made many more over its lifespan. Everyone wants that level of success. The market can't support it. Developers can't support it. The products can't support it. A crash is inevitable and it will probably take out a lot of capital for indies, further consolidate publishers, and maybe one of the console vendors with it.
Palworld and Helldivers 2 cost less than 5 million to make each and they're the most talked about and played games of the year so far, maybe there's a shift going on.
Don't forget the marketing teams that are massive money sinks that have made themselves untouchable.
Eventually, some risk analyst is going to run their own ROI assessment on marketing and see just how much grift is going on in there.