Over time, there have been significant changes in the gaming industry, especially in AAA games. As seen by industry giants like PlayStation paying more than $200 million in their flagship AAA releases, these high-budget games now require more time and money.
In a recent keynote speech, Shawn Layden, the former CEO of PlayStation, discussed the crucial problem of rising budgets and the viability of AAA game production, claiming that these increasing costs constitute a severe threat to the sector.
What makes it important: The downward trend of AAA game development is concerning, as big companies release fewer games each year due to the increased focus on producing games of the highest caliber.
Shawn Layden expressed his fears about the future of the gaming business during a speech at the Games Industry Investment Summit. Beyond the continued trend of mergers and industry consolidation, he emphasized the rising costs involved in creating AAA games, saying:
“I think we’re all in danger of going extinct because of the rising costs in the gaming industry.”
This is not the first time a gaming industry budget issue has caused controversy. God of War Ragnarok took a $200 million budget to create, according to Shuhei Yoshida ofPlayStation earlier in the year. Although this is now the standard for AAA games, he emphasized that God of War 3’s budget was only about five times as much as it is now, demonstrating the dramatic cost growth in gaming over the past ten years.
Major gaming companies are reluctant to take chances on cutting-edge projects since hundreds of millions of dollars are invested in each AAA release. Embracer Group’s recent investment of over $100 million in the Saints Row relaunch is a recent example. Despite attempting to change up the series, the bet didn’t pay off, leaving Embracer Group with huge losses. Following the failure of this initiative, the business just this week chose to shut down Volition Games.
These incidents emphasize Shawn Layden’s worry about the negative implications of cost increases and industry consolidation, which could ultimately limit creators’ creative flexibility.
It’s important to note that Layden is one of many professionals in the field to draw attention to the dangers of the current course. Pawel Sasko of CD Projekt Red previously stated that massive AAA RPGs are quickly losing their ability to support themselves financially.
Despite these worries, the gaming sector continues to grow. Game developers aim to create huge worlds with finely detailed environments and protracted gameplay. Consumers are simultaneously becoming more skeptical of games with shorter playtimes and debating the value of $60–$70 games.
The gaming business is close to a turning point, which is not lost on seasoned industry professionals.
The idea of live-service gaming has come to light as a viable remedy in recent years. It makes it possible for game producers to make large profits by supplying constant material for games over an extended period. Significant players like PlayStation have increased their investments in the market due to this trend. However, concerns remain regarding the long-term viability of it.