The Medium-Budget Game

A few years ago at GDC or MIGS there was a talk on using the concept of micro-lending to fund more games.  The basic principle (as applied to games) would be that a big studio, who would normally $10 million into one game, banking on that being a hit, would instead put $1 million into ten projects, some of which would bomb, but one of them would be a big hit.  The money made in the successful games would make up for the losses of the poor games.

In this way, big studios would make medium-budget games.  This is a less risky strategy in theory because you are no longer putting all your eggs in one basket.

Image: relevant!

A recent post on Destructoid revealed that big-budget gamesare becoming too big, and the latest Tomb Raider was a failure at 3.6 million copies sold.

How can 3.6 million be considered a failure?  At $70 a pop (a ridiculous price in the first place), you're looking at $252 million gross profit.  Just how much does a game cost to make?  I can't imagine the budget for Tomb Raider for the net to be in the red.

It's been a couple of years since I saw that talk, and I'm surprised the advice still hasn't been followed.  If big companies like THQ are going down, and even hugely popular games are considered failures, surely executives are seeing the warning signs.  If budgets aren't reigned in, they will find themselves in the same hole as THQ.

Gamers seem to support this concept as well, with their wallets.  Just look at the hardware for the obvious example:  the PS3 was technically proficient, and expensive, but the Wii, while lacking technologically, was cheaper, and the Wii is hands down a bigger success than the PS3.

Trend line not necessarily continuing into Wii U.

That is not to say that there is no market for big-budget games--after all, the PS3 did still sell; it's not like it was avoided like the plague.  But the amazing success of the Wii suggests perhaps the balance of big-budget and medium-budget games should shift.  Some companies should diversify their projects and split up the cash, giving themselves a greater shot at success, by offering more games at cheaper prices.  Then selling 3.6 million won't be considered a failure, and they'll be more likely to hit that mark anyway.

Some companies are great at big-budget games, and those successful ones have no need to change their strategy.  But Square Enix, the developer/publisher behind the latest Tomb Raider and Hitman games, for instance, seems to be failing at making the big-budget titles.

And to clarify: I am not saying these games are garbage or anything, just that Square Enix itself considers them failures for not making the profit they need.

So Square Enix ought to consider the move toward many medium-budget games.  They can take chances on new IPs, work on games of all genres, and discover which games become big hits through a less risky trail-and-error system.  Using that knowledge, they can then give sequels to the successes bigger budgets if they think they can make that kind of profit with them.

Looks great, but not $100 Million great.

But let's talk about what a medium-budget game is.  A big-budget game, of course, would be the AAA variety we get from major studios.  A small-budget game comes off the likes of indie studios that don't have much financial support, or even casual games (it doesn't take a particularly high budget to make a Facebook game or a match-3 mobile game).

But what does a medium-budget game look like?  Well, essentially, they're a generation behind.  God of War 2, for the PS2, had a budget of only a million dollars.  God of War 3 had 44 times the budget.  God of War 3 was not 44 times better, and did not sell 44 times as many copies.

I would happily play a game that looks a few years old if I could get it for even half the price.  Yet a medium-budget game could sell for as low as $20 and only need to sell 100,000 copies for 100% profit.

I think the industry is shooting itself in the foot by raising their budgets and prices so high that only extreme hobbyists can afford their products.  By doing so, they're fighting over smaller and smaller markets.  They also seem to think that the solution to poor sales on the last game is to throw money at the next game.

But there is a wide open market for medium-budget games to bridge the gap between the AAAs and the casual/indie markets.  More potential gamers would be willing to try core games if they weren't so expensive, so they could get their feet wet and see if it's right for them.  Some gamers would find they enjoy them, and then be more willing to pay for the $70 games.  So medium-budget games would have a larger impact than just the sales of the medium-budget game--it might impact the sales of the big-budget game in a positive way.  Then games like Tomb Raider will hit their goal, and that ultra-high budget will be justified.

You know what?  Six years old and still looks good.