In a recent piece that appeared in Bloomberg, Schreyer literally described on his fingers what rising development costs mean. Why do large publishers have such extravagant operating budgets?

In recent years, video game development budgets have grown to hundreds of millions of dollars. One example is 2020's Call of Duty: Black Ops Cold War with a $700 million budget. The reason for the spending is not limited to the graphics component.

The video game industry has taken a step forward in graphics over the past decades, but that's not the only reason for the increased costs. In modern games, the number of people involved in development and the time spent plays an important role. For example, The Last of Us Part II took about $220 million dollars to make, and this is one example of how increased staff and longer development times lead to bloated budgets.

Modern game studios hire hundreds of specialists, including artists, programmers, designers and many others, whose salaries in major cities are 15-20 thousand dollars a month. Working with such sums, a project with 300 employees can cost a studio 72 million dollars annually. And if you consider that modern games are developed over several years, it becomes obvious why budgets have increased significantly.

Studios also face problems related to ineffective management, which contributes to rising costs. There are often cases when projects change on the fly and teams are forced to work on ideas that are eventually canceled. This results in lost time and additional costs.

So, while the graphics and look and feel of a game is an important part of the development process, it is the increased scope of the project and sub-optimal management that become the main factors that inflate budgets.

Main image: youtube.com

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