Why do so many games fail?
Games fail because the teams making them don't have the talent, the finances, the vision, or the marketing to succeed. Buggy games are often the result of either a rushed project (lack of money), or delays (poor management). Boring games are a consequence of a poor vision and/or an inability (for financial reasons) to take the time and perfect the little things that take a game to the next level – a better combat system, or more meaningful dialog, or crisper weapons control and movement. Even if a game is innovative, interesting, and bug-free, a sub-par marketing campaign can sink it. I can think of no better example than Interplay's Sacrifice. Whether through financial shortage or simply an incompetent marketing department, Interplay was unable to get the public excited about this excellent game. Of course, the public is also only willing to go so far to receive strange games, no matter how good they may be (ie, Giants: Citizen Kabuto, Sacrifice).
The rest of the questions
Before we address the rest of the issues affecting game development, let's look at some numbers first. These figures are what we came up with based on talking privately with several developers stretching back to last E3. Everyone has some variation, so we drew an average on the lower end of the scale from most of the numbers thrown our way. All sources have chosen to remain anonymous.
Let's assume for a second that you already have a game engine – whether you're developing a sequel to one of your own products or have licensed.
In the first year, your team will average about 20 people. Here you get your core programmers and designers learning what you can do with it, one or two artists of the various types (concept, texture, modelers, animators) to put the engine through its paces, and a rough framework evolves. Ideas are thrown around and the design begins to crystallize into a somewhat more realistic version of what was proposed in the design document.
Since these are your best people, they'll likely be earning more than everyone else. Total monthly cost per employee will be about $9000. Now that doesn't mean they get paid $9000, but after including the cost of office space, utilities, benefits, computers, networking, software licenses, and occasionally feeding these guys, that's a good estimate.
All numbers below are either conservative or very conservative figures. We generally took the lower end of answers to avoid the risks of exaggeration.
So, in your first year, your game costs you:
20 * $9000 * 12, for a total estimate of:
Not bad, right?
Problem is, you have two more years to go, and if you've been paying attention so far in this article, that team is going to get a lot bigger. Up to around or over 100 people.
So for years two and three, let's assume an average of 100 people. It will be a little lower at the start of year two and quite a bit higher at the end of year three (when the almost inevitable crunch time brings in extra hands and QA), but the average cost will go down somewhat, to about $7500 per employee per month.
So, for year two and three, your game costs you:
100 * $7500 * 24, for a total estimate of:
The grand total development cost is thus $20,160,000. At this time, we're not including engine costs (either development or licensing), or a marketing budget, or the overhead from the company itself (executives, support staff, etc.)
Let's just run with that number for the moment. Now, a game sells for $50 when new, and the publisher doesn't get all that. Hard figures on wholesale costs were hard to find, but we're told $35 is a good guess.
At $35 per copy, a publisher would have to sell just under 600,000 copies of a game to cover development costs. Add a $500,000 engine license plus another $4,000,000 in shaping the engine to suit your needs, and that figure jumps to about 700,000 copies. Then there's the marketing budget - $1,000,000. Add another $3,000,000 in ancillary costs (executives, support staff, smaller licenses, PR budget), and here is your grand total estimate:
Divide that by $35, and you get almost 830,000 copies sold to break even.
Does that sound easy? Let me put it this way: Crackdown was one of the most exciting and enjoyable games released on the Xbox 360 (the most numerous of the next-gen consoles), it got rave reviews and good word-of-mouth. In February, it sold 427,000 copies. In March, it wasn't even on the top 10 list. Now, it wasn't quite listed as a AAA title (in the vein of WarCraft 3, Gears of War, etc.) for most of its development, and the dev team probably averaged 60-70 people over the last two years. It was announced in October of 2005 and had likely seen a year and a half of development by that point. There were early rumors of delays, which usually means that these aren't the usual expected delays associated with development.
Due to the smaller team, it cost less to develop but also had less support than AAA titles. Most likely Crackdown simply broke even or made a modest profit for the publisher – which makes no guarantees for the developers. The great achievement of Crackdown was to establish a solid new IP with some interest from the audience at large in a meaningful sequel.