Next-gen dev costs to hit $60 million - Guillemot

Ubisoft CEO says the cost for creating games for new consoles will double due to technical potential, OnLive could usher in new cycle earlier than expected.

As the technical capabilities of gaming consoles have increased with each subsequent generation, so too has the price to make games for those systems. Current-generation AAA game development is a pricey affair indeed, with Guerrilla Games telling a Dutch newspaper that its top-tier PlayStation 3 shooter Killzone 2 cost upward of $21 million. And according to Ubisoft chairman and CEO Yves Guillemot, that trend will continue with the arrival of the next generation of gaming consoles.

Yves Guillemot

Speaking to CNBC, Guillemot said that he believes creating upper echelon games will cost on average $60 million, due to the increased investment in technology necessitated by the technical potential of the new consoles. "The next generation is going to be so powerful that playing a game is going to be the equivalent of playing a CGI movie today," he said. Headcount is likely to be another factor spiking costs, with Ubisoft saying in May that more than 450 people are working on Assassin's Creed 2.

A number of analysts, including Wedbush Morgan Securities' Michael Pachter, believe that the next round of new consoles will arrive in 2013 at the earliest. However, Guillemot believes one factor that could advance that window is OnLive's on-demand game-streaming service.

"If somebody comes out with online--if OnLive manages to make this work--we will have a next generation of systems sooner than currently planned," he said. Ubisoft, along with Electronic Arts, Take-Two, Warner Bros. Interactive Studios, THQ, and several others, announced that they would support the service with new games when it launches later this year.

Having debuted the publisher's own Wii-based movement sensor during Ubisoft's E3 2009 press conference, Guillemot also expressed optimism over Microsoft's and Sony's new wave of camera-based motion sensing.

"[Microsoft's Project Natal] is one step, but quickly they will take the other step [of releasing new consoles]--pushed by the environment," he said. "For us, the current machines are very powerful, and we can do high-quality work. I'd like to stay with this generation as long as possible, but my customers will want the best machine possible." Guillemot went on to tell CNBC that he expects the new motion-sensing technology to expand the core gaming audience by 20 percent.

Lastly, Ubisoft's foremost executive addressed the publisher's ambitions in the massively multiplayer online gaming space. According to Guillemot, Ubisoft was outbid by Atari for Star Trek Online developer Cryptic Studios last year, but the publisher is still interested in establishing a foothold in the space.

"We know it can be a disaster or a very profitable business," he said. "It's a part of the business we want to be in...but we have to find the best place to invest." Notably, as part of Ubisoft's acquisition of the Tom Clancy brand in March 2008, Guillemot said that the publisher was interested in adapting the military franchise to a massively multiplayer online environment.

396 Comments

  • BattleforAzerot

    Posted Jul 19, 2009 1:57 am PT

    Doesnt the fact that games get harder and more costly to make mean that one day they are gonna hit a wall from where its almost as good as impossible to climb over ? I mean some game developping teams area made out of hundreds of people , when like doom 2 had just few people , dont remember how many excactly.Same time costs rise more and more.But how much more can they handle ? I doubt they will make a games in future when they would cost like billion dollars And talking about consoles , they are currently DirectX 9 machines , the DirectX11 comes this year and by the year 2013 the PC games might be so fast that consoles cant handle them at all ? Many games have features that console ones simply dont have because of the hardware limitations.Or maybe the console versions look so primitive next to a PC game counterpart that the PC version looks more like a sequel ? If you look at the corrent consoles and compare its hardware to a PC , it turns out xbox360 and PS3 have graphics cards equivalent to 7800Gt or 7900Gt , which in computer terms is old and slow.

  • Cillerboy

    Posted Jul 16, 2009 9:59 am PT

    i think they should let the current-gen consoles live a lil longer than up to 2013 to give them a better chance to achieve their capabilities such as ps3's capabilites, project natal for 360 and.. um...more 3rd party games for the wii!

  • sgtdrog

    Posted Jul 4, 2009 11:30 am PT

    That is the main reason why I hate console gaming (the hardware constraints). I either want to see one console gaming machine or NONE. Pc games almost don't have any hardware limitations because the hardware is advancing faster than the software can. And is sicking listening to people say "I want this game but its only for (insert any console here).", that almost never happens with PC games. Even if your machine only meets a games "Minimum Requirements" you can still play the game and get (what I think is) the most important aspect of the game: the story. Everyone is focusing on graphics but it doesn't seem like too many people care about the story or plot anymore. Most "gamers" now days just go for the best looking "twitch shooter" they can and then complain cause its "too much like other games".

    I dunno where I'm going with this.... I could rant forever.

  • Mawy_Golomb

    Posted Jun 27, 2009 9:11 am PT

    It actually is quite possible that development costs will skyrocket. If GTA IV can handle $100 million, and if Microsoft and Sony want gimmicky devices for their consoles, along with better graphics, then why consider it false?

    Oh, how video games must follow Moore's Law. It is all about the graphics, isn't it? I am greatly beginning to dislike mainstream video games. If anything, I think that a lot more people will eventually cater to indie gaming because innovation has been so underappreciated by corporate companies. It is funny because we are also approaching the uncanny valley, since people can easily spot mistakes within games' graphics now, more than ever and expect them to look perfectly photorealistic.

    This is so pathetic. People had might as well go ahead and play around with graphics technology or create their own computer art, if they feel so intrigued by games, most of the time due to their graphics.

  • Apex3835

    Posted Jun 25, 2009 10:33 pm PT

    I agree with ClawedMonkey

  • wars45

    Posted Jun 23, 2009 12:19 am PT

    dont think so .when the most exspensive game to date is 30 mill . how can u say a game will cost 60 mill when the new gen is not even out . and they havent got the hardwher . if the games was going to cost 60 mill . ther will not be a lot of games about

  • ClawedMonkey

    Posted Jun 22, 2009 9:34 pm PT

    I'm all for a new generation of consoles.

    The current gen. consoles are already years old and have mostly been pushed as far as they can go. We can't expect to see any further graphical enhancements or complexity in our games because of their hardware limitations.

    This article over exaggerates the production costs for games that may appear on the next gen of consoles. Its really not that much more effort to push up the polygon count and texture resolution. In fact, the poly count and texture res. is often slashed from already developed content as an optimization to maintain decent frame rates on current gen consoles.

    My point is, games are already ready for the next generation of consoles. Most of them on the PC have the graphics options available, they're just disabled on the consoles as an optimization because of the hardware limitation.

    I've only really mentioned graphics, but there's also still the limitations of the CPU...

  • W3En

    Posted Jun 21, 2009 7:00 pm PT

    I don't see how they are so expensive, PC games were running games that looked like "next-gen" now in 2007.... and most PC games are cheaper than their Xbox or PS3 counterparts!

  • ZippyDSMLee

    Posted Jun 21, 2009 8:20 am PT

    All the more reason to wait till tis cheaper and refine the skills you have with current systems, not to mention start back on gameplay instead of focusing solely on graphics......

  • FinalDuo1886

    Posted Jun 21, 2009 3:07 am PT

    @maybock3000 I agree. It looks like I'm going to invest back into PC games again, cause $60 my limit as well.

  • bennae66

    Posted Jun 21, 2009 12:11 am PT

    im happy to let this cycle last longer. bring on natal!

  • Tygraph

    Posted Jun 20, 2009 10:26 pm PT

    Umm...Ubisoft makes quality games. And Microsoft produced games are always of quality. It would be nice if everyone woud stop putting money signs in the names like they put out effort just for the cash. Like Splinter Cell and stuff wasn't a great franchise and Halo wasn't good...

  • JunkyMcMuffin

    Posted Jun 20, 2009 7:30 am PT

    Where going to end up payin a minimum of $100 for next gen games.

  • ColonelRadec

    Posted Jun 20, 2009 7:08 am PT

    I hope they come down with the price for the dev kits so that it might help drop the prices of games.

  • glendarach

    Posted Jun 20, 2009 12:35 am PT

    i disagree, the reason why this generation was a shock for most developers was the change from single core, to multi-core etc, the next generation of consoles will be much much more powerful, but will use the same tech, just it will be faster, more cores, etc.

  • maybock3000

    Posted Jun 18, 2009 9:49 pm PT

    I refuse to pay more than 59.99 for any game, great or not. The gaming industry had BETTER NOT raise their prices on games for the next gen. Remember 3DO? Remember when they charged 99.99 per game? Well, that's one big reason they went under. People won't be making more money in 2013 either. The costs of living are going up in every aspect of our lives, taxes are being raised, and on and on. I fear that the gaming industry might be in trouble by 2013, because people will have less money due to having to pay more to survive.

  • BladedNuiasnce

    Posted Jun 18, 2009 8:43 pm PT

    @ Timstuff
    you are so wrong, most people wont be buying indie games because they, most of the time, suck! I think most people would be more willing to spend $70 on 1 good game, than $70 on 3 crap games!

  • Autolycus

    Posted Jun 18, 2009 12:38 pm PT

    Yawn get a clue. these analyst are just as useful ans CEO's of a company... (aka they are a waste of company resources and a waste of life)

  • plm3d_basic

    Posted Jun 18, 2009 11:39 am PT

    Well, the price for making summer blockbuster movies continue to go up but the ticket prices haven't jumped to $15-20 yet so I seriously doubt games will jump in price to $70. But the amount of content will undoubtedly be reduced and a lot of studios will make the extra profit off of DLC which would have been originally in the game but is now separate. It's already happening.

  • anomaly3001

    Posted Jun 18, 2009 10:59 am PT

    Look people ya'll don't get it! Look at all the ps3 and xbox 360 games out! Only a slight handfull of those games costs millions to make. for example only the exclusives, but for some reason all games cost 60 dollars! These developers need to find cheaper ways to produce games rather than just throw money around and hope to make their money back off of profits! I have a feeling the people in charge of these studios don't know what they are doing. Perfect example! Should Haze, Too Human, Ghost Busters, Tomb Raider underworld, Terminator salvation, etc. cost $60 dollars no because these games suck and there are about 10games developed to 1 blockbuster game that suck! This is not fair for the consumer that even if your game sux u can sell it for $60 dollars just to make your money back. People who paid money for Haze feel me!

  • mark_unix

    Posted Jun 18, 2009 9:43 am PT

    i am surprised it hasn't hit 120million, as games are outselling movies. the profits on these 50million dollar games, are about 10times more than movies do with the same budget.

    so they are getting much better margins than the movie industry...

  • cleo2525

    Posted Jun 18, 2009 8:04 am PT

    games and consoles wont get all that much dearer as companies wont make any money lol just think of all the milliions of games and consoles sold alot of them are to parents who are giving them to children wether for xmas, or any other time and i know full well they wont be buyin any console that cost anything over £600 or games that cost over £70

  • Timstuff

    Posted Jun 18, 2009 12:01 am PT

    Good news for indie developers. If the big wigs are going to dump that much money into their games there will only be maybe 6 major releases a year, and they'll all cost $80 since companies like Ubi$oft will want to pass the cost to the consumer. Meanwhile, Joe the Programmer and his friends will be able to make a game out of their basement with total creative freedom, and sell it for $30.

    If the big corporations want to cut themselves out of the market with bloated budgets, it's their own loss.

  • PodXCOM

    Posted Jun 17, 2009 10:42 pm PT

    Oh, come on people! We'll have PhotoRealistic games, and your all acting as if this is the end of games, as we know it!?!

    Instead of Normal mapping, we'll have Displacement mapping, which will make games look better then ever before!

    We'll also have Compute-Shader, which will make Physics and AI better!

    Just go look up DirectX 11 to see what I mean.
    http://www.youtube.com/watch?v=NAsoXHHCqWM

  • gnrlstuart

    Posted Jun 17, 2009 9:57 pm PT

    so how will they keep the games the same price, gaming is already very expensive.

  • akiwak

    Posted Jun 17, 2009 8:29 pm PT

    On Live is just an expansion of a PC, the better your PC that you have for On Live the better the graphics. I believe these guys will come out of the gate very slow but by next console race they will be the go to place for online games.

  • Kenji_Masamune

    Posted Jun 17, 2009 6:31 pm PT

    Onlive will launch, but I doubt it's success. The premise is real for sure, but the demos we watch were on their own servers with maybe no more than 4 people on at any given time. There just is no way to stream video games to millions of gamers at the same time and remain lag free. They could do it, upgrade servers, dedicated connections (and I'm talking about fiber optics), but then the service would have to cost over $40 a month. Onlive in that sense will epic fail.

  • andrew_ribbons

    Posted Jun 17, 2009 6:22 pm PT

    OnLive is a waste of time and funding. It's a great concept on paper, one that will never traslate well to real life unfortunately. Lag and latency will plague it to the ends of the earth. Especially with controller latency *shudders from the horror of 200ms controler latency*

  • FlashCharge

    Posted Jun 17, 2009 6:12 pm PT

    When you look at the poor quality of many of the games released, you wonder how 10 million could of gone into the development of these games. Companies are making profit over profit. It will never end until they price themselves out of the market. But wait, isn't there a third world manufacturer waiting to replace another American worker.

  • anomaly3001

    Posted Jun 17, 2009 5:48 pm PT

    I don't care what anyone says! If it costs you 10 million dollars or more to make a video game then your corporation needs to rework things from the inside! This is tech people! I guarantee you that these studios who do produce million dollar games have the equipment to do this in the first place! For me to truly believe that it costs 10 million + for most games I need a break down chart of where all that money is going, and I guarantee u we will never get a break down, all these guys do is talk and throw out numbers and most of you guys just believe it and roll with it! If more people start to stand up against high price games instead of helping these guys sell out in one week! Then us gamers may make progress, but as of now we have rich gamers who don't care about high prices who make it suck for all the regular gamers who are the majority! These businesses and businessmen are always trying to make at any expense money! Some of u need to remember that! Every game that comes out is not a good one worth $60 dollars and every game that comes out does not have 10 mill worth of development in it! Stop believing everything you hear! Stand for something or fall for anything!

  • Mike_Labeckio

    Posted Jun 17, 2009 4:17 pm PT

    proof ingame-ads were never intended to drop selling price of games. Just more income to keep the corporate machine running.

  • Ace77765

    Posted Jun 17, 2009 4:13 pm PT

    Doesn't take financial analysts or gurus to predict this one and that is why most of us think that if sony or microsoft makes a next gen console in these times we are in...whew they are gonna take a beating even if they only make like 100 or 1,000 of them because that is about how many they will sell and the cost to make them just insane...this doesn't include nintendo or sega if they decide to pick up the ball again and get back into the game they could do it and the price would be about what these systems are now but sony and microsoft forget about it...and we won't even mention the games because those prices would double too and for 120 bucks or more...whew

  • Tygraph

    Posted Jun 17, 2009 3:25 pm PT

    It all depends on the type of game you are making. This could possibly mean the end of games based on movies too. We would all love that. Crank out a good game that would make, or deserve to make money. Killzone 2 cost about 22 million to develop while GTA 4 took about 100 million. MGS 4 was about 40 million as well. Also, take into account that Final Fantasy 7, PS1 game, took 24 million to develop. New technology doesn't always mean what you think. Just because it is the most advanced doesn't mean it is undeniably going to cost around 60 million to make or that 60 million is a lot for good developers. If they can make a "Next-Gen" game cost about 60 million then they are going a good job. CGI movies can cost well over 150 million.

  • LordChimera

    Posted Jun 17, 2009 3:24 pm PT

    Remember the jump from GTA III to GTA SA? The size of the map, the content, the gameplay... Apparently the PS3 has only unleashed about a quarter of it's potential, just as the PS2 had during it's early years.

    I hope we will see the same kind of advancment with the PS3 and Xbox 360 over the next 3 or 4 years. For example, a GTA game with a map 5 times the size of GTA IV's Liberty City and about ten times the features lol. I'm more interested in the potential of the current consoles than the ps4 and xbox??? (erm...540???? ) or whatever. And I wouldn't worry too much about a huge price tag on next gen games. They will probably start with around a 20% higher price tag but they'll go down in no time... Just like current gen games when they were 1st released.
    otherwise they simply wouldn't sell half as much. The consoles however :s £1000 ???? - just a guess of course. End of rant

  • jmc88888

    Posted Jun 17, 2009 3:11 pm PT

    Therefore you would expect that the first couple of years, while the install base grew, most of the games would simply be ports. I.E. even new games made for the 360 or ps3 and ported over to the more powerful OnLive without many or any new features. By the time OnLive gets big, the ps4 or xbox 720 should be right there and make up any gap. There are advantages though, over a few development cycles, i.e ps5, ps6, ps7, consistently along the way OnLive can just simply add more processing power to their core service locations and produce a consistently better performance. I can forsee it overtaking xbox or ps or nintendo, if it's done right, and it has enough money for the next 10 years. Because it's going to be a gradual shift, rather than a big immediate shift. Sort of like dvds. No one bought them early, but it slowly gained on vhs for years. Then they put out the players for the price of a vcr, and whammo, vhs market share crumbled almost overnight. I can see something similar, but not based merely on price. It's a prime advantage to take small baby steps whenever you want to, rather then a distinct architectual shift to a distinctly new console. Game development costs could be streamlined, as you can just apply a couple new features each year, rather than have say ps2 coders learn the newer ps3 dev kits. Hell they've only sufficiently figured that out recently.

  • jmc88888

    Posted Jun 17, 2009 3:11 pm PT

    Well I wouldn't expect OnLive with a bang. Odds are other than a handful of exclusive titles, the list will probably be 360/pc and perhaps ps3 games ported over to OnLive. Most of the exclusive titles won't be AAA titles. I would expect ubsioft to make one launch game that may look like say, Crysis in terms of technical capability. There's lots of factors involved. Developers as a norm don't start producing AAA titles en masse onto a platform until there is an install base big enough to offset the costs of making the game. Otherwise you have disaster. Think Atari and E.T. among many other recent examples. Now ubisoft with skin in the game will probably produce a game, but asking others to commit a 60 million dollar gamble to produce a AAA game on a system that might only have 500,000 units sold in the first year is a big risk.

  • nuwans_basic

    Posted Jun 17, 2009 2:50 pm PT

    No new consoles will arrive for a while!
    i think these guys forget is it US the consumer who has to pay for these devices and then the games! after the credit crunch we have shown that we arent willing to spend when the banks dont lend!

  • duffmanth

    Posted Jun 17, 2009 2:35 pm PT

    The only kind of games I can see costing that much to develop now and in the future are epic games that are usually 2-5 years in development like Metal Gear, Final Fantasy, Gran Turismo, and Halo among others. Games like Need for Speed, Smackdown, sh*tty sports games, and shovelware games can in no way possibly cost tens of millions of dollars to make!?

    I don't understand how epic AAA games like MGS4 and Halo 3 can possibly be going for the same price as pieces of sh*t like NFS: Undercover and Haze?!

  • ShroudedEagle

    Posted Jun 17, 2009 1:49 pm PT

    Oh great, if it is going to cost that much to make game, we can expect a price raise in them all, that's for sure.

  • dogpigfish

    Posted Jun 17, 2009 1:47 pm PT

    I've seen OnLive, it doesn't have anything that the PS3 and XBOX 360 don't already have. Ubisoft is a big investor, but don't think this is going to be a good investment.

  • raahsnavj

    Posted Jun 17, 2009 12:44 pm PT

    Hum... I still think the ability to turn a profit will dictate how much to spend on a title. And "if OnLive manages to make this work" - On-live working... I still chuckle at that. Good idea, but not until bandwidth limitations are gone...

  • zombey1333

    Posted Jun 17, 2009 12:36 pm PT

    Man...all I'm reading is "slownewsdayslownewsdayslownewsday." Anyone else seeing the same thing? :p

  • Ghoulish_Visage

    Posted Jun 17, 2009 12:25 pm PT

    @ Antatious
    Well, a show it may be, but its making life very hard for us and giving me little hope of being able to afford a new console, or the extremely expensive games that come with it.

  • Inconnux

    Posted Jun 17, 2009 12:11 pm PT

    The problem is that these developers are spending millions without concentrating on the main part of the game... making it FUN! All this money is spent of fancy graphics and the actual game portion is just an afterthought.

  • eal-zubieri

    Posted Jun 17, 2009 12:10 pm PT

    and its too early for new 4th generation .

  • AnelZukic

    Posted Jun 17, 2009 12:07 pm PT

    I'm sure that many people are happy with this ongoing generation. They still can wait for the next generation, and if take in considering that this generation just started to bloom, nobody is in hurry.

    The genre which is at most affected by the raise of the dev costs of games are RPG's which aren't coming out as before (go back to the time of SNES and PS1), Adventure (I hope Heavy Rain will open the eyes of the public) and Survival Horror. Now if the costs of the game is going to hit 60 million average, you can expect less quantity but hopefully more quality. So that would mean about 10-20 AA & AAA games per year at max.

    My predictions are that the 8th generation of consoles are going to hit the market in 2015 at earliest.

    Now we just have to hope that the industry is going to have any tremors .

  • slayersdeath200

    Posted Jun 17, 2009 12:06 pm PT

    The best move to make now is just keep making games for this generations consoles there is no need for new consoles at this time just keep the AAA games coming

  • Antatious

    Posted Jun 17, 2009 12:06 pm PT

    What do you mean, "wait for the economic climate to strengthen"?
    Our economic stature is always right where the private federal banking reserve wants it to be- under their control. Our "economy" is based on paper being backed by nothing. Don't talk about the "state of our economy". Production will still go on. It is all just a fcking show.

  • eal-zubieri

    Posted Jun 17, 2009 12:04 pm PT

    WOW i am shucked to see how much it takes to make one video game!

  • Sechu

    Posted Jun 17, 2009 11:44 am PT

    The current console generation is just great. There is still extra power under the hood of the PS3 and the 360 waiting to be exploited. The camera based motion sensing is an interesting feature that really can extend the life cycle of these machines being the new controlling mechanism more important than the graphics as the success of the Wii suggests.

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