Just Cause developer says AAA game development unhealthy, unprofitable

"Very few traditional $60 games make any money, and what used to make sense doesn't any more," Christofer Sundberg says.

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The state of AAA development today is unhealthy and most big-budget games will never make a profit, Just Cause creator Avalanche Studios founder and creative director Christofer Sundberg believes.

"It’s really not healthy at the moment," Sundberg said when asked to give his assessment of the AAA business today. "Games have evolved, technology has evolved but as businesses we’re still stuck where we were 15 years ago. As budgets grow, risks increase."

Publishers and developers alike are handcuffed by this stagnation, he argues.

"The publishers are nervous because they have to project a game being a massive hit three years into the future and the developers are frustrated because they need to be flexible to every move the publishers make," Sundberg said. "It’s impossible to make everyone happy in the current equation."

Sundberg
Sundberg

And when a AAA title is released, it's unlikely it will end up profitable, Sundberg said

"Very few traditional $60 games make any money, and what used to make sense doesn't any more," he said. "Publishers and developers very rarely see a return of investment from a 5-8 hour long game."

Evidence of this is becoming apparent. Electronic Arts announced last week that it had lowered its revenue projections "due to the weakness in current-generation software."

Sundberg's comments are especially noteworthy considering he is currently working on multiplatform action game Mad Max, a bonafide AAA game to be published by Warner Bros., a division of the massive entertainment company Time Warner.

The game is coming to Xbox One and PlayStation 4, and while early sales numbers for both consoles are in Sundberg's words "fantastic," he's not ready to jump for joy just yet.

"It’s a bit early for me to feel comfortable though," Sundberg said. "The investments in a AAA game these days are huge and even if everyone of those two million people bought a copy each, most big games would not break even if they were next-gen exclusives."

Game budgets are famously secret, but most agree that development for new platforms like the Xbox One and PS4 is more costly compared to past generations. Capcom even contends that next-generation game development takes 8-10 times more work compared to Xbox 360 and PlayStation 3.

Avalanche isn't putting all its eggs in one basket, however. The Sweden-based outfit operates Expansive Worlds, which created the free-to-play hunting game The Hunter, and is also working on a new game to be published by Square Enix, rumored to be the long-awaited Just Cause 3. In addition, Avalanche is currently creating a game based on a comic book franchise, but it's not Superman.

Also negatively impacting the video game business today is its hit-driven nature, the executive argues. A publisher relying on a proven formula instead of branching out and trying something new "kills innovation" and leads to fewer major new franchises coming to market, he said.

Sundberg's assessment of the gaming industry wasn't all bleak, however. He said the "way out" of the current situation comes down to developers and publishers working harder to foster closer collaboration as a means to create innovative and exciting new experiences.

"I hope and think we will see improvements over time," Sundberg said, making a point to say he is "really excited" to see Titanfall and Destiny coming to market from major publishers Electronic Arts and Activision, respectively.

Regarding the Xbox One and PlayStation 4 specifically, Sundberg said the new consoles are "maybe not saving the industry," but should provide a much-needed jolt that will inspire developers to take risks and create unique games.

Our full interview with Sundberg will run later this week.

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Avatar image for concetta731
concetta731

The going rate for every N64 game, regardless of quality, was 75 plus tax. That was back in the nineties. It boggles my mind that games are now vastly superior, take thousands more hours of work to make, actually cost way less to buy than games did 20 years ago, and still we have all of the complainers. You can not expect quality gaming without being willing to pay for it.

Avatar image for syntaxkt
SyntaxKT

<< LINK REMOVED >> That's because there was no internet to complain about these days and there are a lot more games to compare to in terms of value for the money. Less and less people are not gonna spend they 60 dollars they worked for if the game is only 10 or less hours and has little to no replay value. People want long lasting games like GTA and Skyrim for the money now, and that's why a lot of games now have RPG elements where you get the sense of leveling up your character from grinding more gametime like Far cry 3.

Avatar image for negativeions
negativeions

Please. Spare us, Sundberg. He's full of crap. He's basically trying to legitimize the pay as you play model by suggesting the "traditional" model hardly works. You make a good game, chances are high you'll make money. You make a bad game, chances are high you won't. Real simple.

Avatar image for Zork_Wesker
Zork_Wesker

<< LINK REMOVED >> That's kind of a naive way of looking at things. It's not so cut and dry like that. What's a good game, and what's a bad one exactly? There have been good games that didn't really make their return investment and they were considered failures financially. A good recent example of this is Tomb Raider, Square Enix was hoping it would sell more than it did, nowadays, 4 Million units is a disappointment anymore it seems, which is ridiculous. Resident Evil 6 (In my opinion, not a good game) sold somewhere in the ballpark of 7 Million copies and it was considered a failure by Capcom. 7 Million isn't good enough? You're telling me that in the current marketplace, there's nothing wrong with this line of thinking?

Honestly I think that the big publishers have gotten into this bad habit of overspending and creating bloated budgets for their games. Why does Assassin's Creed need a staff of over 1,000 people to work on it? They brag about that like it's a big deal but it just seems like wastefulness. Why did The Old Republic's budget exceed 100 million dollars? Don't you think this is nuts in some way? That video game production costs are climbing at this astronomical rate?

There's a reason game budgets are held as secrets by the publishers I think. Probably because it'd be embarrassing if everyone found out how much money they spent making a damn game anymore. It's a video game for cripes sake. If anything, I can see this getting even worse with time, and actually causing a major slump in the industry. I don't want to say crash, but the closest we'll come to one.


Avatar image for Shinobi120
Shinobi120

IMO, I think that the AAA gaming market is going to wind up collapsing on home gaming consoles, especially when both Wii U & Xbox One sales are dragging down. And quite frankly, I'll be glad when that happens.


There needs to be a return to mid-tier gaming (middle market) & low-tier gaming, & both of them needs to be popular on consoles again just like back in the 80's through the mid-2000's. Indies could wind up being the future of gaming as well (which I don't mind, as most of their games are good, IMO).

Avatar image for spikepigeo
spikepigeo

This guy has been talking a lot lately, but funny thing...I actually listen to him. He usually has decent assessments of the industry that publishers wouldn't like their developers saying out loud. That usually means it's good stuff.


What he saying here is so true. AAA develop is absolutely ridiculous right now and is completely unsustainable. They'll have to look for alternative methods some day. Here's to hoping that Star Citizen pays off.

Avatar image for JDFS
JDFS

''Publishers and developers very rarely see a return of investment from a 5-8 hour long game''.
And this is exactly the main issue with AAA games but they're too stupid to understand, which is why I buy more indie games than AAA now, I want gameplay and replayability and for example in 2013 I didn't buy any AAA games because they are not worth 60$, Arma 3 is now indie and this is the only game I bought over 40$, the last good AAA I bought was Skyrim... which was released in 2011.

Avatar image for mrpxiz
mrpxiz

<< LINK REMOVED >> I hope you meant "arma 3 is NOT indie" instead of "now", because it's definitely not. Not even Dayz is indie which was made by a much smaller team. Bohemia has been around for more than a decade and they made and spent millions. I own all their titles btw, they are my favorite company since Arma Combat Operations.

Avatar image for dirkradke
dirkradke

Basically, what a took away from his comments were that "everything is bloated and unsustainable" as things stand in the video game industry. For the most part I agree with him, but what a lot of publishers rely on is tie-ins and name recognition and other things not directly related to the video game itself. People constantly complain how IT services are expensive and drag an organization down. However, without those same services the organization probably couldn't compete in today's economy. So while his comments are accurate to a degree I doubt it explains the whole story. Of course I don't think he was trying to explain it anyway - just express his thoughts.

Avatar image for corteztheg
corteztheg

I support his views being that video game sales even in the last generation had rendered many publishers and developers bankrupt while causing the lucky ones to be acquired or downsized. the current gen might as well inflict a far worst calamity on publishers and developers being that more is expected now by the gamers which would guarantee a higher development cost . the last GTA game cost over $200m to market and develop, whats the next one gonna cost?


it makes you wonder if the lack of backward compatibility of last gen on current gen was no accident in order to capitalize on already existing and well known IPs by re-releasing as HD or 3D ports on current gen. the higher the cost, the greater the risk aversion. expect more of the same old or just the same old like gears of war trilogy 3D remix in the future ( microsoft already bought the franchise).

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FabledVeteran

Am i the only one who thought Just Cause 2 was an awesome game ??


Story sucked, it was a bit sparse... but the scale of the game and the freedom was awesome...

Avatar image for corteztheg
corteztheg

<< LINK REMOVED >> just the story? what about the Voice acting, one of the voices portraying an Asian character sounded Jamacian

Avatar image for Coseniath
Coseniath

<< LINK REMOVED >> I completely agree. The game was so big that no other game is near it. 1k square kms to explore... nuff said...

Avatar image for ceaseless
ceaseless

<< LINK REMOVED >><< LINK REMOVED >> I loved that the map and area was so big, but that's why I was so angry at the same time. I saw much potential in that map, but there was nothing to do (nah I'm not going to try and create stunts as an excuse for something to do hehe)

Avatar image for juhis815
juhis815

I'm baffled about this, but most people on earth just want to play those Call of Duty games, because they have no other choice on their pathetic "lifes"...

Avatar image for Gamer_4_Fun
Gamer_4_Fun

He paints such a grim picture, makes it distasteful to get excited for Mad Max

Avatar image for corteztheg
corteztheg

<< LINK REMOVED >> well i stopped being excited when its price lowered to 30.99 pounds on amazon. that is usually an indicator that the game is either lower on content compared to contemporaries for example Batman Arkham Origins or suspect to be an either average below average game for example Deadpool or Anarchy Reigns.

Avatar image for Gamer_4_Fun
Gamer_4_Fun

Well, as much as I love gaming in various price points, 60$ triple A games I play the most.

Avatar image for dcno07
dcno07

Well if this leads to more games like NBA2k14 where you pay full price AND get to spend real money in game to actually enjoy the game I'll just resort to more pirating. Good thinking devs. I have no problem paying full price for a GOOD solid game but these new video game models - in game purchases - are just driving me to pirate.

Avatar image for Lacarus
Lacarus

<< LINK REMOVED >> Don't blame the developers. Blame the publishers.

Avatar image for ioshilee
ioshilee

Very funny to hear that from a dev, whos games aren't that great at all. Why don't you go and tell Blizzard, Rockstar, CD Project, Bethesda that AAA games are not profitable, mr. Sundberg?

Avatar image for corteztheg
corteztheg

<< LINK REMOVED >> well $235 million on market and development is incredibly risky ( GTA 5).

Avatar image for spikepigeo
spikepigeo

<< LINK REMOVED >><< LINK REMOVED >> Right. Risky for anyone BUT Rockstar. Every GTA installment is a guaranteed hit.

Avatar image for jgn77
jgn77

Wow. So surprising another dev blames everything but the quality of the games themselves for the state of the gaming industry. Make a quality game and it will sell hand over fist. Gamers are dying for it.

Avatar image for corteztheg
corteztheg

<< LINK REMOVED >> Remember me, Prototype 2, Homefront, Hitman Absolution. all good games that sealed their developer's fate to either be bankrupt, closed or downsized. making and publishing game without brand recognition is risky and that is the state of the industry.

Avatar image for rickphoenixxx
RickPhoenixxx

I think this is how Nintendo has so much profit, and why we may never see a new big Metroid of Starfox game. It is a business and all, so we will only get the big titles that stay the same every year mostly.

Avatar image for RPG_Fan_I_Am
RPG_Fan_I_Am

lol. urge to troll.... can't stop...

1"Very few traditional $60 games make any money, and what used to make sense doesn't any more"

Just cause a games $60 doesn't mean it's a AAA game. AAA games are usually big budget/Big payout games. A lot of $60 games have been coming out that really aren't worth $60. Thats just the set standard of PS3/360 new game cost.

2." Electronic Arts announced last week that it had lowered its revenue projections "<< LINK REMOVED >>.""

Right. It's the PS3 and 360's fault you guys aren't making great games worth buying.

3." next-generation game development << LINK REMOVED >>."

This is my favorite one. So you admit here you can't afford to develop games on the PS4/Xbone. Yet your the ones complaining about the limiting hardware of the PS3/360 making it impossible to develop a good game........


I just love how all the big gaming companies can find excuses as to why they aren't making any money. They just run you in circles.

Avatar image for rickphoenixxx
RickPhoenixxx

The gaming industry is bigger than ever, so the GOOD aaa titles do indeed make money. There are cash grabs like capcom though, who have released the same fighting games over and over again like Streetfighter. They should have plenty of cash in the budget to make a new AAA mega man if they wanted, or another Resident Evil the quality of 4.

Avatar image for downloadthefile
downloadthefile

Funny enough, there's no other industry where I feel quite as ripped off quite as consistently as with video games. I mean, wow, do I feel bamboozled a good amount of the time. I almost applaud some of the developers for their ability to siphon my money with hype and no substance. Maybe I'd have more sympathy if so many devs didn't make me feel like they stole money either intentionally or because of publisher restraints on the amount of time needed, either way the result is the same.

Avatar image for rickphoenixxx
RickPhoenixxx

<< LINK REMOVED >> Yeah, back in the day 60 bucks would buy you a game. Now that's the introductory down payment when you look at dlc season passes and stuff like $20 car packs in Forza 5.

Avatar image for 1wikkid1
1wikkid1

The reason it's "unhealthy" and "unprofitable" is because the big game companies grew to a point where they are run by paper-pushers instead of the developers. The people making decisions have no clue about gaming or games in general, they're still think it's something for the kiddies while most of the players are late teens and older. On top of that their objective is not making good games, it's making money, if the game happens to be good that's just icing.

Give the developers, the people who actually design and build the games, power to make decisions that have impact on the gameplay and let the paper-pushers do what they do best, push papers around. (or better yet, get rid of the paper-fiends, I dunno, they must be good for something... maybe we could make soap out of em or dog food or something.)

Avatar image for Ghosthunter54
Ghosthunter54

Skyrim, GTA V, CoD, etc. Plenty of AAA games (if you can call CoD a AAA game lol) make a crap ton of money. If you're making a AAA you need to go all out and make it great. Half-assing it will just leave you in debt.

Avatar image for buffaloblitz85
buffaloblitz85

<< LINK REMOVED >> what about the 'new' COD engine? That was pretty expensive right?

Avatar image for garcia_jx
garcia_jx

But it's pretty expensive putting in that COD fish technology.

Avatar image for rickphoenixxx
RickPhoenixxx

<< LINK REMOVED >> you forgot dogs, never been a dog in a videogame before.

Avatar image for stailcookie
stailcookie

JC2 was great, but it was down to $20 at record pace and continues to be sold for $2-3 on PC on a regular basis. He says $60 games don't make money, I would agree when you sell them 95% off... EA and SE do it more than any other publisher, yet they complain about profits more than all the other publishers combined. Blame the pirates I guess...

Avatar image for Jacanuk
Jacanuk

This guy have no clue what he is talking about.


Most games are not profitable because it can cost a arm and a leg to develop, most are not profitable because they are not good enough.


Also their marketing costs are insane, think it was Activision who spend 100mill+ on global marketing.


Avatar image for Redsyrup
Redsyrup

The problem is he's lumping AAA sales with AAA quality. The CoD, GTA, WoW gravy trains will eventually run dry.

Avatar image for Kryptonbornson
Kryptonbornson

<< LINK REMOVED >> Of course they do, but they just get replaced with another one. Halo gave way to Call of Duty and now Call of Duty will fall to something else.

Avatar image for buffaloblitz85
buffaloblitz85

<< LINK REMOVED >><< LINK REMOVED >> Call of Duty will 'fall to Titan'fall' HEHE!!

Avatar image for Kryptonbornson
Kryptonbornson

@Death_Masta187 @uchihasilver@buffaloblitz85@Kryptonbornson@Redsyrup They might not have paid. It was probably a back room deal when they were cutting Gamestop out of used sales with their policies. If MS and the publisher got a cut of used sales, then the exclusivity made sense. Since Sony overreacted and dropped their blocking of used games, then MS had to backtrack. Makes me wonder if that wasn't just a bid by Sony to undermine Microsoft because they were poised to be the more popular console by early adopters.

Avatar image for Death_Masta187
Death_Masta187

<< LINK REMOVED >><< LINK REMOVED >><< LINK REMOVED >><< LINK REMOVED >>

don't think MS didn't pay to have titanfall exclusive to the XB1. EA is still a business and their only goal is to make money. EA may be evil as **** but they are not stupid.

Avatar image for uchihasilver
uchihasilver

<< LINK REMOVED >><< LINK REMOVED >><< LINK REMOVED >> unlikely EA already cut half of there potential buyers by not including PS3 and PS4 and unless you are completely stupid you wont run out and buy a console for yet another fps title


Avatar image for Redsyrup
Redsyrup

I wonder where he got his sleeves done?

Avatar image for xolivierx
xolivierx

It's funny because good CONSOLE games are very hard to find nowadays. I don't know if you remember the Ps1 and Ps2 era...we have seen A LOT of great games and some interesting franchises were born during that time. Now what do we have? Cod, Battlefield, Ass Creed, Nintendo with their fracking Mario games....everything is turning into a shooter.

I miss the days of Silent Hill, Resident Evil, Parasite Eve, Panzer Dragoon, Legacy of kain/Blood Omen, Ace Frigging Combat, Sonic on the Dreamcast, Crash Bandicoot, Tomba..

I mostly play Rpgs nowadays because almost everything else is garbage. Kudo for the creators of Demons Souls for resurrecting a style that was dead.

Avatar image for TheMatrixCBC
TheMatrixCBC

<< LINK REMOVED >> I don't know if you remember the NES and SNES, but more great games and interesting franchises were born during that time than any other - that's when they got started.

Say what you will about Mario games, but each game is enjoyable and entertaining because Nintendo takes the time to produce games that are high in content, low on flash, and fun to play.

I don't disagree with the sentiment that most games that come out, now, aren't worth $60.