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Video Games: 3 Threats Facing Next-Gen Video Game Consoles

Video games sales are sliding, console sales are off, and executives are bailing

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3 Threats Facing Video Game Consoles: Cost to Develop Video Games is Skyrocketing

Video games are the new blockbusters — they cost a fortune to make, and a hit title can bring in $1 billion in sales over a long weekend launch.

video-game-consoles-video-gamesThat sounds good for video game developers, but it’s actually a worrisome trend.

Bringing an average game to market for the previous video game consoles could cost in the $20 million to $30 million range, but in order to take advantage of the new hardware and online capabilities of next-gen consoles, that average is expected to push $60 million. A blockbuster can cost much more.

With a $60 million entry fee, smaller studios can’t afford to play in the next-gen consoles leagues.

Titanfall, the Xbox One blockbuster took two years to develop. The final cost hasn’t been released, but EA’s big console title for 2013 Battlefield 4 required a $100 million expenditure; it’s not unreasonable to expect Titanfall to be at least in the same range, if not more expensive.

There’s room for independent studios to release smaller-scale games for a few bucks through the next-gen consoles’ online stores, but the mid-range is becoming too expensive for game studios to shoot for. Blockbuster video games could kill a company if they fail to perform at “blockbuster” levels.

The Playstation 3 has had around 800 video games released at retail, while the Playstation 2 had closer to 4,000. With a prohibitive cost of entry to develop video games for next-gen consoles, the risk of being displaced on store shelves by those blockbuster titles and a relatively small pool of Xbox One, PS4 and Wii U owners, there’s a good chance this round of video game consoles will have fewer games to choose from than previous generations.

It’s a bit of a chicken and egg thing, but fewer games is likely to translate into fewer console sales — which makes developing games for next-gen consoles even less appealing.

Article printed from InvestorPlace Media,

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