Video games often take so much more effort to produce compared to a movie. Why are there so many titles released every year? Do these obscure games even sell enough to break even?

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Video games often take so much more effort to produce compared to a movie. Why are there so many titles released every year? Do these obscure games even sell enough to break even?

In: Economics
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Video games make a LOT of money. First off, the cost of buying a video game versus going to the movies is generally a lot higher in regards to a AAA high-quality title. (But conversely, you get far more hours of entertainment out of it.) Now, it’s true that there are TONS of games that get released, and like movies, not all of them end up selling enough to make up for the money invested in their creation. But enough do that it’s a thriving, growing industry.

Most of them yes, and the one that don’t usually lead to the company going bankrupt and stop making video games. Keep in mind that the video games industry is a LOT bigger than Hollywood.

In 2018 the video game industry was 137.9 Billion per year, while movies was 41.5 billion and music was 19.3 billion. The highest grossing film of all time is Avengers : Endgame with 2.79 billion, following by Avatar at 2.78 billion. Grand Theft Auto V is the highest grossing entertainment product with 6 billion in revenue. So yes, video game make a lot of money.

Now for obscure video game, the range of revenue and spending vary a lot. There is a lot of video made only by one guy or a small team that become popular, so in that case they costed less to make than even a small movie. Some other games are just reskin of game already made, so again the cost isn’t that high. So ya the cost to make a video game can be lower or higher than what you need to do a movie and the same it true for the revenue they gonna make. The main goal here is to have a budget lower than what you expect to get in revenue, and companies that are not good at that, end up closing.

AAA video game titles do indeed require lots of time, people, and money, but I’d argue that the MINIMUM investment to produce a passable video game is actually much lower than for a movie.

For a film to not look laughably amateurish, you need special equipment (cameras, lighting, microphones) and people who can operate it. You could try animation instead, but the prevailing styles also require a lot of specialized labor. Because you’re hiring people to work on your movie, you need to have a lot of cash on hand.

Meanwhile, indie games often have leeway to use much simpler images if the art is cohesive and the gameplay is engaging. Then it’s just code, and depending on how complicated the game is, that can be done by only a couple people. If those people own the studio, the only thing they’re really investing is their own time. Success then is more a question of “Did this make enough money to justify me quitting my job to work on it?” and less “Did this make enough money to pay the bank back for that loan?”

It’s an extreme example, but Tetris really captures this dynamic. It’s a fantastic game, but it’s also something that you personally could recreate in your spare time.