Why is it so expensive to make games in the United States?

I used to work for big game studios in the bay area, and changed careers to big tech because of this.

Games don't bring in enough revenue to sustain employees in high-cost-of-living areas ($7B revenue for EA versus $305B for Google in 2023). From the business perspective it doesn't make sense for a game company to pay SF Bay Area tech salaries when it's making so much less revenue, so the result is more and more game development shifts overseas.

Then from the employee perspective, it's already a brutal nights-and-weekends industry. "Crunch time" is normal. If you add to that poor relative pay for where you live, it's just not worth it anymore to chase a dream you once had as a kid.

I personally am much more satisfied with my life as a result of the shift. But it is a sad trend for the US.

I'm in the trenches. Making games is amazing, but the business is brutal. Very hard to find a "geyser of money" and monopolize it for years let alone decades. Contrast with Google search or Microsoft Office, etc. The tech advances quickly, dating past work. One fad gives way to the next. There's a fixed amount of attention for an ever growing amount of content. etc. etc.

Meanwhile, the technical work is very sophisticated and game engineers can work elsewhere, so they justifiably want to be paid well or they will leave to adjacent industries. Plus life is expensive in America. Six figure salary ain't what it used to be. People overseas, including western Europe, will do comparable work for peanuts. Article basically gets it correct. Not sure the problem can be solved. Joe in Seattle wants $150,000. Jozef in Poland wants $50,000. Case closed.

Still, I'm grateful to get to make games with cool people every day. Carpe diem!

The article sort of answers this. There are so many other opportunities in the US that pay better (and have a saner lifestyle) for many of the same skill sets.

It is more expensive to do anything in the USA. This did not matter in the past, because US consumers also had vastly more disposble income. Now, however, nobody has any disposable income.

Adjusted for inflation, SNES games cost over $100. Now games are 100x larger in terms of content, and while the market has increased, the price is halved at best. $100 got you a game made by 1 or two people. Now $50 gets you a game with a thirty minutes credits roll. Microsoft and Sony offer games for a monthly price, and budget consumers buy games used - such that GameStop captures the additional value.

In 2000 I was paid just over $100k as a game developer. Adjusted for inflation that's $182k. I'd be almost tempted to go back if someone could pay that much, reliably. They don't pay that much and they certainly aren't reliable.

Underlying it all is that the USA is no longer the only industrialized nation in the world, as it once was after everywhere else was bombed flat. So just as countless TV shows are made in Canada and elsewhere, so too games can be made elsewhere.

Every time this topic comes up I point to the fact that the television industry makes gigantic volumes of content, reasonably on-schedule and on-budget. Movies have somewhat different math, but there's a huge economic segment routinely producing creative content with a high proportion of salary expenses, much of which is unionized.

It seems crazy to discuss gamer salaries without discussing how normally dysfunctional game studios are, with crunch time all year round, intense burnout of young employees, terrible working conditions, and rarely hitting schedule or budget constraints. In other words, there's a huge opportunity cost in reforming the process by which studios make games, and all they need to do is look at TV to see how to do it. Hell, just hiring some television producers would probably bring a level of sanity as-yet-unseen.

Part of what drives high salaries in gaming is the terrible working conditions. You could pay less just by saying "we work 9 to 5 and value quality of life."

Anybody that has worked in a large American game studio also knows it’s a high pressure environment. Burn out is very common because these studios demand so much. Yet because of poor management (or overly paid management), Americans produce subpar products and studios like Rockstar Games continue to milk their cash cows (ie, GTA V - a 10+ yr old game that shits money due to GTA Online and micro-transactions).

No innovation in this market. EA continues to milk the sports series with minimal to no improvements in underlying engine (ie, Sims, FIFA and whatever the American Football one is called now). Epic Games just milks Fortnite (again with microtransactions). Mobile game studios are more like nanotransaction based “games” using tactics from casinos to get older and younger populations to spend money. Activision/Blizzard hasn’t pumped out anything new in a long time and continues to milk their cash cows (Call of Duty, Overwatch “2”).

Riot Games building off predecessors with F2P w/ microtransactions. RG produced games are _okay_, but really only LoL and Valorant are the ones I play.

Indie game studios sort of gaining traction but often overshadowed by larger game studios.

Also let’s not forget the monopoly that Microsoft has over gaming. Want a AAA game? Got to use their proprietary shit (DirectX) to build it and ship it. Probably need to obtain Windows licenses as well for dev purposes.

Some advancements in agnostic APIs such as Vulcan and alternative game engines (bevy). But so far haven’t seen them used in AAA games.

> In late 2023 the average monthly gross salary of Polish workers is almost 8,000 pln (about $2,000) or about $24,000 per year. In the United States the monthly average salary was about $4,941 per month, coming in at about $59,300 per year at the same time period. In other words, investors and employers can pay for more Polish workers than American ones with the same amount of cash.

While this is true - in Poland the difference between IT and non-IT salaries are higher than in US, so it's not a good comparison for cost of hiring programmers in particular. The differences won't be as big.

Funnily enough the higher taxes in Poland are the main reason cost of development is effectively LOWER here - because you don't have to save for crazy expansive medical insurances or university funds for your kids - cause it's provided for free by the state - and the private alternatives have to compete with that - so they are cheap as well.

15% of the screen is not an ad or a popup, on mobile. 15%. What the fuck.

It's incentives. A studio nowadays is either outright owned by the publisher or is signed up for development with little or zero equity. In this situation the only source of income for a studio is the milestone payments or salary paid by the publisher so the longer development goes on, the more it gets paid and the more is the cost.

If American studios could find publishing contracts leaving them more than 50% of equity like they used to in 1990s-early 2000s they would be making games much cheaper. Even though you might get cheaper developers elsewhere, few have skills and spend most of the time on learning how to make games through trial and error, running costs up.

I remember how expensive Killzone appeared to the American game developers: the Dutch studio, apparently had hundreds of staff and tens of millions cost in early 2000s, when a better selling American game had been usually developed by a couple of dozens staff for under 10mil.

It's amazing to see how much money is spent on not much playability. The teams are too big and there are too many managers. Cost cutting by moving jobs abroad doesn't solve the core problem of games not being very enjoyable. I'd rather trade fancy graphics for something that is fun to play.

Also relevant to this is the Game Industry Layoffs tracker @ https://publish.obsidian.md/vg-layoffs/Archive/2024

Game development is an interesting industry where both happen to be true:

1. It's too expensive to make a game

2. Employees in the industry don't get paid enough

Similar industries include childcare, where you hear politicians decry the cost of childcare in the same breath and how little the workers in their field are getting paid.

Maybe the costs are somewhere else, not employees? Nope. From the article:

> That cash flow is essential because a studio's operational costs remain fixed (or even increase) while revenue fluctuates up and down. Like most software companies, game development operating costs are derived almost entirely from salaries. And in the United States, there are dozens of factors that drive salaries upward.

So I guess the article is arguing salaries are too high, which is not something you hear too often in the game industry context.

How could a journalist write so much and research so little as to completely miss any mention of the ongoing section 174 disaster? They even mention “tax” eleven times and specifically mention small studio cash flow issues and costly salaries, but payroll taxes and tax credits are all nothing-burgers, not worth the words on the page, compared to the insolvency insanity of being only able to expense and deduct 10% of a developer’s salary in the first year and depreciate the rest over five years.

I thought Canada is where games are made now

When the chief marginal cost of your product is employee wages why would anyone be surprised that the country where wages are most expensive makes it the hardest to produce a profitable product as the marketplace opens more and more globally and gets saturated?

Insane how many words the author uses to capture "costs are higher for US game studios because salaries are higher". There's no actual secret second thing and it's hilarious watching the author try to find a way to spin "people make more money" into a problem with capitalism.