What’s behind ballooning video game budgets?

Why do some companies cost hundreds of millions of dollars to develop a popular video game?

A few weeks ago, The New York Times blamed the never-ending quest to deliver more photo-realistic graphics— and suggested that the industry is starting to see diminishing returns, leading to layoffs and studio closures.

However, Bloomberg’s Jason Schreier argues this analysis is “a little off the mark.” He doesn’t deny that budgets have risen dramatically ($20 million for Naughty Dog’s “Uncharted 2” in 2009 versus $220 million for their “Last of Us Part II” in 2020) or that graphics play a role, but he said it really comes down to to the need for larger teams for longer periods of time — due to improved graphics, yes, but also the ever-increasing scope of the game.

Additionally, he writes that “everyone” who has spent at least a few years in the industry has “their own horror story” about management decisions such as “a feature getting canceled because the CEO’s teenage kid didn’t like it” or teams of hundreds of people “messing around in pre-production as they try to figure out what the ‘core loop’ of the game will actually look like.”

So if game companies are really worried about skyrocketing budgets, Schreier says they should focus their “introspection” on the mismanagement that can end up wasting everyone’s work and time.