Ever-increasing development budgets rear ugly head in latest Square Enix financials

Rising dev costs concern as 3.4m Tomb Raider sales are not enough

Sales of 3.4 million for Square Enix’s Tomb Raider reboot in the space of a month were not enough to meet targets, according to the publisher’s latest financial report.

The Japanese game giant, which is expecting to report "extraordinary losses", said that despite performing well critically, titles such as Tomb Raider, Hitman: Absolution and Sleeping Dogs all failed to hit their sales goals.

Hitman: Absolution reported 3.6 million sales, while Sleeping Dogs hit 1.75 million.

Square Enix said that its North America sales force in particular was “ineffective”, making up just two thirds of the number of units sold in Europe.

Labelling the sales of 3.4 million for Tomb Raider as “weak” shows the challenges developers are increasingly facing to produce triple-A titles with ever-escalating development costs.

Breaking the $100m barrier

Developers and publishers have long-argued over whether the cost of development will ratchet up even further in the next-generation of consoles, with the PS4 set to launch later this year and the next Xbox expected to follow swiftly after.

A report from the New York Times recently claimed that the critically acclaimed BioShock Infinite cost $100 million to develop and another $100 million to market, which would make it one of the most expensive projects of all time if true.

Irrational Games co-founder Ken Levine has refuted these claims however, and joked on Twitter: “200 million for Infinite? Did someone send some checks to the wrong address? #unnamedanalyst”.

It has also been rumoured that EA’s MMO Star Wars: The Old Republic had cost between $200m-to-$500m to create, although the publisher has yet to reveal the exact cost of the title. After lacklustre subscriptions however, EA has since made large portions of the game free-to-play in an effort to make returns on its large investment.

Other expensively developed titles in the past include Gran Turismo at $80 million, Shenmue at $70 million and Too Human and Metal Gear Sold 4 at $60 million each.

Activision CEO Bobby Kotick said last month that despite the high costs of triple-A development in the current generation, he expected it to rise further on next-gen systems, as it always has on new hardware.

"This is my 22nd year doing this, and every single console transition we’ve seen an increase in development costs," he said.

"Over long periods of time it gets smoothed out, but I would say this is not a transition where that’s going to be an exception.

"We’re going to have to figure out how to take advantage of the unique abilities of new hardware and that requires new skills and investment in tools and technology and engines and so yes, that’s likely."

Avalanche CTO Linus Blomberg recently told Developthat development costs depend entirely on the type of game being developed, but expected some new record development budgets to be awr on the next generation of consoles such as the PS4.

“It depends entirely on what game you’re making,” said Blomberg.

“The PS4 opens up indies and smaller developers to a whole different level than the PS3. But it also raises the bar of what a mega blockbuster can be, and I’m sure there’ll be some new records in terms of development budgets.

"As an open-world developer however, there’s tons of exciting potential to create epic experiences that are more cost-effective due to the scalable nature of procedural technology, things that we have been forced to hold back on with previous generations.”

What do you think about console and triple-A development costs, are they out of control? What can developers do to increase their return on investment? Let us know.

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