Forbes has a very interesting article regarding the costs of Gears of War explaining the reasons behind the sixty dollar price tag. Art and Design was reported to cost 25%. They commented: “The rippling oceans, expressive faces and explosive action sequences gamers want to see don’t come cheap.” Programming and Engineering was 20%, which includes the gaming engine, artificial intelligence, and so on.
Retail costs were 20% and “console owner fee” 11.5%. It’s quite interesting that gamers first need to purchase consoles for several hundreds of dollars, and then pay for a big piece of game development. Besides these numbers, there were marketing (7%), market development fund (5%), manufacturing & packaging costs (5%), licensing (5%), publisher profit (1.5% – amazingly low!), distributor (1.5%), corporate costs like management (0.3%), hardware development (0.05%). Watch the detailed slideshow with pictures to see in detail where the money goes.
Taken into account that Gears of Wars has sold over 3 millions units and the fact that they are preparing a Gears of Wars movie the publisher should be quite happy with the results.
EDIT: And I’ve received a message saying “The forbes article is actually a load of bollocks.”, with additional comments: “Several of us in the industry discussed the forbes article when it first appeared, and I know 2 of the people who work at Epic, who confirm that those figures are fictional.”. Anyone remember what I’ve previously said about questioning authority?
I started coding games when I was a small kid with access to Commodore 64.
Gears of Wars costs € 65 here, of which 19% is VAT. That’s € 52,65 without VAT, making roughly $ 87
US: $ 60, Europe $ 87.
“Console owner fee” sounded nefarious at first, but from what I understood, it is the license fee that needs to be paid to release a game on a console. I’m surprised the cost is that high, though.
Console owner’s fees are the only way that the Microsofts, Sonys or Nintendos of this world make any money from their machines. Typically they sell their consoles at close-to or below cost. From what I understand, this is a side-effect of the console-wars.