Single-player game budgets and scopes have spiralled out of control – it’s time to shrink the scope

AAA game development budgets and timelines for single-player games are getting out of hand. This was not always the case, but there has been an insidious creep over the past 20 years.

The core development team of 2009’s Assassin’s Creed 2 was 450 people strong, triple that of 2006’s original Assassin’s Creed. Reportedly, more than 1,000 people worked on 2020’s Assassin’s Creed Valhalla.

While the cost of game development is a black box, leaks and disclosures around court cases and acquisitions show that budgets are now in the hundreds of millions for many AAA games. Including marketing spend, the biggest titles could cost a billion.

That is unsustainable.

Games need to sell 10 million copies to simply break even in some cases, and the opportunity cost of making a game for six-plus years is enormous. Not every game is a success like Hogwarts Legacy. For every runaway hit, there are several AAA games that fail to deliver.

Something has got to give. The strain is already being felt among many of the decision makers and developers MIDiA has spoken to.

The oasis of smaller games

Up to now, the games market has managed to grow revenues faster than development budgets by increasing the price of games and monetising further through battle passes, cosmetics, and more. However, that well is quickly running dry.

The budget bloat has been due to many factors, including competition (e.g., PlayStation investing in costly prestige games to stand out), technological advancements, expensive talent, and open-world games. Budgets, however, do not need to keep rising.

In the console and PC spaces, audiences are not growing as quickly as they have in the past. Growth is flat. Microsoft’s CEO of Gaming, Phil Spencer, even admitted to Polygon: “the thing that has me most concerned for the industry is the lack of growth”. Spencer goes on to highlight that “if you’re not going to grow the revenue side, then the cost side becomes challenged”. As he explains, this is a particular concern for publicly traded games companies that have to demonstrate growth to their investors.

Emerging technology like generative AI and distribution methods like platforms powered by user-generated-content (UGC) promise to reduce costs further down the line. There are certainly plenty of exciting moves in these areas that we have covered in the MIDiA subscription, but the jury is still out on these nascent strategies.

One sure-fire way to reduce the cost side right now? Smaller games.

Smaller games have reigned supreme so far in 2024

In the music, TV, and film industries, huge budgets are usually necessary for the biggest success stories. Indie films and small series hardly ever break through but that is not always the case for games.

Let’s take a look at some of 2024’s success stories across PC and console:

• Helldivers 2, made by a team of roughly 100, is the games market’s biggest hit of the year so far and remains a top seller across PlayStation and Steam despite a light initial marketing campaign. 
• Palworld, made by a core team of 10 people (expanding to 50), sold eight million copies in its first week.
• Balatro, made by ONE person, has already sold a million (and counting).

These are all small games by AAA standards, two are new franchises and Helldivers was a niche IP. Yet these games’ discourse, impact on the industry (we will likely be seeing Helldivers, Palword, and Balatro clones), and unit sales have eclipsed big-budget 2024 games like Ubisoft’s Skull and Bones and huge IP like Warner Bros. Games’ Suicide Squad: Kill the Justice League. Both of those took over ten years  – quite the opportunity cost.    

Most players are not even finishing these huge games

Many AAA games take over five years to develop due to their sheer scale. Games that would have taken 20 hours to finish a decade ago now take 50 hours, 100 hours, or even longer to complete. Nobody is calling out for games to be longer, but that scope keeps creeping up.

Most players are not rolling credits on these games. Completion rates – or lack thereof – can be seen via trophies on PlayStation and achievements on Steam and Xbox. They demonstrate that much of the hard work done by AAA development teams is not even seen by consumers, negating the high costs involved.

Many games could cut their content and scope by 20% and most consumers would not notice. By reducing the size of games, costs would drop noticeably and all without needing to lay off thousands of people each quarter to balance the books.

Reusing assets works

PlayStation, ironically one of the spearheads of increasing single-player budgets, has experimented with smaller stopgap titles between its main launches.

This includes standalone expansions for The Last of Us (Left Behind), Uncharted 4 (Lost Legacy), and Marvel’s Spider-Man (Miles Morales).

These smaller titles borrow assets from the games they expand on but retain their big-budget feel. Stopgap titles can even perform better – commercially and critically – than the full games they are based on, as developers can directly iterate on previous feedback from players. It’s a stopgap between a game and its sequel. And such standalone titles have bigger total addressable markets than DLC, as consumers do not need to own the original game. 

Across the board, game makers reuse swaths of assets from their earlier games to ease development further down the line:

• The two sequels to Marvel’s Spider-Man reused and built upon the first game’s sprawling New York Citymap
• The Legend of Zelda: Tears of the Kingdom took the Hyrule map from Breath of the Wild and added more verticality and mechanics
• The Like a Dragon (formerlyYakuza) games have reused the Kamurocho setting time and time again

These games have been praised by consumers, streamers, and the media alike. Consumers evidently do not mind when developers reuse assets.

More advantages of smaller and stopgap games

When done right, smaller games in established IP and stopgap games between bigger-budget franchise launches can help generate:

• Significant revenues, leveraging the strength of the IP
• Higher margins and returns on investment (leaked documents from Insomniac Games show that Miles Morales’ return on investment so far eclipses the expected ROI for the bigger-budget Spider-Man2)
•  A testbed for new ideas to expand on further in sequels and other titles in a publishers’ roadmap
• More time for developers to work on other projects
• A more sustainable AAA games industry

As well as revenue and engagement gains, smaller experiences also complement the multi-game subscription model. Smaller games can add value to content libraries in services like Xbox Game Pass and PlayStation Plus. They are also a lower time investment for players whose time is limited.

As we often reiterate here at MIDiA, attention inflation is an issue. As each unit of user attention becomes divided among an increasing number of activities, the value of that attention decreases.

With AAA game sequels looking increasingly further away, we are hitting a new paradigm. A trend is emerging where studios take more chances on new IP while also satiating fans with smaller, more bespoke experiences from IP they know and love.

This strategy needs to happen, as the current model is about to explode.

Bigger is not always better. Gamers only spend an average of nine hours playing games per week. It is in the industry’s best interest to make that time count while also making game development more profitable as well as less risky and bloated.