Microsoft Xbox Discussion Part II

[Beau Knows]

This has to be satire, that's like an Onion headline.

He didn't actually specifically mention Hi-Fi Rush in his statement. But it still rings hollow when you say something like that the day after announcing that you're closing a studio that did just that for you.

Mid-budget games are something the industry is lacking (similar to Hollywood right now) and Microsoft appears to be moving even further away from making those. Seemingly closing these two studios, at least in part to move resources around to make bigger titles - potentially including Fallout.

Which is a shame because I think the mid-budget space is often where you'd see a lot of innovative and unique games. You don't get as much of that from the AAA space, since the costs are so high, they tend to play it safe and chase trends.

There's obviously still the huge growth of indie market, but they generally don't have the resources that mid-budget games have, so I don't think they quite fill that gap.

 

[x Tame Impala]

From Soft charged $60 + $40 for DLC and we got a GOTY masterpiece in Elden Ring that sold 23 million copies plus I’m sure what will be 12+ million DLC purchases. That’s $1.3 billion + $480 million in DLC sales.

I think game studios and their investors need to shift their priorities. Focus less on games like COD, Starfield, and Suicide Squad, focus more on creating an authentic experience for gamers to enjoy. They’ll be swimming in money. Especially in a recession, gaming is one of the best bang for your buck entertainment mediums out there.

I fully think the quality of games is holding this industry back. Starfield and Redfall were supposed to be huge statements for Gamepass and look how that turned out. Build it and they will come.

 

[93LEAFS]

I think one factor is that you have hundreds, sometimes over a thousand people working on just one game. 8 bit and 16 bit games for example never had more than 10 people working on them.

Basic math: 500 employees and contractors x 50k average salary = 25 million dollars a year. 4 years of development of a AAA game would be 100 million just in salary.

Thats not even accounting cost of workstations and renting office space. Then you could have the snowball effect of the cost being so high that you need to borrow money and pay interest on that, Curt Schilling will tell you all about that.

How many studios have 500 people or more working on one game in a western nation with high wages? Obviously, you got example like Rockstar, but I feel that many people is generally a long-term live service game which creates more cash. A lot of the animation is outsourced to studios in Malaysia or whatever whereas the primary coding takes place in North America or Europe. I know a ton of Insomniac games are done that way.

Not that costs aren't getting out of control, but we see well received AAA games done by studios like SuckerPunch, who I believe was under 120 people for Ghost of Tsushima (plus some outsourcing to cheaper nations).

I also think office space costs have gone down. I know someone who is a lead of a team at Insomniac but works from home and is in Toronto. Depends on studio cultures, but I think there is a lot more work from home type situations post-pandemic.

 

[93LEAFS]

He didn't actually specifically mention Hi-Fi Rush in his statement. But it still rings hollow when you say something like that the day after announcing that you're closing a studio that did just that for you.

Mid-budget games are something the industry is lacking (similar to Hollywood right now) and Microsoft appears to be moving even further away from making those. Seemingly closing these two studios, at least in part to move resources around to make bigger titles - potentially including Fallout.

Which is a shame because I think the mid-budget space is often where you'd see a lot of innovative and unique games. You don't get as much of that from the AAA space, since the costs are so high, they tend to play it safe and chase trends.

There's obviously still the huge growth of indie market, but they generally don't have the resources that mid-budget games have, so I don't think they quite fill that gap.

It felt like MS bought Zenimax, one for Bethesda, but also so they could have studios like MachineGames, Arkane (a critical darling) and Tango so they could diversify there first party offerings, and maybe have studios that while maybe not giants, could potentially be their SuckerPunch or Guerilla. So they were no longer just a Halo, Gears and Forza factory. Atleast that was the outcome I was hoping for. Same with the hope that MS would do something with some of Activision's IP's with Toys for Bob or the team that remade Tony Hawk. 6 months post closure on Activision, it feels they are just reverting to being a COD, Fallout, TES, Halo, Gears and Forza factory. Yes, I know they have new stuff in the pipeline, but everything they've done with Activision seems they want it to remain a fully COD factory, and the press release on the Bethesda cuts reads as we want to focus on TES and Fallout and move talent or cut talent to invest in that. Microsoft seems to never learn from their mistakes. 3 years ago they were talking how big a mistake in retrospect it was to close Lionshead. They lost Bungie (and Destiny) because they wouldn't let them make what they want, so now 343 had to be created to just make Halo games. Not all franchises need to be never ending, people who had one or two great ideas can have a new great one.

 

[Jussi]

Alan Wake 2 involved 130 people, according to Thomas Puha, their PR Director.

Edit: just to chime in on the "how many people does it requite to produce a AAA game?" discussion.

 

[aleshemsky83]

Alan Wake 2 involved 130 people, according to Thomas Puha, their PR Director.

Edit: just to chime in on the "how many people does it requite to produce a AAA game?" discussion.

Remedy is a AA developer though. Their games are significantly smaller than AAA games. For example rocksteady employs 250 people. That’s not counting contractors which were used heavily on Suicide Squad. 500 is not that outrageous.

 

[93LEAFS]

Remedy is a AA developer though. Their games are significantly smaller than AAA games. For example rocksteady employs 250 people. That’s not counting contractors which were used heavily on Suicide Squad. 500 is not that outrageous.

I'd say Control and Alan Wake 2 fall under AAA.

Suicide Squad was trying to be live-service. When those games fail its catastrophic. But, Remedy is a AAA single player developer. Like, I think it'd be hard to argue Ghost of Tsushima isn't a AAA game, and Sucker Punch has 160 employees. Sony Santa Monica is 250 and God of War series is absolutely AAA.

I think the amount of studios with over 500 people focusing solely on a solely single player game or that side of it is pretty limited. You are talking like the single player side of a Rockstar game, which is then also used for the basis of a massive Live-service game which rakes in cash.

 

[Jussi]

I'd say Control and Alan Wake 2 fall under AAA.

Suicide Squad was trying to be live-service. When those games fail its catastrophic. But, Remedy is a AAA single player developer. Like, I think it'd be hard to argue Ghost of Tsushima isn't a AAA game, and Sucker Punch has 160 employees. Sony Santa Monica is 250 and God of War series is absolutely AAA.

I think the amount of studios with over 500 people focusing solely on a solely single player game or that side of it is pretty limited. You are talking like the single player side of a Rockstar game, which is then also used for the basis of a massive Live-service game which rakes in cash.

And Remedy posted losses in their last two quarters. Not exactly small losses either.

 

[Mikeaveli]

I think one factor is that you have hundreds, sometimes over a thousand people working on just one game. 8 bit and 16 bit games for example never had more than 10 people working on them.

Basic math: 500 employees and contractors x 50k average salary = 25 million dollars a year. 4 years of development of a AAA game would be 100 million just in salary.

Thats not even accounting cost of workstations and renting office space. Then you could have the snowball effect of the cost being so high that you need to borrow money and pay interest on that, Curt Schilling will tell you all about that.

I would say 50k is pretty conservative, looking at Glassdoor a company like Activision Blizzard is paying on average 120-170k for software engineer roles and 95-160k for game designers. Of course they outsource a lot of stuff but any game developer based in the USA is paying a ton in salary.

 

[aleshemsky83]

I'd say Control and Alan Wake 2 fall under AAA.

Suicide Squad was trying to be live-service. When those games fail its catastrophic. But, Remedy is a AAA single player developer. Like, I think it'd be hard to argue Ghost of Tsushima isn't a AAA game, and Sucker Punch has 160 employees. Sony Santa Monica is 250 and God of War series is absolutely AAA.

I think the amount of studios with over 500 people focusing solely on a solely single player game or that side of it is pretty limited. You are talking like the single player side of a Rockstar game, which is then also used for the basis of a massive Live-service game which rakes in cash.

We can easily just check this ourselves though. Game credits are easily accessible. Lets take an example you gave: The GoW Ragnarok Credits are 33 minutes long. I used a clicker counter to count the names each time a new name went to the top of the screen. It took me 3 minutes and 30 seconds to reach 250. That's 2000 names. Even if I'm a bad counter, thats easily going to cover 1000 names in the credits. Yes, obviously not all of them were on for a whole 4 years but its really not crazy to say 500.

I would say 50k is pretty conservative, looking at Glassdoor a company like Activision Blizzard is paying on average 120-170k for software engineer roles and 95-160k for game designers. Of course they outsource a lot of stuff but any game developer based in the USA is paying a ton in salary.

Good point, especially since a lot of these developers are based in california. Ridiculously high cost of living and as a result salary requirements.

 

[93LEAFS]

And Remedy posted losses in their last two quarters. Not exactly small losses either.

Unless you are in live service, due to the nature of the business I would expect losses to be posted in every qtr outside of the qtr you release a game when it comes to big single player games. Now, the healthiness of that business model is another question.

 

[Commander Clueless]

I'm actually ticked at Xbox right now.

 

[TheDoldrums]

Why is game development so much more expensive nowadays?

One reason is that the vast majority of AAA development is constantly chasing better graphics even though that really only matters to a niche section of the video game enjoying population.

Look at the sales of Nintendo Switch software. Or look at how popular games like Fall Guys and Among Us have been. Most gamers don't really care about having the best most realistic graphics. Not chasing those would vastly cut down on development costs. Focus on making enjoyable experiences first and not pleasing those who watch Digital Foundry videos.

 

[aleshemsky83]

Is it over xbox bros?

 

[93LEAFS]

Is it over xbox bros?

If they mess up Double Fine, I'm gonna be really pissed. Psychonauts 2 is probably my favorite game published by Microsoft in the X-Box One/Series era (I loved Sunset Overdrive too, but that game is almost a decade old now).

 

[Jussi]

So I've watched Destin's live stream for a bit and it seems people in the know think/know the closures were made by "money people" higher up than Spencer, Bond and Booty at Microsoft, some people straight up saying Nadella.. "This studio is too much in the red, gone" type of stuff.

 

[93LEAFS]

So I've watched Destin's live stream for a bit and it seems people in the know think/know the closures were made by "money people" higher up than Spencer, Bond and Booty at Microsoft, some people straight up saying Nadella.. "This studio is too much in the red, gone" type of stuff.

When you spend over 75b on acquisitions over 5 years you cease to be a small part of Microsoft. That level of investment is going to get a lot of questions asked by people above them in the food chain. Especially when Starfield didn't give them the growth they hoped for in the console or gamepass market this Holiday season with analysts projecting Sony is outselling them at a 3 to 1 ratio since the start of 2023, and a new Nintendo console on the way in 2025. I think MS expected to still stay in 3rd this console generation, what they didn't expect is to not put a dent into Sony's adoption rate and improve on Xbox One numbers. And, now its likely to be the smaller studios in their portfolio who aren't in full production on new games paying the price.

 

[syz]

Microsoft's head of publishing said 7 years ago now that she didn't know if single player games were viable business anymore due to the increased costs of meeting player expectations re: graphical and technical fidelity. I remember that it was 7 years ago because she said it in 2017, a year where the PS4 had several well received single player games. The question is: would the bean counters at MS actually consider games like Nier Automata, Persona 5, or Nioh to be "financially viable," even if they made money? Those games were considered successful for selling a couple million copies, but I don't think that's what the business division of Microsoft expects.

On the other hand, I imagine it's difficult to make huge profits on GaaS titles when your platform is behind the others in terms of install base. For all the dumb shit Spencer has said over the past handful of years he at least had some prescient quotes about how Xbox ultimately messed things up at the worst possible time. The beginning of the PS4/XB1 era was the beginning of people committing to an ecosystem of digital games and online accounts. Even if they weren't out there doing silly shit like passing on Hoyoverse rights they still likely wouldn't have the market on their platform to capitalize on those games because those people all chose Sony's ecosystem in 2013 and the years that followed.

 

[93LEAFS]

Microsoft's head of publishing said 7 years ago now that she didn't know if single player games were viable business anymore due to the increased costs of meeting player expectations re: graphical and technical fidelity. I remember that it was 7 years ago because she said it in 2017, a year where the PS4 had several well received single player games. The question is: would the bean counters at MS actually consider games like Nier Automata, Persona 5, or Nioh to be "financially viable," even if they made money? Those games were considered successful for selling a couple million copies, but I don't think that's what the business division of Microsoft expects.

On the other hand, I imagine it's difficult to make huge profits on GaaS titles when your platform is behind the others in terms of install base. For all the dumb shit Spencer has said over the past handful of years he at least had some prescient quotes about how Xbox ultimately messed things up at the worst possible time. The beginning of the PS4/XB1 era was the beginning of people committing to an ecosystem of digital games and online accounts. Even if they weren't out there doing silly shit like passing on Hoyoverse rights they still likely wouldn't have the market on their platform to capitalize on those games because those people all chose Sony's ecosystem in 2013 and the years that followed.

I think single player exclusives have always been used to drive people to your platform. The only company who makes that their bread and butter is Nintendo, who are also the only company to consistently turn a profit on hardware.

I think for someone like Sony with their massive projects it's about making a slight profit on the game sales themselves to somewhat balance out the hardware R&D and production costs, but they are primarily used to drive people to the console where you make 30% off 3rd party sales and MTX.

I think the real question with MS's is, on top of being a distant 3rd in hardware sales, what has gamepass done to their 3rd party sales they make 30% on but have no development costs on. That historically has been where console manufactures see their profits arise from. The other thing is, with first party you are making 100% of sales (or around 95% to 90% on physical copies) even if it's not on all platforms, which also helps offset development costs compared to the 70% 3rd parties make. MS's has pursued all digital much more aggressively than Sony and Nintendo with Hellblade 2 for example being digital only.

It would be really interesting to see someone much smarter than I get an actual look at Xbox's numbers, but MS has been very secretive of them since around the Xbox one launch.