Sky-High Game Budgets Are Hurting the Industry, Says Exec

Matthew Karch, the founder of Saber Interactive, recently shared his thoughts on the current state of big-budget video games. He believes that spending hundreds of millions on AAA games might be unnecessary and could be linked to recent job cuts in the industry. Karch stated, ‘I think that the age of the $200 million, $300 million, $400 million AAA game is on its way out. I don’t think it’s necessary. I don’t think it’s appropriate.’

In 2023, Karch’s company, Beacon Interactive, acquired assets from Embracer Group, Saber Interactive’s parent company, as part of Embracer’s move to reduce its operations in Russia. This deal marked the official separation between Karch and Embracer, with Beacon taking over Saber.

Reflecting on the industry’s challenges, Karch noted that many games are being canceled due to economic factors. He mentioned that industry consolidation and financial turmoil are contributing to these issues. He said, ‘Teams will regroup but the capital at the moment, it just isn’t there. And so the industry is actually contracting somewhat and the supply of content is going to be way short of the demand.’

Karch also questioned the standard $70 price tag for new games. He feels it’s ‘almost not fair’ to charge that much. He pointed to ‘Helldivers 2,’ which launched at $40 and achieved significant success, as an example of how lower-priced games can perform well. However, Saber’s recent release, ‘Warhammer 40,000: Space Marine 2,’ was priced at $70, despite Karch’s reservations about such pricing.

Tim Willits from Saber Interactive highlighted another concern: the high sales expectations for games. He remarked that it’s unfortunate that many studios consider a game a failure if it doesn’t sell 5 million copies. He questioned, ‘I mean, what business are we in where you fail if you sell less than 5 million?’

These insights shed light on the challenges of escalating game development costs and the pressures they place on the industry. As budgets grow, the risk increases, leading to potential job losses and a narrower focus on projects deemed ‘safe’ or guaranteed to succeed. This environment can stifle creativity and innovation, as studios may become hesitant to invest in unique or experimental ideas.

The industry’s current trajectory raises questions about sustainability. If the trend of ballooning budgets continues, it could lead to more significant financial risks for companies. This situation might result in further layoffs, studio closures, or a decline in the diversity of games available to players.

Karch’s perspective suggests that a shift towards more modest budgets could benefit the industry. By focusing on creating quality games without the necessity of massive financial investments, studios might achieve profitability more easily. This approach could also encourage a broader range of games, fostering innovation and providing players with a more diverse gaming experience.

In conclusion, while high-budget AAA games have dominated the market, there’s a growing sentiment that this model may not be sustainable. Industry leaders like Karch advocate for a reevaluation of spending practices to promote a healthier, more inclusive, and innovative gaming landscape.