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EA: Budgets For Games Going In 'Reverse Direction'

EA: Budgets For Games Going In 'Reverse Direction'

August 24, 2010 | By Kris Graft

August 24, 2010 | By Kris Graft
More: Console/PC

Now that video game consoles have hit their mid-life and online and social games are becoming more prevalent, one Electronic Arts exec believes that skyrocketing development costs are on their way back down.

"I think budgets for games have actually peaked and are starting to move in the reverse direction again," said David DeMartini in an interview with [registration required]. He's VP and group general manager of EA Partners, the publisher's third-party distribution arm.

At EA, lower-cost social games have become more important, as exemplified with the publisher's 2009 acquisition of Pet Society social game maker Playfish for up to $400 million (including earnouts).

EA also works with Neowiz in Korea on initiatives like FIFA Online, an online-only soccer title that generates recurring revenues without the expense of millions of dollars a year for annual boxed installments.

A report this year from Ibis Capital estimated that the average cost of development for a PlayStation 3 or Xbox 360 game was $15-$30 million per title, with marketing costs that can actually match or exceed the amount spent for development. The same report said Wii games cost $5-$7 million.

DeMartini wouldn't elaborate on just how far he thinks video game development costs will decline, but said, "In my area [outside developer deals] you kind of worry about the budget before you sign the deal, and then the budget is kind of what the budget is..."

"If [a developer] happens to make a lot of money based on that budget, great for them. If they come up short and have to cover some of it -- y'know, they'll be smarter the next time they do it. That's kind of the approach that we take to it."

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