two business partners are chatting and one says, “We’re losing money on every sale”, so the other one responds, “Yea, but we’ll make it up in volume!”
Software costs nothing to copy and paste, only to design.
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If a response would be satisfied by inserting the word “essentially,” please do not make that response.
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Alan Wake 2 (for example) did not spend a decade in development, but somehow blow “pretty much 100% of the budget” after launch.
You can maybe salvage that sentence fragment by insisting we’re talking about multiplayer-only “live service” crap that goes on for years and years after launch… but the topic you named is distribution. The marginal cost of software is essentially zero. Supporting customer N+1 is a rounding error. Valve basically has a monopoly on PC game distribution and only employs a couple hundred people. Do those salaries cost money? No shit. But relative to, conservatively, half the money spent on PC games? Fraction of a percent.
“Keeping people employed” takes a lot of money because making a game takes a lot of people a long time. Shipping is the cheap part. Has been since CD-ROMs. In many infamous cases, people were not kept employed once their game shipped, because all those people were not necessary to make all of the money off of the game.
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Your in-house guys do the next game.
Most games don’t get years of full-staff support. They simply do not need the army of artists who made the whole the thing from scratch, when all that’s happening post-launch are support jobs. Some games are lucky enough to get significantly more content - paid or otherwise. But they’re the exceptions.
At some point, development ends. Nobody’s paying the full team that made Sekiro to keep making Sekiro. Mostly they moved onto Elden Ring, and at this point, surely they’ve moved on from that.
That’s what’s “keeping people employed.” They made one game. It launched. It got finished-ish, generally not long after. And then their managers put them on another game.
These games cost so much money because those higher-ups will put a thousand people on one project for years. The factors pushing budgets and scope up up up are mostly competition and marketing. Having a billion dollars to throw at a project leaves you in rarified company - which plays nicely with how spending half that money spamming one game’s ads is more cost-effective than dividing it up between ten games.
Big games also enjoy a better “long tail.” FromSoft can keep selling Sekiro, forever, for an upkeep cost of approximately fuck-all. No huge staff is dedicated to those files on a server. The cost of keeping them available isn’t literally nothing, but it is practically nothing.
And no, the cost of those things is not “marginal” or “a fraction of a percent”.
Hey, good thing that’s not what I used those words for! Marginal cost is a specific economic concept. It’s the cost of selling 10,000 units versus 9,999. For games? That’s essentially nothing. Which is how Steam handles a supermajority of sales and distribution with a tiny little company.
