Tim Sweeney says the video game industry is going through its biggest crash since the 1980s. He ties that squeeze to high AAA development costs and a hardware shortage that is already pushing up prices for RAM and storage.
Edge and Crash 2.0
The comments appear in the latest issue of Edge, where Alex Spencer spoke with nine experts about Crash 2.0 and where the industry goes from here.
Sweeney said, "This is the worst crash we've seen since the 1980s" and called the component squeeze "an unexpected, severe disruption," while also warning that gaming-relevant hardware could face a continual supply crisis for the next three years.
AAA budgets and supply
He said budgets now reach between $250 million and $400 million, which leaves less room for error at the exact moment hardware costs are moving higher.
He also said there has been an unprecedented wave of investment in AI systems and data centres, and that they can outbid the entire entertainment industry for components.
Raph Koster on costs
Raph Koster said he first spoke about rising development costs in 2005, and he put the cost curve at roughly 10 times higher every decade.
He said AAA game development for consoles or PC was about $1 million in the mid-1990s, $10 million in 2005, and $100 million in 2015 after inflation, which makes the current budget range look less like a spike than the continuation of a long climb.
Koster also said AI is not a platform reset and that it does not lower costs, even as Sweeney says AI demand is helping pull components away from gaming hardware.
Shawn Layden and Amir Satvat
Shawn Layden said developers can support games with a lower probability of financial success if they keep budgets and costs low, and he called financial resources the great constraint that never gets expanded.
Amir Satvat said a game made by one or two people is great, but he is more interested in a 50-person or 60-person team becoming a 20-person team, which points to where the industry may still find room to cut costs without cutting the work to the bone.
The open question is what concrete market or production data supports Sweeney's three-year hardware shortage forecast, because that is the number studios and PC buyers now have to plan around.
