The UK Competition and Markets Authority (CMA) recently blocked the proposed Microsoft and Activision Blizzard merger due to concerns about the implications for cloud gaming. As a result, the document released alongside the decision has shed light on the increasing financial demands behind AAA games.
According to the CMA report, some major publishers report that their AAA games can cost over $1 billion to make. Development budgets for greenlit AAA games with potential releases in 2024 or 2025 typically exceed $200 million, and the development costs for Call of Duty alone have surpassed $300 million. The next Grand Theft Auto title will likely require a development budget of $250 million or more. When marketing costs are factored in, the cost of creating and promoting a AAA game can easily exceed $1 billion.
These costs represent a significant increase from just five years ago, when most AAA games had budgets between $50 million and $150 million. The report also highlights the increasing development demands for new Call of Duty titles, with one studio noting that they require almost 1.5 lead studios for each annual release.
The CMA’s ruling not only affects the future of Microsoft and Activision Blizzard but also offers an insight into the immense financial pressures facing the video game industry. As development costs continue to skyrocket, it will be interesting to see how publishers adapt to the changing landscape.
