Ex-Sony boss on game budgets: 'Unless you're Rockstar, don't expect to sell 25 million units'

Former PlayStation boss Shawn Layden has a word of warning to publishers who greenlight expensive game budgets.

2

Thanks to inflation and complexity, games are more expensive to make now than they've ever been. Competition is fierce, and a miss on a big-budget game can lead to substantial write-offs and studio closures--which is exactly what happened to PlayStation's failed Concord and game developer Firewalk Studios.

In a recent interview with GamesIndustry.biz, former PlayStation studios chairman Shawn Layden cautions devs to reel back high $200 million+ budgets because odds are the devs may not be able to make a profit. The budgets really aren't feasible unless the teams are in the caliber of a dev like Rockstar Games, who can sell 25 million copies easy.

"The cost of construction is just way too high. If you're going to spend over $200 million to build a game, your margins are super tight unless you can expect to sell 25 million units.

"Unless you're Rockstar, [you] should not expect to sell 25 million units," Layden said.

For comparison, GTA V has shipped over 215 million units worldwide across 3 console gens. The game routinely ships anywhere from 15 to 20 million copies per quarter in the last few years in a row. Analysts predict GTA 6 could sell 38 million copies at launch.

The former PlayStation boss says that games companies have been trading higher profits for wider reach. The rationale was that raising game prices past $59.99 would deter purchases. Instead, publishers kept that price point for multiple generations as the console installed base continued to grow.

Layden discussed why no one wanted to raise prices until Gen 9, which saw multiple publishers like Take-Two, Electronic Arts, and even PlayStation collectively raise prices to $70. Gradually and incrementally raising prices over multiple generations would've been the way to go, Layden also commented.

"No one wants to be the first one to raise the price, because you're afraid to lose traffic. So what you do is you just end up eating into your operating income, your profit margin.

"There were more sports cars in the parking lot in the PS1 era than there were in the PS4 era.

That's because if you're selling 20 million units at $60 for something that only cost you $10 million to make, that's different than selling 20 million units at $60 for something that cost you $160 million to make."