Take-Two Interactive CEO Strauss Zelnick said to Bloomberg TV recently that game development is “an expensive business, and the risk profile reflects that.” As the head of one of the more successful triple-A studios out there, Zelnick has seen this risk first hand. According to him, the business is more expensive than ever, and therefore riskier than ever—so much so that it is creating a rather high barrier of entry into the triple-A game development scene. It is not a great place for the industry to be, and it only seems to get worse as time goes on. Right now, Zelnick says that the hit-ratio for good big-budget publishers is around 80%, which is much higher than he would like to see it.
For those unfamiliar with the term, the hit-ratio is the percentage of releases a publisher needs to do well in order to sustain themselves. For the big film industry, it rests at around 30%, or just over one third of where the game industry stands. In Zelnick’s own words, “those very expensive production, marketing, overhead, in the case of sports titles, licensing, they do create a risk profile, and from our point of view it embeds the winners even further. It actually creates a barrier to entry in our business.” A developer hoping to join in the major market “cannot get in not without having a couple hundred high quality engineers and artists, loads of capital and lots of money to market the title,” which has made it nearly impossible for new developers to show up in the triple-A industry.