What does the rising cost of development mean for AAA games?

Lowering the cost of development was supposed to be one of this generation's big perks. Both Sony and Microsoft went to great lengths to make their new consoles developer friendly and to shorten the development time. However, recent statements from Capcom seem to indicate that developing games is harder than ever.

In an interview with Capcom's Masaru Ijuin, he stated that the amount of work involved in developing for next-gen consoles is "eight to ten times greater" than developing for the previous one. While Capcom is striving to overcome these difficulties with their new Panta Rhei engine, it's still a troubling statement. If this generation is pushing the cost of development even higher, what does that mean for AAA games?

One potential problem is that developers will take even fewer risks with their AAA titles. If a game has to be an enormous success in order to make a profit, what motivation does a developer have to try something new? During the last generation, games that sold over 3 million copies were considered to have underperformed. How high will the sales bar go? Only a few franchises, like GTA and Call of Duty, can deliver guaranteed blockbusters. The market needs more than that to survive.

Another major concern is that we'll be seeing more studios close. In the last few years, we've seen THQ, Junction Point, Hudson Soft, and many others shut their doors. Other studios have been plagued by layoffs, and it often feels as though another closure is just around the corner. Kingdom of Amalur: Reckoning, a game that sold over a million copies, managed to shut down both Big Huge Games and 38 Studios. It only took one poorly received sequel to bring down Junction Point. If financial success is harder to achieve than ever, how many studios will be able to stay afloat?

Of course, things aren't all doom and gloom. While we may see fewer AAA games, it's easier than ever for developers to experiment with smaller titles. Ubisoft's Child of Light, an indie-esque RPG, is due out later this year. The title, which is being developed by the Far Cry 3 team, looks beautiful without looking overly expensive. If the title is a success, we'll almost certainly see this trend continue. Smaller titles are a great way for AAA studios to try something new without risking huge losses.

And of course, not every company needs to build a new engine from the ground up. Silent Hill: Downpour, Mass Effect, and the upcoming Mighty No. 9 are just a few of the titless made with Epic Games' Unreal Engine. JRPG Escha and Logy was made using Dynasty Warriors' LTGL engine. The stigma associated with sharing engines has all but vanished, and that's a good thing. Licensing an engine can be an excellent way for developers to recoup losses, and using a pre-made engine can save studios a lot of time and money.

Third-party console exclusivity may also become a thing of the past. No single console dominates the market the way the PS2 did, and that seems unlikely to change. Exclusivity limits sales potential in a big way, and it may no longer be worthwhile. It's also possible that we'll see more games headed to the PC. Developers frequently develop for consoles, then port the games to PC, but developing for the PC may actually be more cost effective. Instead of going through the headache-laden process of making a console title work well on the PC, developers can simply develop high quality assets, then scale them down for consoles. It's already becoming standard for western developers to release their big titles on the PC. It shouldn't be long before we see Japanese developers following suit.

The rising cost of development will undoubtedly change the face of AAA games. What's uncertain is how that change will manifest itself. While some have predicted another gaming crash, it's possible for developers to achieve more success than ever before. They just have to play their cards right.