The Costs Of Making A Virtual Reality Game

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The Costs Of Making A Virtual Reality Game
December 14, 2016

Or, how we're down $36,000+ after making an HTC Vive launch title.

 

There’s been a little bit of talk recently about VR game funding, where money comes from, how much games cost and all that. Mostly this discussion comes up around money being received from companies like Oculus, and the exclusivity rights that may be a result of accepting the money. There’s been a lot of posts about how working in VR is expensive, and we developers need money to live. And since there isn’t a lot of money in VR right now, we have to go where the money is. I even wrote about the difficulties of VR game development a few months ago.

 

However, in all these posts by VR game developers, no ones really broken down the cost of making a VR game. Understandable, many people are bound to NDA’s and legally cannot reveal this information. Some people are worried about the backlash they might receive for talking about it, worried it might undermine various different things. Fortunately, I can talk about money and the cost of making a VR game, and so I will talk about the cost of making my companies first title, Light Repair Team #4.

Image Credit Metavariable

 

The Actual Costs, the right and wrong ways.

 

I’m going to look at the cost break down two ways. First, we’re going to look at if I was paying myself my (somewhat low) hourly rate, as if I was a freelancer. I have learned that this is absolutely not a way you should budget your game. I’m going to include a break down of if I had, however, as a way to re-enforce the point I’m going to make.

 

Secondly, I’ll break down the cost of the game the “proper” way, as if I was pitching the game to Valve or Oculus for funding money. This is, as I understand it, the way that everyone has and should be pitching.

 

First, Hourly Rates (the wrong way, worth mentioning)

 

So, lets look at the break down of if I charged myself and Noah at my ridiculously low freelancers rate of 40 USD/hr (This is hella low. Please refer to the Gamasutra Salary Survey from 2014 for a more accurate value)

 

  • • 14 weeks of development x 40 hrs a week x $40.00 USD/Hr = $22,400 USD (This includes prototyping, design, art
  • • 5 hours of Noahs time x $40.00 USD/Hr = $200 USD
  • • Cost of setting up the company + legal = $3,500 USD
  • • Server Costs $10/mo x 3 months (We use Digital Ocean)= $30.00 USD
  • • Cost of commissioning two music tracks = ~$3,000 USD

 

Total Cost? $29,130 USD

 

29k for a game that had about 70 minutes of content, using the inproper way of budgeting. Like I mentioned you shouldn’t budget your game like this. This method is harder to manage and keep track of as game development cycles can be highly unpredictable at an hourly level. It might take a month to do something, but how many hours in that month? Thats harder to tell. You shouldn’t look at game budgets like this. Something else to consider; even though a contractor is getting $40/hr, they’re really only getting at most 30/hr, because in the US self-employed freelancers taxes are at least 25% of their income. Don’t ever look at game development budgets like this. Ever.

 

Secondly, the “accepted” way to budget (The right way to start up)

 

Lets look at how people actually do it. Additionally, we’ll just assume that for the sake of arguing, Noah offered his 5 hours of time for free.

 

  • • ~4 months x $10,000 USD per dev* = $40,000 USD
  • • Cost of setting up the company + legal = $3,500 USD
  • • Server Costs $10/mo x 3 months = 30.00 USD
  • • Cost of commissioning two music tracks = ~$3,000 USD

 

Total Cost? $46,530 USD

 

This is closer to a more realistic budget for the game.

 

*this value is a standard for many budget proposals, as it covers all necessary things (taxes, insurance) and adds a little bit of leeway.

 

But wait, there’s more!

 

Oops! I forgot some things! Like, creating and maintaining an office, since not everyone works from home (these are all rough estimates).

 

  • • Average Cost of one VR ready workstation = $1,500 USD
  • • Cost of Vive or Rift (if you don’t get dev kits) = $600–$800 USD.
  • • Cost of office space rental (heavily location based) = $500–5,000 USD/mo
  • • Cost of (good) Internet = $110/mo —$180/mo
  • • Desks and chairs per dev= $1,000 USD
  • • General Office Supplies = ~$150/mo
  • • Other Utilities = ~250/mo
  • • And I’m not including the licensing fees for software Unity Pro, Maya or whatever else.

 

So, if Noah and I were not working from home, and building an office from scratch, the total cost would be assuming we got free dev kits:

 

  • • 2 Computers = $3,000 USD
  • • 1 year lease on office = $6,000–$60,000 USD
  • • 1 year internet contract = $1320–$2160 USD
  • • Office furniture = $2,000 USD
  • • Office Supplies = $150 (I’ll low ball it)
  • • Other Utilities for 3 months = ~$750
  • • Totaling anywhere between $13,220–$68,060.

 

Yea.

 

So, how many copies did we have to sell to make back development costs? After Taxes, Unreal Engine royalty payments and Valve cut, we’re only getting about 60% of our gross revenue. So, for each unit sold at full price ($7.99 USD), we’re getting about $5.20 USD. So, with the “wrong” budgeting — 5,602 units. With the “correct” budgeting — 8,949 units. This number will be higher though, due to the fact that we have gone on sale on Steam in all sales that we could. And this also reflects that we were working from home, on personal computers.

 

The Reality

 

After all that, how much did LRT4 earn us?

 

About ~2,300 units sold and ~$14,000 in revenue for the company (not including taxes and other royalty payments we have to pay). If you look at even the “cheapest” way of budgeting developers (cheapest in hindesight!), the way you should never do, it still wasn’t profitable. Additionally, after the April launch of the Vive, we did launch a few more update over the next few months — so more money spent there, that I didn’t even account for.

 

Now, this is just our game — other games have different budgets, but I’m certain a lot of them aren’t making their money back, truely. Even with Survios announcing that it earned a million dollars a few months back, I’d be surprised if they really turned a profit.

 

We took a risk. Actually, every VR developer is taking a risk. For us, it didn’t pay off financially and for others, I’m sure it hasn’t either yet. From the viewpoint of a business person, VR developers are stupid, idiotic and reckless. And for VR, thats fucking beautiful. You 100% need to be all those if you want to succeed in VR. If people weren’t being reckless and if it wasn’t for companies like Oculus or Intel shoving money at developers to soften the financial blows, VR would not last long at all. Period. End of story.

 

The next time you see a developer announce that they’re an Oculus exclusive, or has received money from a company so that they can promote their product in their game, or whatever may happen next, keep this in mind: They’re not trying to hurt the consumer, they’re enabling themselves and more importantly, VR.

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