The Hidden Costs of Exclusive Games

The recent court case between the FTC and Microsoft has revealed some fascinating insights into the world of platform exclusivity. Due to a careless mistake, documents from both Sony and Microsoft were released with key details still visible, despite attempts to redact them. These documents have provided a unique glimpse into the financial side of the gaming industry, including the development budgets for major titles like Horizon: Forbidden West and The Last of Us Part 2. The figures are staggering, with both games having cost over $200 million to develop. This has sparked a lot of interest and surprise among gamers, who often struggle to understand where the money is going. Unlike Hollywood blockbusters, where the costs are more visible, game development is a complex and often opaque process. The leak has also highlighted the unique economics of being a platform holder with a significant first-party software lineup. Sony, for example, gets to keep all the money from its first-party titles, as well as a cut of the sales of third-party games on its platform. This allows the company to justify large development budgets and invest in games that might not otherwise be profitable. The documents have also shed light on the marketing budgets for these games, which are likely to be just as high as the development costs. For Sony, the marketing budget is often intertwined with its overall platform marketing strategy, making it difficult to separate the two. The end result is that Sony is one of the few companies that can afford to spend big on game development while still sticking to a traditional pay-to-play business model. Other publishers often have to rely on more aggressive monetization strategies or partner with a platform holder to access the economic advantages of exclusivity. The question of platform exclusives is a complex one, with many arguing that it is anti-consumer. However, for companies like Square Enix, which is developing Final Fantasy XVI, exclusivity can be a way to tap into the economic advantages of first-party games. By partnering with Sony, Square Enix can reduce its marketing costs and increase its revenue per unit sold. This highlights the delicate balance that publishers must strike between maximizing their income from game sales and denying access to certain consumers. As development budgets continue to rise, the lure of exclusivity deals is likely to increase, making the issue even more pressing. The recent leak has provided a unique insight into the world of platform exclusivity, and it will be interesting to see how the industry evolves in response to these revelations.