Task 4

Financial Planning

Budget
In a business, budgets are the most important element, the budget of a project in a business can determine whether a business will succeed in whatever project they are carrying out and how much money they make back from it.
Budgets have to be broken down into all different sectors of a business, if a business is given £1,000,000 for a project, then this is all the money they have, usually this money is put towards paying employees wages, from the wages of the CEO to the sound engineer.

Below is a list of budgets for games over the last decade, these budgets would have covered every aspect of a the company creating the game, from cost of computers, wages to cost of advertisement and the production of the game.

Information from http://kotaku.com/how-much-does-it-cost-to-make-a-big-video-game-1501413649

Call of Duty: Finest Hour - $8.5 million - The first Call of Duty console game's development contract, released as part of a lawsuit between developer Spark Unlimited and Activision, pegged development costs for the game at $8.5 million.

City of Heroes - $7 million - A 2004 Forbes profile of then-developer Cryptic Studios claimed the development cost of the superhero MMO was $7 million, and publisher NCSoft budgeted $18 million for annual marketing, maintenance and support costs.

Driver - $34 million - Bruno Bonnell, then-chairman of publisher Atari, told The Wall Street Journal marketing and development budgets for the tepidly received open-world game were both around $17 million, bringing total spend to around $34 million.

Half-Life 2 $40 million - In a 2004 interview, Gabe Newell admitted the game's development cost in excess of $40 million.

Halo 2 - under $20 million - A spokesperson for Microsoft told The Wall Street Journal development costs on Bungie's sequel were under $20 million.

Jak 3 - $10 million - Jason Rubin's presentation said the last game of Naughty Dog's trilogy, produced in half the time of its predecessors, cost $10 million to develop.

World of Warcraft - $200 million - In a September 2008 analyst conference call, Blizzard disclosed that the cost of four years of post-launch upkeep on the blockbuster MMO was $200 million.


Advent Rising - $4 million - In a story about the game, MTV reported that Chair Entertainment spent $4 million developing their sci-fi epic.

Call of Duty 2 - $14.5 million - During a speech at the 2005 Montreal International Game Summit, Infinity Ward cofounder Grant Collier revealed that the World War II shooter sequel and next-gen launch title cost $14.5 million to develop.

Guild Wars - $20-30 million - ArenaNet cofounder Jeff Strain told the Seattle Times his company spent between $20 million and $30 million developing their first MMO.

Guitar Hero - $1.7 million - In a recent profile of Harmonix, BostonInno, a Boston tech/startup blog, claimed the first Guitar Hero's development budget was $1.7 million.

Jak X - $10 million - Jason Rubin claimed Naughty Dog's final Jak and Daxter game, produced shortly after he left Naughty Dog, cost $10 million to develop.

King Kong - $20 million - Michel Ancel's movie tie-in had a budget over $20 million, according to a New York Times report about the game.

The Matrix Online - $8.5 million - The marketing and PR spend on this now-defunct licensed online game was more than $8.5 million, according to a former Warner Bros. marketing manager.

Mortal Kombat: Shaolin Monks - $20 million - The former studio head and founder of developer Midway Studios Los Angeles (previously Paradox Development) said on her resume this fighting game spinoff had a development budget of $20 million.

Quake 4 - $15 million - In a 2005 profile of developer Raven Software, the Wisconsin State Journal—a local Madison, Wisconsin newspaper—reported that the shooter sequel cost around $15 million to develop.

Psychonauts - $11.8 million - Caroline Esmurdoc, then-COO of Double Fine, claimed in a Game Developer postmortem the company's literally mind-bending platformer had a development budget of $11.8 million.

Anno 1701 - €8 million - A press release from developer Sunflowers pegged development costs of the strategy game at eight million euros.

Empire Earth III - $10 million - A former Mad Doc Software producer said the strategy sequel cost $10 million to develop.

Gears of War - $10 million - During a speech at the London Games Summit, Mark Rein, vice president of Epic Games, said development costs on the game were around $10 million.

Ghost Recon Advanced Warfighter - $18 million - The first Tom Clancy title for HD consoles cost $18 million, according to the biography of a North Carolinian news anchor and actress who appeared in the game.

Lost Planet - $40 million - According to a 2006 Forbes report, marketing and development budgets on Capcom's game were both $20 million, pegging total spend around $40 million.

Red Steel - €10 million - A 2006 radio story about developers at Ubisoft's headquarters in Paris on French news station France Info revealed that the Wii launch title's development budget was 10 million euros.

Scarface: The World is Yours - $2.5 million (audio) - The audio budget alone on the open-world crime game was $2.5 million, according to a Gamasutra postmortem by the project's audio director, Rob Bridgett.

Test Drive Unlimited - €15 million - The development budget for this open-world racing title was 15 million euros, according to a former Eden Games project manager.

Unreal Engine 3 - $40 million - In a CNNMoney column about Unreal Engine 3, journalist Chris Morris reported that the cost of development of Epic's third engine was more than $40 million.

Age of Conan - kr200 million - Norwegian business publication Dagens Næringsliv reported that Funcom's fantasy MMO cost in excess of 200 million Norwegian kroner.

BioShock - $15 million - Irrational Games' Ken Levine claimed in an MIT Q&A session that development costs on the dystopian first-person game were $15 million.

Black College Football Experience - $9 million - According to a former executive at now-defunct developer Nerjyzed Entertainment, the budget on this football simulation was $9 million.

Crackdown - $20 million - David Jones, former head of now-defunct developer Realtime Worlds, told GamesIndustry.biz the cult open-world game had a development budget of around $20 million.

Crysis - €15 million - At the 2008 Games Convention Developers Conference in Germany, Cevat Yerli said the PC-only shooter had a development budget of 15 million euros.

Halo MMO - $90 million - In an interview with IncGamers, Dusty Monk—a former Ensemble Studios engineer—claimed the studio's never released Halo MMO (codenamed "Titan") had a project budget of $90 million.

Heavenly Sword - $20 million - A former Sony Computer Entertainment Europe senior producer pegged Ninja Theory's cinematic action title at a development cost of $20 million.

Marathon 2: Durandal - $0.3 million - Development costs on the Xbox Live Arcade port of Bungie's 1995 FPS sequel were $300,000, according to a Gamasutra postmortem.

Rock Band - $20 million - According to BostonInno, the development budget on the first Rock Band was $20 million.

Strangehold - $30 million - In an interview with GamesIndustry.biz, former Midway Europe managing director Martin Spiess said the John Woo action game "cost around $30 million.

Stuntman: Ignition - $20 million - A former Paradigm Entertainment designer said the project's development budget was $20 million.

Braid - $0.2 million - During a GDC presentation, Jonathan Blow said he spent $200,000 on development of his acclaimed deconstructive puzzler.

The Chronicles of Narnia: Prince Caspian - $20 million (marketing) - The game tie-in's marketing campaign cost $20 million, according to a former Disney special projects manager.

Gears of War 2 - $12 million - The shooter sequel cost $12 million to develop, according to a presentation Epic Games CEO Tim Sweeney gave at a 2009 computer graphics conference.

Golden Axe: Beast Rider - $15 million - According to a Game Developer postmortem, Sega spent $15 million on development costs for Secret Level's HD Sega IP reboot.

Guitar Hero: Aerosmith - $5 million (marketing) - A former RedOctane marketing associate said it cost $5 million to market this single-artist music title.

Left 4 Dead - $11 million (marketing) - Valve told Edge Online the company's marketing budget for the zombie game was $11 million.

The Witcher - zł20 million - During a GDC 2012 presentation, CD Projekt RED cofounder Marcin Iwiński said the PC-only RPG had a $2 million marketing budget. And according to the site of CD Projekt RED's parent company, the development budget on the title was almost 20 million zloty.

The Beatles: Rock Band - $20 million (marketing) - Advertising Age said the marketing spend on Harmonix's single-artist title was $20 million.

Brütal Legend - $24 million - In a Game Developer postmortem, Caroline Esmurdoc said Double Fine's heavy metal action game cost $24 million to develop.

Call of Duty: Modern Warfare 2 - $200 million - In 2009 article on the game's launch, Ben Fritz, then a reporter at the Los Angeles Times, reported that the game had a production budget between $40 million and $50 million, and a total launch cost — including global distribution and marketing — of $200 million.

Fortress - $16.5 million - A 2011 report in Swedish newspaper Aftonbladet claimed the contract for Grin's ill-fated Final Fantasy XII spinoff specified a $16.5 million development budget for the game.

Free Realms - $20-30 million - Development costs on Sony Online Entertainment's tween-friendly MMO were between $20 million and $30 million, according to an NBC News report on online games targeting younger audiences.

Ghostbusters - $15-20 million - A local newspaper report on the game from the Fort Worth Star Telegram pegged development costs for Terminal Reality's next-gen SKUs as being between $15 million and $20 million.



Variable Costs
Variable costs are the expenses in a business that decrease or increase with the level of sales. If you had your own game company and you were producing a game, your variables would be things like:

• Cost of software
• Cost of advertisement 
• Cost of packaging
• Additional game content 

Each is a key aspect of a business and each key aspect leads to the completion of a game, when the final product is complete, the business that create the final product usually goes on to make a profit, making all variable cost worth it. 

Fixed Costs
Fixed costs are costs in a business that are unavoidable, costs that are mandatory and will cost a business whether they profit from their project or not. Fixed costs in a business would be things like:

• Rent
• Labor
• Insurance
• Utilities

Fixed costs are very different to variable costs, as they are not affected by sales, they never decrease or increase, so making a profit is key in a business to get your money back for all of the fixed costs. 

Break-even Point
The break even point, or "breaking even" is when your business has only managed to gather enough money from sales to cover the project that has just been complete, leaving them with no less money, but no profits, this does not effect things like wages, it just doesn't leave a business with any extra money, but the game they might have made throughout their project may have still been successful and may go onto sell in the future, continuing to make the specific business who created the game, money.

Monitoring
Monitoring is the monitoring of a budget that has been decided for a project in a business. The budget will be closely monitored however the business decides, whether it's weekly, monthly, annually etc. The budget has to be monitored, in order to make sure a business stay within their budget and does not exceed the budget, possibly leaving a business in debt, depending on whether the sales of the project budgeted are greater than the budget itself.