Why don’t games slightly over estimate their budgets so they have extra “flight time” (per your older metaphors) to make up for inevitable bumps in the road? Like, if they estimate a game will cost 90 million to reach the intended experience goal, why don’t they try to seek it an even 100 million budget so even if they are “over” budget they still have an extra 10 million to play with.
We do. We always plan in additional budget and scheduled time for unforeseen problems. The difficulty comes from more innocuous-seeming problems that creep in during early development that get worse over time if not addressed immediately, but there's a lot of additional factors that exist that can compound this issue.
Let's go through an example. Imagine that I'm working on a new game idea that my AAA studio is pitching. My small incubation team is doing this because the majority of the devs at the studio are working on the current AAA game that will be launching in 6-12 months. Our goal is to get our next AAA game into production by the time the development on the current project winds down, so that we can keep everybody at the studio employed and productive.
Let's say that we run into some design issues with the initial idea. The fun is kind of there, but there are some real problematic issues that must be ironed out. This idea probably needs another few months to iron out, or might even need to be scrapped for a new one. However, this would put the entire studio behind the 8-ball - there would likely need to be layoffs because we'd need another several months to come up with a new pitch that may or may not work out, and we wouldn't have any work for the majority of the dev team to do while we were still trying to figure out what to do next. Instead, we put our faith in the dev team, leverage the good name of the studio and push the pitch through, even though we know the pitch has problems with it.
Let's say the publisher sees the same problems, but gives us the green light anyway. They know we're veterans, they believe in the studio and our skills, they trust us to continue. We expand the team, we continue to build, we push hard, we manage to dig up some gold in our experimentation and expansion. The team grows, we increase production value, the game heads towards the vertical slice and the gate to production. The next green light meeting comes and we fail - the game isn't fun enough. Now what?
The project must go back to preproduction and fix what's wrong, there's no question about that. But what can we do with the devs who aren't part of that process? Nobody wants layoffs. Instead, the leadership desperately pitches an even bigger scope. Even more stuff, even larger revenue estimates! We'll get the rest of the devs working on high quality assets for the game we'll eventually need anyway while the core team fixes the problems in our second preproduction! The publisher is dubious, but still believes in the name and the pedigree of the studio. We get additional budget, we get to keep going. We're burning a ton of money because we're now paying for a full production team during preproduction, which means our revised revenue targets are now astronomical.
We manage to get through the vertical slice green light the second time, we increase scope, but the core problems still plague us. The game is pretty good - it basically hits all of the original targets we expected - but there's no way it can match the ridiculous expectations we set for ourselves the second time around and isn't anywhere near on target for the increased scope for the second vertical slice pitch. We're over on budget and must release something. At this point, we're basically doomed. If we delay the game to fix the problems, we must increase the game's scope to justify the increased cost. If we release now, there's no way we'll hit our targets.
Do you see how budgeting some extra wouldn't really have helped in this kind of situation? This is the complicated and scary reality of game development - making good games is really hard and the road to failure is paved with good intentions. Throughout this entire hypothetical story, both the studio leadership and the publisher continued to put their faith in their developers to come up with something great. The harsh reality is that sometimes the best choice for the studio (early layoffs) can also be the most unthinkable.
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