Think it costs a lot of money to make a blockbuster movie? Try producing a blockbuster video game.
This Friday, Sony will release the third installment “Infamous: Second Son,” the first big exclusive game for the PlayStation 4 video game console.
Analysts say that a video game of this caliber could cost hundreds of millions of dollars, but the payoff could be enormous.
It’s the third installment of a series that has been very successful for the company, and one that it hopes will help it expand its advantage over Microsoft in the console wars.
Sony won’t comment on what it has spent—and will spend—building and marketing the game, but analysts say the cost could run into the hundreds of millions.
“A big budget game title right now will cost almost as much as a feature film. You can talk budgets of $50 million up to over $200 million for a specific title,” said David Cole, CEO of DFC Intelligence, a San Diego-based video game market research firm.
A huge investment, for sure, but the payoff can be huge. Take-Two‘s “Grand Theft Auto 5,” for example—released last fall—has already reached $1.8 billion in sales.
“The numbers really don’t have a defined ceiling,” said Edward Williams, managing director at BMO Capital Markets. “You’re talking about something on the development side that can take several years. It can take hundreds of people working on that title for that period of time, and development costs are easily measured in mid-tens of millions of dollars, so it could be 30, 40, 50 million dollars, with exceptions north of that,” he said.
The marketing budget for a game can run $30 million alone, said DFC’s Cole.
“So if we look at Sony’s market today and say there are 6 million PlayStation 4s, what you’re going to try and do is drive a significant percentage of those 6 million to step in and buy it as well as provide a consumer who has not yet bought a PlayStation 4 a reason to buy it,” said Williams.
Which underscores Sony’s real goal with “Infamous: Second Son”: more console sales. The company says it has sold 6 million consoles, compared with 4 million for Microsoft’s Xbox One.
Both companies aim to entice gamers with exclusive titles, but Sony’s PlayStation has the advantage of being cheaper, say analysts.
“I think the biggest value proposition right now is the Playstation 4 is cheaper than the Xbox One and that’s clearly a reason consumers have gone for the PS4 more than the Xbox One,” said Cole.
(Read more: For Xbox, PS4 sales, it all comes down to price)
Video games have become one of the biggest aspects of the entertainment industry. According to Gartner statistics last October, the industry was expected to reach $93 billion in 2013.
“Overall we look at this as a two-horse race between Microsoft and Sony that’s likely to be very close in terms of unit sales, with market share fairly equally divided, with somewhat of an advantage to the Playstation 4. And long term we’re thinking both of these systems could sell over 100 million units worldwide over the next five or six years,” Cole said.
“You can clearly justify budgets in the hundred million, or two hundred million dollar range,” Cole added.