One of the hot topics at this year's Game Developer Conference was the soaring costs of game development. In a couple of months, the next-generation consoles will be introduced and along with their increased capabilities comes increased expectations on what the top games will deliver.
Many developers lament that because costs are growing so high, publishers are becoming much more risk adverse which in turn stifles creativity. But that isn't the full issue. Is it really an issue about being economically competitive or just plain competitive? That is, are developers lamenting the costs because they can't be profitable without huge budgets? Or are developers lamenting that they won't be able to work on the "Game of the Year" unless its budget is in the post $10 million range?
If the issue is about profitability -- making cool games that still pay the bills, perhaps what is needed are more distribution channels.
This article on JoeUser.com goes into more detail.
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