"The end has come for development in its current form in the US": How the crisis in the AAA segment is changing the industry

The crisis in modern AAA game development is evident to most developers, with its epicenter concentrated in the USA. What causes it and what consequences does it have for the industry? This is what our extensive feature today explores.

In August, veteran game industry professional Greg Street published a post on LinkedIn, which started with the following phrase: “I fear that USA game development as we know it is coming to an end.”

Street has spent his entire career working at major companies on franchises like Age of Empires, World of Warcraft, and League of Legends. He currently leads the studio Fantastic Pixel Castle, which is developing an MMORPG under the codename Ghost, funded by the Chinese giant NetEase. The team includes staff from various countries, including the UK, Canada, Australia, and the USA.

According to Street, in private conversations, European and Asian publishers increasingly point out that today it makes little sense to hire people in expensive places to live, like California.

This largely concerns the AAA segment, where game budgets and studio operating costs increasingly don’t align with the revenue from the final product.

Gaming companies rarely disclose project budgets, but based on available data, the exponential growth in development costs is clear. 10–15 years ago, the production of a AAA game—excluding certain exceptions like GTA—cost a major publisher on average $100 million or even less. Today, we are looking at entirely different numbers.

Here are just a few well-known examples: