Gears of War 4 would cost $100 million on Xbox one and bankrupt Epic Games

Gears of War 4 is developed by ‘The Coalition’. n January 2014, Microsoft announced that it purchased the Gears of War property from Epic Games. Later this fall, Microsoft will be shipping Gears of War 4, a game that would have cost Epic around $100 million to develop had it held onto the IP, estimates Epic boss Tim Sweeney. For Epic, unloading the franchise was a transitional point for the company and a necessary business move.

“The very first Gears of War game cost $12 million to develop, and it made about $100 million in revenue,” Sweeney told Polygon in a feature on Epic’s evolution. “It was very profitable… By the end of the cycle, Gears of War 3 cost about four or five times more than the original to make. The profit was shrinking and shrinking. We calculated that, if we built Gears of War 4, the budget would have been well over $100 million, and if it was a huge success, we could break even. Anything less could put us out of business. That’s what caused us to move and change business models.”

While economics played a large part in Epic’s decision, the developer also clearly felt constrained by its publishing relationship with Microsoft. If a publisher bankrolls a project, it can veto certain things in a game, and that didn’t sit well with Sweeney when Epic was working on Gears of War: Judgment.

“When we released Gears of War: Judgment, a bunch of community players were complaining about all the multiplayer levels we created. We realized that, you know, there are some problems with this, we should rework it, create a bunch of new content and release multiplayer around a new game just like we did in the project that was the genesis of Unreal Tournament,” Sweeney said. “We had all these plans to do this, and so we went to Microsoft and we said, ‘Hey, we want to do this.’ And they said ‘No, you don’t want to do that.’

“We weren’t asking them for money, but you know as our publisher and proprietor of Xbox, it didn’t fit into their business plans and so they said no. That made me realize very clearly the risk of having a publisher or anybody standing between game developers and gamers – and how toxic and destructive that process could be to the health of a game and its community.”

With AAA games becoming increasingly expensive and risky to make, and business models changing in favor of things like Early Access and games-as-a-service titles, Epic realized the “writing was on the wall,” Sweeney said.

The company pivoted and sold 40 percent of its stake to Chinese giant Tencent, and began looking at free-to-play efforts like the indie survival game Fortnite and the MOBA title Paragon.

“We realized that the business really needed to change its approach quite significantly. We were seeing some of the best games in the industry being built and operated as live games over time rather than big retail releases. We recognized that the ideal role for Epic in the industry is to drive that, and so we began the transition of being a fairly narrow console developer focused on Xbox to being a multi-platform game developer and self publisher, and indie on a larger scale,” Sweeney described.

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