The economics of Live Arcade development

Proponents of digital distribution have long argued that cutting out the retail middleman would allow more money to go directly to a game's developer, letting lower-budget games thrive. Now that Xbox Live Arcade is approaching its first anniversary, how are developers of top-selling games like Marble Blast Ultra making out?

Not horribly, but not amazingly either, according to GarageGames' Jeff Tunnel In a post on his Making It Big in Games blog, Tunnel breaks down the publicly available information on game budgets, Microsoft's distribution fees and game sales to come up with a rough estimate of a $780,000 net for a game like Marble Blast Ultra. As Tunnel puts it "if you are a starving Indie developer this sounds like an infinite amount of money. But, in the world of publishers, this is not considered a big hit."

Tunnel also mentions that XBLA development budgets are expanding quickly, following a trend in traditionally distributed games. Soon, Tunnel predicts, a $300,000 budget will be considered cheap for a Live Arcade game -- food for thought for anyone hoping to jump into 360 development with nothing but a $99 XNA license and a dream.

[Via Edge Online]

This article was originally published on Joystiq.