Hi,
It''s a combination of many things, but I would imagine it''s mostly the employees and advertising.
Consider: your average employee costs about $50k per year, and many of the big games take a year or more to develop. Now, if the team is 10 people, you''ve got $500k in just one year. Granted, salaries vary, but the latest Gamasutra survey found that $50k was about average (I don''t have the exact figures nearby, I''m trying to recall it from memory).

That''s the only thing I can tell you for sure. Now I''m going to make blatant assumptions. :-) These are educated guesses, so don''t flame me too bad guys.

Not all companies will need to rebuy equipment such as computers, compilers, and art/sound tools, but startups will definitely need to purchase these things. If it''s a 3d game, toss multi-thousand dollar 3d modelers into this. There goes a few more thousand.

Then we get into the HEAVY stuff like advertising. I believe this is mostly covered by the publisher, but I''ll toss it in anyways. A simple banner on Gamasutra can cost you a few thousand dollars. The big-name games can''t settle with this. They need to hype their game. This means advertisements on magazine after magazine, and sometimes they even go to television. I would imagine this could easily amount to a million, but as I said, I''m no expert.

Well, I included everything I can think of. Feel free to correct me/add on to this anyone.

--Brian

Employee costs are usually the single greatest expense, like Darjk mentioned. However, he mis-calculated the cost a bit.

If you are being paid by a company $50K per year, you are, in general, costing that company $70K per year for FICA, benefits, etc. And then there administrative overhead like your desk, your workstation, the building where those are located, and so on.

Even with expensive engines, license costs aren''t going to be a huge percentage of your budget. A noticeable percentage, yes, but unlikely to be even half the employee percentage of the budget.

Advertising is seldom figured into a development budget, because that''s not handled by the developer. Advertising costs are above and beyond development costs, generally.

DavidRM
Samu Games

The hardware has to be purchased by the developer. If the project is self funded you pay for it. If it is publisher funded then they pay. Equipment costs is one of the things that publishers hate the most. It is a large upfront payment and publishers prefer payments to be back-ended. Kind of tricky because it is rather hard to get to the end of the project without buying the equipment.

Dan Marchant
Obscure Productions