Keep Cutting – Sunk Cost Fallacy and Game Development – Extra Credits

“Sunk Cost Fallacy” is a term that you’ve probably heard before. It’s a thing that constantly rears it’s head in game development but in ways a bit more complex than you might think. Time, money, and personnel that have been invested in a project and can’t be recouped are sunk costs. Every project inevitably has sunk costs. But there’s this phenomenon that occurs as we sink more and more resources into something. It starts to have this weird effect on our brain where we become increasingly committed to the project’s current course. Even when that project is not going well. This is the Sunk Cost Fallacy When this concept is taught, the example that’s often given is of a famous memo sent to Lindon Johnson by one of his diplomatic court about the possibility of ramping up US involvement in Vietnam This memo explained that as soon as men start getting killed we are not going to able to pull out of Vietnam We’re just gonna have to keep committing more and more men and material until the effort is literally unsustainable And even though more and more men won’t make this war anymore winnable We’re gonna have to keep doing it, because nobody want to see those first lives lost in vain this happens all the time in business especially in the games business Wesay to each other, “This feature is gonna be great” “It just needs a little more money to get there!” Or “If we just spend a little bit more on advertising, we can make this game profitable” and often, we say these things even when we have doubts or that shows it is clearly not the case As consumers, it’s easier to see this on a macro level With things like THQ overcommitment to the Homefront series or that drawing tablet that they were making for the Wii But the truth is this very often happens within game development as well Some features like terrain deformation or some crazy new facial mapping technology will start going over budget and falling behind schedule But instead of cutting the feature, the studio will put more resources toward it to help it along Sometimes this solves the problem, oftentimes it does not and when it doesn’t solve the problem, Those additional resources that were thrown at it have to be justified and because nobody likes wasting resources on a subconscious level, those in charge will often decide that the only way to justify their existing investment in the feature is by making sure that this feature is a success And the only way they know to make that happen, is to commit even more resources to it and this dooms so many projects. After all, the resources you commit to that feature are being drained from the project’s overall budget and those additional resources may not be enough to save the feature. But that’s just the straight forward side of Sunk Cost Fallacy Now, let’s talk about the two ways game devellopment add some interesting new complexities to this concept First is the idea of “recoupement” Sometimes, there is a valid reason for committing more resources to a failing project. It lets you get the game out the door, it gives you something you can sell. But from the consumer side, this still results in a bad or at least half baked game When a project is going of the rails When what was originally budgeted for a hundred millions has blown up into a five hundred millions dollar project Somebody has to eventually step in and say: “Alright, enough is enough. We cannot keep pouring money in this black hole” But at that point, you’re left with two possible options: Either you cancel the project entirely Or, you find the least expensive way to just wrap it up and ship it And that second option is the one that is often taken. which, I mean, make sense. After all, if you have already poured five hundred million dollars into a failed project and then decide to cancel it all of that money is just lost But oftentimes, you’ll have solid marketing data that says So long as you can get a box on the shelves with that title some people are gonna buy it And given that you have poured a ton of money into it, there’s probably a lot of hype out there So if marketing says that so long as you can ship something you will make a hundred million dollars it’s worth another fifty millions to get something into a box The return on that money is two to one. And the five hundred millions you already sunk in Well, you aren’t gonna get that back anyway It’s a smart business play, at least in the short term This is sort of what happened with Bioshock Infinite and even Destiny Not bad games, but there not quite what everybody, including the developers originally hoped that they would be You wanna know why so many games come out feeling unfinished or rushed? This is often why. the project was already over budget, with no guarantee that any further investment would make a difference And somebody made the call They calculated the minimum amount that could be spent to get the game to a state where it could be released And if that number was smaller than whatever their marketing data estimated it’s worst case sales would be Then regardless of quality, that’s what they did. The window for artistic decisions had long passed and all that remained was a business decision They had already sunk a lot of money into that project now, was there anyway at all to get value out of that sunk cost by putting just a little bit more money in? That’s the non-fallacy side of sunk cost considerations But its a side that nonetheless account for many of the poor or underwhelming games that you see each year But there’s another corollary to the sunk cost fallacy in games And this is the idea that, because resources were put into something It must have value So many times when working on a game team, you’ll finish building a feature or level or system and find that, when you finally get it in there and really test it It doesn’t actually work that well in your game But if you suggest cutting it, then somebody on the team will say: “But we put all that hard work and time into it. We’ve gotta use it!” It’s a completely understandable feeling, but not a good reason to keep something in your game It’s really difficult, I know. You so want all off that invested time and effort to have value that you’ll even start fooling yourself into thinking that the feature is better than it is The thought that your game could have been way better if you had just spent that labor and money elsewhere is miserable. But it’s all sunk cost Just because work was put in does not mean that it inherently benefit the project Hard as it can be to accept, this is one of the things that most often drags down projects Adding unnecessary bloat and distracting from all of the more successful content the team has made One of the single most common problem that James runs into when consulting on a game project is the devs team over-commitment to an idea that is not working Either by throwing too many resources at it or by simply not being willing to abandon it. This is what most often leads to that person from the business side coming in and saying: “Alright, shows over. We are putting in just enough money to ship whatever we have” “so that we can all still have a job next month” Don’t let this happen to your game Do not succumb to sunk cost fallacy See you next week

Danny Hutson

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