Risk is a huge factor in creating AAA games.  But there are huge risk problems when a game must be an “instant hit” due to the production cost of the game itself.

Take for instance Metal Gear Solid 4 for the Playstation 3.  To even begin to recover production cost (not including marketing costs), the franchise needed to sell over 1 MILLION units on DAY ONE to recover losses.  Over 50% of all PS3 units in the US had to buy a copy – not rent, borrow or possibly pirate, but BUY.

Game production for AAA titles has gone through the roof hitting $10-$50 million.  Now Square-Enix with Final Fantasy XIII will definitely blow through the top of that cap.  And a “losing” franchise is one that sells 500,000 units.  Is this model truly sustainable especially when only 3 in 10 games produced actually turn a profit?

One of Square-Enix’s most dramatic shifts was their announcement that Final Fantasy XIII wouldn’t be a PS3 exclusive.  I would more accurately say that it couldn’t be.  There isn’t enough PS3s owners out there to recover the production costs even if 50% of all PS3 owners bought the game on launch day.  They needed a wider audience and the Xbox 360 is that audience.

So consider the next big AAA titles – will there be a big enough install base to recouperate the cost of production?  There is a huge market gap here and the big development houses can only sustain this production race for so long.

But remember, where ever there is a gap, there is opportunity.