Former Xbox Manager Explains Why $500M Cost For Gears: E-Day Doesn't Tell The Whole Story

I have a lot to say about this…

I work in IT and have worked as an employee and contractor for my whole career. I also work with Microsoft contractors, and I will have to double check with them if what I’m going to say next also is true for them but I bet it is.

ANY well managed corporation has a time management system where employees and contractors register their time and what project they were working on. Even if they are salaried employees that don’t get paid by the hour. This is used not only to track personal time off and/or sick time but also precisely to manage independent project budgets.

It can sometimes be annoying as an employee that works full time in a single project (as those employees might see it as pointless), but it’s vital for management to know what projects (not teams) are eating up money.

If Xbox has been operating exclusively around team hierarchy to evaluate project expenses, then Xbox has been managed way worse than I expected.

Even if it was, it would had been prudent of self-piloted studios to at least internally implement such tracking precisely so they could protect their own operations should this ever come up, precisely as it’s implied in the article. If they are seriously having issues tracking the accreditation of tome contributed to other studios/teams projects, then the Coalition management also was doing a terrible job. I’m not talking about project leads, I’m talking about anyone in charge of time keeping. At this point, I would not be shocked if no one was in charge of timekeeping, though.

Mean does it really change the overall point of the conversation?

While it's good that the full picture has been revealed, it's very concerning how these rumours were handled by people still at Xbox. If you respond to rumours then if you're silent about other rumours, people come to the conclusion the rumours not addressed are the full truth. Especially when insiders like Jason Schreier get involved.

Xbox were very quick to address stuff like terrible GTA6 Xbox preorder numbers rumour and the MW4 Xbox review issue but when it comes to this E-Day budget rumour, they were just silent.

“Nevertheless, Corden warns that $500 million is a ‘lot of money to invest without a specific structure in place to explain why some of these costs were worthwhile to Microsoft auditors,’ and that there have even been ‘some internal disagreements over how exactly attribution should be distributed.”

This is what worries me about Coalition.

It’s a very, very bad time for any team at Xbox to be costing lots of money and unable to point to direct attribution.

I have to imagine some of this budget (however big or small) was going to the PS5 port, with the plan to recoup more of the cost there. I really hope that Xbox leadership has taken that into account, since it was enough of a last-minute decision that the trailer went out with the PS5 logo.

Exactly. Still shows the inflated cost of AAA development mainly in North America. To be clear this isn’t just an Xbox issue. But will say one thing that affects mainly only affects Xbox is having their super expensive AAA games launch on game pass day one taking away a huge chunk of revenue from a full purchase which on top of the increasing development cost certainly doesn’t help.

I don't know why some people believe unfounded rumours so quickly and why the same people don't believe official sources when they revoke them, e.g., "Xbox is on sale", and the behaviour only applies to Xbox, in a suspicious way, to make it look like it's always failing.

The fact that The Coalition has been working on multiple games, not just theirs, just confirms that they are one of the best assets that Xbox has. This is not a new thing, they have been doing that for many years. Id has been doing the same to a lesser extent, e.g., they helped Bethesda with Starfield.

This is why you can't just say that an Xbox cost $500M. You could say so about a third party whose budget was leaked and that was focused on a single game, but not about an Xbox studio.

So did MS receive any revenue from the Matrix demo and the work the Coalition did on it? They would have received money from Avowed, Hellblade 2 and both Grounded Games as well as money from SoD3 and Clockwork Revolution when they hit the market but how are the 'costs' on those games worked out - do they cost less because the work the Coalition did is part of this $500m or are they trying to count things twice to make things look even more expensive?

It was obvious that the Coalition wasn't working on Gears exclusively, that they had worked with Epic and of course internal Studios using UE5 as the Unreal Engine experts in the Company. Contributing not only to those games being developed, but the Engine itself and of course the UE5 Matrix Demo which was free - so did MS and the Coalition get money from that?

Sometimes I wonder why they try and make a Game seem far more expensive than it was because obviously we all know that the Coalition had been spread out working on numerous other things as well so that $500m is spread across all those projects, all that consultancy work, all that help and assistance as well as UE5 development work they've done too

@FraserG Thanks for the quote. What's striking is how much attention this kind of article gets from gamers, when, at most, it should really only be of interest to shareholders. Meanwhile, people tend to forget to talk about the game's quality, even though it's been praised almost unanimously.

Alongside Resonance, it's my Game of the Year. I'm genuinely having a great time with it. The campaign is simply excellent, and I'm starting to really enjoy the multiplayer as well.

@themightyant Obvious to you and me, and some toher people. But judging by the number of comments alongside the applause, it clearly wasn't that obvious to everyone. What people need to understand is that this is a long-term investment, benefiting future Gears installments as well as other games. When you look at it that way, the cost doesn't seem outrageous at all. The difference is obvious when you compare it to other UE5 games. It’s on a completely different level. In fact, it hardly even looks like Gears: E-Day is using the same engine, considering how much The Coalition has enhanced and customized it.

@Rimebreaker We don't really know how the budget is calculated internally. Let's not forget that this whole $500 million figure is still just a rumor. Nothing has been confirmed by Xbox, and we have no details on how the budget is allocated or accounted for internally.

That said, you're probably right in practice. Internally, they almost certainly know the exact budget breakdown for each project. It's just that they haven't communicated any of those details publicly. And to be fair, very few studios go into that level of detail when discussing their budgets.

@Fishmasterflex96 And yes, it changes everything, despite what some cynics continue to claim. Derel Reese stated that "much ot that cost" is being invested in the game engine and the technologies being developed from it. Developing tools is expensive, but those costs are then amortized across the various games that use them. And we can be sure that other games will benefit from the technological advancements developed by The Coalition.

@BAMozzy I would be curious about the matrix demo finances but doubt we will ever know. It’s possible it was paid for by Epic Games, part of some long-term licensing discount, or Phil throwing resources around for free. None of that matters if they never bothered to do proper per-project time-tracking.

As for the figure, as far as I can tell, it’s a rounding (rounded up I’m sure) of how much the total operational costs for the studio was between two key dates. I’m assuming the culmination of Gears 5 development and release of E-Day. Mentions of project tracking would not increase or decrease that figure, it would just help determine if the studio was carting its weight via their contribution of all touched projects.

@fatpunkslim it’s still dev cost and the main point is that it’s super expensive. On top of that the amount of tams that used unreal has went from 6/7 to 2 so would imagine a lot of the internal systems they spent time working on are probably worthless now. To me at least the main point is that AAA development in North America is too expensive now this isn’t just an Xbox issue but one thing that is mainly only an Xbox issue is the fact that they’re a huge blockbuster games release day one on game pass, and they lose revenue from that which is a problem they’re spending so much to make them.

@fatpunkslim There is a game made on Unreal Engine 5 that I beat, Immortals of Aveum, and if you compare it with Gears of War E-Day, it's night and day. Hellblade II is very impressive but it cuts the screen to allow lower-res video and it's completely linear, with boss battles and camera scripted.

The Coalition is the only Xbox studio I would allow to use a third-party engine indefinitely, despite Xbox owning even better engines, because what they did with Gears of War E-Day is unbelievable. You only have to play the campaign to see how incredible it looks.

I'm sure that The Coalition is completely safe, that Xbox is proud of them, and that E-Day 2 has been greenlit. Months ago I said that it doesn't mean that there won't be layoffs, if Asha considers that the team has grown too much during Phil's tenure, regardless of the commercial performance of the game on Xbox —which we still don't know, same as its budget.

I'm sure PS will be as fast with this updated news...

@Fiendish-Beaver maybe I’m wrong but I don’t think I ever seen a large publisher confirm the budget of any given project.

Honestly, given how this is important finance information, I would never expect a publicly traded company make any such statement outside an investors call. There are very strict regulations that such information MUST be provided to investors first. Elon has multiple times gotten into tons of trouble with regulators over opening his mouth about financial information in social media without making sure investors got that information at the same time in compliant manner.

@Fishmasterflex96 Developing tools is expensive, but those costs are then amortized across the various games that use them. And we can be sure that other games will benefit from the technological advancements developed by The Coalition.

@Banjo- Yes exactly Even when compared to more recent games like Phantom Blade Zero, it's night and day. You really have to not have played the campaign to claim otherwise, especially when you see how many things are happening simultaneously on screen: the explosions, the large number of enemies (whose AI is genuinely impressive, constantly repositioning, taking cover, and trying to flank you), the management of your squad members, The level of detail in both the environments and the visuals is remarkable. the lighting... it's simply stunning.

@Fishmasterflex96 what Matt Piscatella had to say about Gamepass Day One games (on Bluesky).

Game Pass Ultimate costs $23 a month.
Let's not say that Gears was 'free' with Game Pass, ok?
Game Pass isn't free. The framing is ludicrous.

And it isn't straight cannibalism if a person paying for Game Pass plays an offered game through the service.
Please. Let's be serious people. Or at least try to be.

And. For the love of Mario.

Not every person who plays a game via a sub service would buy that game were it not included in that service.

Just like that silly math that floated around last year about what Call of Duty "lost" being on GP by multiplying GP players by the full price of the game.

@Schonks Right. The proof is that when a game is confirmed to have failed on the Xbox store, like South of Midnight or Keeper, it also failed at engaging players on Game Pass, and when a game is very successful on the Xbox store, like Forza Horizon 6, it's also very successful on Game Pass. This proves that many players buy Xbox games, while others just play them on Game Pass. There is some overlapping business there, but implying that it's 100%, which means cannibalisation, is utterly ridiculous. Besides, like you said, Game Pass is not free.

@fatpunkslim Microsoft has made it that way with their actions. If 2024 onwards wasn't rife with Xbox mass layoffs and closures, you could easily look at things as just "[insert studio] made amazing games and can't wait for whatever the studio is working on next."

But as the frequency of mass layoffs and closures are so common (it's becoming every 1-2 months now), the discussion turns into "[insert studio] made amazing games but the financial side of things is a worrying sign that they may not be able to work on more games in the future because of Nadella's obsession with AI and infinite growth."

Wouldn't the easiest way to dispute this figure be to say what the actual cost of gears was? Their spreadsheets must be more detailed than a single entry of total expenses.

The original leakers within the coalition or xbox clearly wanted the public to think it cost $500 million to make e day. Why? Disgruntled employees, excuse for more layoffs, excuse for multiplats triumphant return? Maybe it will become clear in the future but in the meantime the narrative will continue to be that gears cost a whole lot of money and didnt perform very well. Not saying "actually this is what gears cost" seems to confirm that narrative.

@Grumblevolcano You need to consider two things if you want to see the big picture and not just the "evil" side of Xbox executives:

a) Layoffs come as a result of those studios becoming too big during Phil's tenure and bleeding money because their games are not successful, regardless of how "amazing" they are. Studios need to be proportionate. They can't grow massively and underperform. That just does not work for any publisher.

b) All the studios that Asha has decided to let go have not made successful games lately (lately = 8 years): Compulsion, Double Fine, Ninja Theory and Arkane.

The only exception is Undead Labs. State of Decay 2 was a success. They needed, however, external assistance despite also becoming much bigger, and State of Decay 3 was in development hell. This is the only studio I would personally have kept at least until they release State of Decay 3, to check if the game deserved the investment. I even predicted that the other studios were at risk, but not this.

@Rimebreaker Great insight! I work in the operations side of an IT consultancy and need to complete timesheets on any internal project I am involved in. First time round I was like “why the hell am I doing this? I’m a perm employee and management know exactly what I am working on”…Then I got more involved in the CapEx vs OpEx conversations and it all became clearer.

Dunno how true it is but googling suggests Xbox don’t rely on any kind of PMO function to track all this. It looks like it’s all handled by a program management layer who, I imagine have enough on their plate without getting bogged down in the budget minutia.

Even if its 300-400 million its a lot more than the game is bringing in. I just hope Xbox are ok with that. If they want an excuse, they can say its 500 million pinned on the Coalition.

Time will tell.

Dedicated video on this topic from Jason Screier just dropped.

@themightyant Was very obvious to Sammy at Push Square. His Sony Goons that write fake news got him to write a few times on this and i told everyone over there it wasn’t $500 million. Now does anyone think they have a story on Push today saying they have egg on their face and they post fake news to their followers? Let’s just not yet and not ever.

@mac_da_man The math appears to be around $230 million on E-day. Which isn’t bad seeing as the game was built with all new assets from the ground up. Next game will be less money as they don’t have as much to build.

@mac_da_man

Regardless of where the $500m was spent it's still a huge amount of dough. Of course the usual suspects will paint this as a "nothing to see here, move along" scenario when it's anything but.

This story is far from over - let's just hope it's in The Coalition's favour

This still doesn't change the fact that E Day cost far too much to create and has sold poorly to the point that all of this investment may never pay off. The next Gears will only add to that $500m investment making it even higher, when E Day has at most generated $40m

@Rimebreaker Of course we will never know - they could have received money from the Film Studio/Publisher behind the Matrix as part of their own Promotional costs and no doubt commissioned Epic to make it.

We as the Public will likely never know exactly how much each aspect cost. As far as MS are concerned, they probably don't need to break it down - their Staff are employed to be working and get paid to be working, they pay The Coalition staff bill whether they spend that day working on Gears or whatever other projects they undertake and/or support with. They are likely salaried and not expected to break down exactly what projects they worked on and for how long - especially not with internal projects that are all being produced by MS and utilising their Staff to ensure their Products release as when expected and at the standard they wanted to hit to. It doesn't change their wage bill for all the Studios, their costs but obviously can affect the exact cost of that Game.

At its most basic, as long as their monthly costs are less than their monthly revenue, it shouldn't matter. You can't exactly say that the revenue from Hardware and Peripherals shouldn't count towards the revenue from game sales if some people buy a Console, controller or headset to play that game so can't say that only Game Sales Revenue should count to recuperating costs, just like you can't say that the game cost a certain amount when some of that money also went on other projects and assistance. Also you can't factor in Cancelled projects as part of the cost to a game that does release but those are still costs that didn't bring in Revenue if they don't reach market....

Maybe I'm just dumb, but couldn't this simply be explained like; "The Coalition has had a $500 million dollar budget as a studio over the last five years, but only a fraction of this was specifically dedicated to E-Day?"

I'm hoping this and the fact that Coalition is basically Xbox tech support means they won't get gutted, but I do have a bad feeling that Asha will just cut staff without really understanding the nuances of this particular one. (Like how iD was cut down and they lost a lot of staff who intricately knew idtech.)

I hope I'm wrong. I wasn't even that impressed with E-Day but I don't want the studio to get gutted over it.

Push square will still get another article out of it

@themightyant Sorry to say that is a deflect from the article Sammy at Push wrote, twice. He takes info from a lying rat Jason S that lied about the Kojima Physint Sony break up. I always said i didn’t fully believe in the Xbox Tax, but people like Jason and websites like Kotaku throw out such misinformation and sites like these shouldn’t even acknowledge them cause when those people and places are wrong it’s already water under the bridge to them even tho industry damage was done. Throw away the fact that E-Day likely losses some money. Not enough info is gathered for that quite yet. Even tho i agree with you it likely will. It’s the consistent $500 and how it should have been on PS BS Crap that Sammy pushes for free clicks. I find it disgusting and sore to the overall industry as there is plenty going on in the world of PS that he isn’t short on article topics. While i always enjoy your posts and level headed comments. I don’t fully agree with you on this as it’s a smeer job done wrong.

Sad part is, for once, the internet isn't focused on this because they want someone to fail but instead are worried they'll be closed in spite of doing a good job. Typically customers ignore the inside baseball and just focus on product value and it's telling that MS has botched it's PR so bad that people are betting on WHEN, not even IF, they'll get fired and close shop. I was incredibly lucky and got in on a conversation at a show back in '99 with a couple of MS guys showing off Asheron's Call and they told us about the then plans around the Direct-XBox. I bought one with Halo and joined Live in the beginning, moving to Gold and then GP; I'm as invested in XBox as I can be and things weren't this bleak when Mattrick wrecked the XBONE launch. There's a lot of talk around Asha both ways, but all that's happened for the customer is she capitalized the name, made the logo green and reduced the GP price increase to $4 (not $10 but not zero); it's early on but that's also it in spite of all the hype. Putting your games on PC or not on PS5 doesn't change my life, I have both but if I'm looking for value from my black box that's great new games and GP... both of which she's stripping with the obvious intention of eliminating. Sony's recent behavior is the result of thinking XBOX is abandoning the console market, and with nearly every Helix estimate putting it north of $1500, they are.

@HonestHick

Push Square's editor clearly has an ongoing issue with the very existence of Xbox.
There's a clear difference between reporting news on any given platform, (good, bad, even misinformed on occasion), and going out of ones way to fuel an ongoing smear campaign against the "competition".
It's unprofessional and immature. One should expect better from the editor of a prominent gaming site like Push Square.

Wow some relationship unreal is smh

@RTGX 100%. I'm more of a playstation player & I can't stand PS anymore. It's like its being run by an edgy 15 year old.
It's a real shame, I used to really enjoy it there, but ever since Xbox started putting games on ps5 they've just lost the plot. (Or shown their true colours!)

@Ichiban

While I've always predominantly been a PC gamer, as a preferred choice, it was not my first system, that would be the humble Commodore Plus/4.
I'm a gamer, first and foremost; from said system, to growing up with the arcades, to now.
Even when I was much younger I never understood brand allegiance amongst console gamers, it literally makes no sense to me in a hobby that should promote a sense of kinship.
With the rise of the internet it seems the joy of gaming has very much taken a backseat to petty games of one-upmanship. The sad part is I'm not entirely sure they realise it themselves.
Even on here there are some where defending their "chosen platform" is more important than the act of gaming itself.
For some even the smallest slight is not just an attack on they're preferred platform, but their identity as a whole. They take it personally, which makes me question why they're here at all? Strikes me that it's not for the games.

@RTGX honestly i could have not said it better myself. You nailed it. The dude never stops writing them and never accepts when he is way wrong.

@HonestHick

The best advice I can give it to stop engaging with the site altogether. Indifference is more powerful a tool than engagement.

@themightyant Jason claimed that Kojima knew Sony was canceling he deal, and Kojima said it happened very quickly and he didn’t know about it. Now this is a story i didn’t follow much, but Jason won’t take egg on his face for nothing. Like he knows more than Kojima himself and he knows the total of E-day better than MS or the coalition. The dude is a cancer to video games and i believe nothing he says.

I used to not believe in the “Xbox Tax” i still don’t per se, i just believe in fake news even that much more and fake news reporters love to talk about Xbox. For not owning one and wanting them out of the industry they sure talk about them more than their favorite brands. .