Video games are getting astonishingly more expensive, the BBC reported this week. 1982’s blockbuster Pacman cost $100,000 to produce. Today’s average Playstation 3 game costs $15 million.

While costs of production go up, retail prices and revenue remains the same, a trend that hurts smaller companies and stifles creativity with non-risky sequels and franchises.

Philip Oliver heads Blitz Games, a small producer of movie, television and commercial tie-ins.

“These costs have risen so sharply because of the complexity of the devices which we are writing the games for,” Mr Oliver says.

“The costs have risen most sharply on the graphics side. We have entered a new era of high-definition video gaming.

“This has led to team sizes having to increase in this area, for new tools to be created for this and generally the costs are rocketing. This is actually having a severe hit on the industry.”

Company bosses such as Mr Oliver have needed to find novel ways of funding games development. Increasingly, this means outsourcing some of the work abroad.

“Obviously at the moment, it’s high-risk, because there aren’t so many consoles being sold. In the long term, there’s the opportunity to get the money back. That’s why we are in the business,” said independent games consultant Nick Parker to the BBC.

Halo 3 cost $30 million to develop and made $170 million its first day, the article points out. Not every game has Halo’s brand recognition, corporate backing, tremendous marketing support and Mountain Dew-infused addiction.

The risk involved in producing such big budget titles has led to a reliance on franchises like Halo and Mario, which are much more likely to be rewarding. 2007 has been a great year for new intellectual property, with BioShock and Assassin’s Creed doing very well.