Had a chance to fully go through and watch Colin's arguments. He makes a number of claims to back up his defense of the $400M figure, and doesn't blame people for doubting him, but then simultaneously states "they just haven't connected the dots like I have". And unfortunately for Colin, the dots he's connecting do not logically add up. Instead of connecting the dots, he's jumping to conclusions, and I knew that the vast majority of his defense of the $400M estimate comes from the initial claims of Series A VC funding for ProbablyMonsters at $250M in 2022. Note: ProbablyMonsters confirms on their website that their studio headcounts grew 65% in 2022.
1. Flaw #1 - Assuming $250M VC funding, closed in 2022, suddenly means that's money that has already been spent.
This is simply capturing private funding to deploy over the course of many years. It does not mean that money has been spent. It has a plan based on the number of studios and incubation projects. Indeed, we can see that from ProbablyMonster's own website they had multiple projects on their roadmap, some of which have been closed (money spent already), but others that were retained. It is a wildly inaccurate accusation that the $250M funding in 2022 was suddenly all mostly accounted for by 2023 when Sony picked up the project. This is long-term investment capital used to bring multiple ProbablyMonsters projects into fruition over the course of 5-10+ years.
Colin also has a habit of making wild claims about compensation. I've heard him make claims in the past about how much some employees at bungie are making at a lead level, and it is wildly out of touch (claiming they stand to make millions upon millions in the acquisition which is just false). The truth is that almost all of the acquisition cost goes to the very tippy top of the organization that has sizable shares. The vast majority do not. Those more involved in the actual game operations do not. In today's video, he claimed that FireWalk had to hire expensive employees, and while this is true, in context of the overall budget you are only talking about a handful of people. And most of their compensation is in the form of stock, as it's a new company and presumably the reason they are starting a new company is to enjoy in that growth moreso than the cash based compensation.
2. Flaw #2 - Assuming most of that $250M VC funding (that wasn't already spent) was largely allocated to Concord.
Pretty self explanatory based on the discussion above. Why would Concord consume the vast majority of their intended VC funding in just the span of a single year, when they were just going to flip FireWalk to Sony? While it was a difficult year and they may have sold FireWalk to Sony as a result of being concerned about long-term cash positions, it makes no sense to sell what you presume to be your golden goose projects and only have a skeleton crew working them. No, it seems to me based upon FireWalk's headcount vs ProbabyMonsters headcount that while the FireWalk divestiture was significant, it was not representative of the majority of the $250M in funding they were accounting for in their FUTURE roadmap.
3. Flaw #3 - Arguing that because Spiderman 2 cost over $300M, that "videogame development is just that expensive these days".
True, game development costs have ballooned over the years. But Spider-Man's costs are out there in public for all to see, and they are quite detailed.
Insomniac is located in probably the most expensive part of the country, even higher than Bellevue Washington according to online CoL estimates. Spider-Man 2 had a headcount of over 300 people on average working on the project on a full-time basis for around 3 years. This ended up costing $245M in direct studio related costs, and $54M in "Outsourcing Costs". Outsourcing, which was significant on SM2, was roughly 18% of the spend. Note: Spider-Man has much larger "credits" than Concord. $245M allocated to 300 people (on average) over 3 years is roughly $272,000 per employee (includes all overhead costs, see Insomniac's detailed breakdown)
Probably Monsters, at its peak, was nowhere NEAR the peak of Insomniac Games at 380 direct employees working on Spider-Man 2. Estimates of FireWalk Studios was roughly 160, and we know that the studio size for ProbablyMonsters grew 65% in 2022. While we can't exactly know how much of that was for FireWalk directly, let's just assume that a dozen employees in 2019 gradually ramped up to a peak of 160 in 2022, and do some rough math.
2019 = 12 x $272,000 = $3.2M
2020 = 50 x $272,000 = $13.6M
2021 = 100 x $272,000 = $27.2M
2022 = 165 x $272,000 = $44.8M (headcount grew 65%)
2023 = 165 x $272,000 = $44.8M
2024 = 165 x $272,000/2 (only worked half the year) =$22.4M
Total Direct Studio Costs: $156M. Assuming outsourcing costs of 20%, similar to Insomniac, that brings the total to $187M
NOTE: I believe this estimate is at the EXTREMELY HIGH END for two main reasons, and a third one that is just more of a hunch:
1) Insomniac games has a VERY GENEROUS profit sharing structure for its employees based on the massive success they had with Spider-Man 1. It essentially shakes out to a roughly 25-33% bonus depending on the year. FireWalk studio is an unproven start-up company. At a start-up, you forego cash based or profit based compensation because that does not exist, in exchange for share ownership in the company itself. So the $272,000 average cost per employee is likely overstated massively for a start up studio in a less expensive part of the country compared to one of the most successful studios in the world in likely the most expensive place in the world to develop.
2) The employee headcount of 165 is around their peak, just like 380 was for Spider-Man 2 in the last stages of development. I had a full 2.5 years where I assumed that 165 employees were working at FireWalk, which represents a massive overestimate.
3) Spider-Man is a very large project where a significant amount of work was outsourced. It stands to reason to me that outsourcing costs would likely be higher for a game with much more on the line to support a much higher project complexity and far more visual production values that Sony is known to support. This point is arguable and not really provable in either way.
Bottom line: Any way you shake it, you cannot get to $400M. It's extremely implausible by more than a factor of 2X. 
