The first video games were non-commercial, and were developed in the 1960s. They required mainframe computers to run and were not available to the general public. Commercial game development began in the 1970s with the advent of first-generation video game consoles and early home computers like the Apple I. Due to low costs and low capabilities of computers, a lone programmer could develop a full game. However, approaching the 21st century, ever-increasing computer processing power and heightened consumer expectations made it difficult for a single person to produce a mainstream console or PC game. The average cost of producing a triple-A video game slowly rose from US$1–4 million in 2000 to over $5 million in 2006, then to over $20 million by 2010.
Mainstream PC and console games are generally developed in phases. First, in pre-production, pitches, prototypes, and game design documents are written. If the idea is approved and the developer receives funding, a full-scale development begins. This usually involves a team of 20–100 individuals with various responsibilities, including designers, artists, programmers, and testers.
Games are produced through the software development process. Games are developed as a creative outlet and to generate profit. Development is normally funded by a publisher. Well-made games bring profit more readily. However, it is important to estimate a game's financial requirements, such as development costs of individual features. Failing to provide clear implications of game's expectations may result in exceeding allocated budget. In fact, the majority of commercial games do not produce profit. Most developers cannot afford changing development schedule and require estimating their capabilities with available resources before production.
The game industry requires innovations, as publishers cannot profit from constant release of repetitive sequels and imitations.[neutrality is disputed] Every year new independent development companies open and some manage to develop hit titles. Similarly, many developers close down because they cannot find a publishing contract or their production is not profitable. It is difficult to start a new company due to high initial investment required. Nevertheless, growth of casual and mobile game market has allowed developers with smaller teams to enter the market. Once the companies become financially stable, they may expand to develop larger games. Most developers start small and gradually expand their business. A developer receiving profit from a successful title may store up a capital to expand and re-factor their company, as well as tolerate more failed deadlines.
In the early era of home computers and video game consoles in the early 1980s, a single programmer could handle almost all the tasks of developing a game — programming, graphical design, sound effects, etc. It could take as little as six weeks to develop a game. However, the high user expectations and requirements of modern commercial games far exceed the capabilities of a single developer and require the splitting of responsibilities. A team of over a hundred people can be employed full-time for a single project.
Game development, production, or design is a process that starts from an idea or concept. Often the idea is based on a modification of an existing game concept. The game idea may fall within one or several genres. Designers often experiment with different combinations of genres. A game designer generally writes an initial game proposal document, that describes the basic concept, gameplay, feature list, setting and story, target audience, requirements and schedule, and finally staff and budget estimates. Different companies have different formal procedures and philosophies regarding game design and development. There is no standardized development method; however commonalities exist.