I've heard that Doom III alone took close to $20 million to make. Huge amounts are spent by developers in licensing fees (music rights, physics engines, video/animation systems, etc) alone. That's in addition to the company's own programmers, artist, directors, managers, etc.
Today's development team sizes and budgets are approaching Hollywood's major motion picture sizes. The days of one guy making a successful game on nights and weekends are long gone.
With MMORPGs, such as The Sims, WoW, etc., the hardware costs for their game servers must be staggering.