:: The idea
Every game begins with an idea. The idea includes the aim of the game, its educational goals and funny elements.
Often story ideas come from game designers themselves or are pitched by outsiders, but increasingly they are based on other forms of entertainment like popular movies. Other common sources are sequels or spin offs of existing games and simulations of real-world events.

:: Scenario development
The scenario is a detailed description of the idea and the main scenes of the game. : More

:: Storyboard
Once the basic game concept is decided upon, writers and artists work together on a storyboard. : More

:: Creating the characters
As the storyboard is made, designers begin to create the characters. : More

:: Putting all in motion
At this stage, the character is basically a digital marionette. The game developpers bring this figure to life by instructing the computer to move the character. : More

:: Game environment
One of the most important aspects of modern game creation is the environment. : More

:: Code
The code is what makes all of the game elements work together, though unseen by the user. : More

:: Postproduction and Testing
Once the game is complete, it enters the postproduction phase. This phase includes extensive testing, review, marketing and finally, distribution. : More

Sources:

:: http://www.pbs.org/kcts/videogamerevolution/inside/how/06.html
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