:: The idea
Every game begins with an idea. The idea includes the aim of the game, its educational goals and funny elements. : More

:: 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.
Rough sketches of major characters are drawn and redrawn until they are perfect. It's important for the artists to refine the characters as much as possible at this stage in order to avoid additional costs later.
The sketches are first scanned into the computer. Then, a digital exoskeleton is created to define the character's shape and to give the computer the control points necessary to animate the figure. The more detailed this exoskeleton is, the more realistic the motion of the character will be. Next, layers of "skin" are added, followed by layers of color and texture.

:: 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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