Game Companies Face Hard Economic Choices 511
Hugh Pickens writes "The NY Times reports that the proliferation of free or low-cost games on the Web and for phones limits how high the major game publishers can set prices, so makers are sometimes unable to charge enough to cover the cost of producing titles. The cost of making a game for the previous generation of machines was about $10 million, not including marketing. The cost of a game for the latest consoles is over twice that — $25 million is typical, and it can be much more. Reggie Fils-Aime, chief marketing officer for Nintendo of America, says publishers of games for its Wii console need to sell one million units of a game to turn a profit, but the majority of games, analysts said, sell no more than 150,000 copies. Developers would like to raise prices to cover development costs, but Mike McGarvey, former chief executive of Eidos and now an executive with OnLive, says that consumers have been looking at console games and saying, 'This is too expensive and there are too many choices.' Since makers cannot charge enough or sell enough games to cover the cost of producing most titles, video game makers have to hope for a blockbuster. 'The model as it exists is dying,' says McGarvey."
As we discussed recently, OnLive is trying to change that by moving a big portion of the hardware requirements to the cloud. Of course, many doubt that such a task can be accomplished in a way that doesn't severely degrade gameplay, but it now appears that Sony is working on something similar as well.
am i missing something? (Score:5, Insightful)
am i missing something, or is the answer to this 'crisis' painfully obvious to everyone?
stop making these huge, expensive games.
go back to making small, experimental fun games.
it seems so simple.
every game should be a new experience, or at least bring something new to the table. adding a few more polygons, and some better shading algorithms does not make a game more fun.
Re:This is easy to fix: (Score:5, Insightful)
Exactly
Reggie Fils-Aime, chief marketing officer for Nintendo of America, says publishers of games for its Wii console need to sell one million units of a game to turn a profit, but the majority of games, analysts said, sell no more than 150,000 copies.
That's because the majority of wii games are shit that SHOULDN'T turn a profit. Why people aren't changing that I don't know. It seems to me that if you put out a crappy game for the wii and it sells crappy, that might tell you something.
(Hint: put out a good game for the wii for good sales)
The answer isn't more marketing nonsense... (Score:5, Insightful)
It's true that the cost of game development is significant, and growing all the time. The answer isn't to flail desperately at the latest fad or wow potential customers with marketspeak, though. Here are a few suggestions:
1) Focus on quality instead of marketing hype. If a project isn't coming together, it's better to cut your losses than to shove a piece of garbage out the door and lose the confidence of your customers.
2) Develop your code with reuseability and extensibility in mind. Never accept quick hacks or shoddy workmanship. It never pays off in the long run. Also: quick hacks for funding milestones = long-term disaster.
3) Don't work your employees insane hours at crunch-time. You'll just lose the best ones after the project is over. Treat them with respect, pay them decently, and give them a stake in the financial success of the company.
4) Invest in internal tool and systems development. It's a longer-term payoff, but high-quality internal tools allow a small team to do what otherwise requires a small army to accomplish.
5) Betting on safe and sure things is a surefire road to stagnation and failure. You can't be afraid to shake up the status-quo and innovate. There's nothing wrong with sequels per se, as fans of your first are likely expecting a second (I'm working on one now), but you can't just remake the same game and expect everyone to buy it a second time.
Pretty boring list, huh? But I'd bet 9 out of 10 companies probably don't really follow this advice. It's sort of like advice on how to lose weight: eat healthy and exercise regularly. Stupid and simple, but it's just to tempting to take the easy road.
The game development company I work for seems to be adhering to these principles pretty well, and is hiring developers while other companies in the area are laying employees off. We'll see if it pays off in the long run.
Return to 1993 (Score:5, Insightful)
Best game I ever played was X-com UFO defense, circa 1993. It featured 320x240 (256 color) VGA graphics and mono sound. I don't know how many people were on the development team or what the budget was, but I'll bet it's not a lot.
Gameplay is everything. None of the $25 million-budget modern games can touch the X-com in game quality and sheer fun IMO.
But I guess console games today do cost tens of millions of dollars to develop... if cheap iphone games are putting the big studios out of business, I don't mind. Lots of little guys putting out lots of little games = more chances for a true gem to come out, as opposed to fewer megaexpensive titles by a handful of big companies.
BTW X-com would probably work just fine on a iphone, which has twice the screen resolution of the original game (!)
Re:am i missing something? (Score:5, Insightful)
stop making these huge, expensive games.
go back to making small, experimental fun games.
it seems so simple.
I agree, you'd think that with the new controller and the lower graphical capabilities, game devs would have thought "well, all we can do with this is make something new and innovative, rather than doing the same thing we did last year with prettier graphics. Spend less money, but put a little more thought into it."
Most instead went with the tactic of "Lets put out games we already made for older systems with only the control scheme changed.
When we run out of old games, we'll just
1. slap something together in 2 hours that will hardly be playable
2. come up with a silly title like 'ninjabread man' [ign.com]
3. ??? maybe hope that enough people will accidentally buy our game instead of another game that...
4. Profit"
It's not like there's a shortage of good ideas for games on the wii, I honestly don't know why game makers are so resistant to new ideas when their current strategies aren't working.
The vapor cloud (Score:5, Insightful)
And how, exactly, is moving part of the compute load to the "cloud" supposed to reduce development costs?
OnLive is amusing. The technology isn't that interesting; it's the business model. Casual games can have a "console-like experience". It also has the ultimate answer to piracy. Since the game software runs entirely in OnLive's data center, there's nothing playable the end user can copy. The OnLive client is just a video player.
But they need an incredibly good bandwidth/latency combination to make it work. They need 5mb/s with under 20ms or so round trip delay to equal the console experience. Unless they have a data center at each cable headend, they're not going to be able to deliver that.
Worse, all the capital costs fall on the provider. Who's going to fund this thing?
Nothing ever changes (Score:5, Insightful)
Every few years the game industry goes through a big shake up. Companies die, people lose their jobs. Then it starts all over. I worked on games way back in the Sega Genesis cartridge days (yes, I'm that old). When my job disappeared I chose to get out of the game industry entirely. The pay seems ok on the surface, but you work horribly long hours, so you're actually getting ripped off. The games always suck at the beginning. The physics are experimental, the graphics are blocks and circles, the story line is just a twinkle in someone's eye. By the time the game is even half completed you are so sick of playing it you want to scream. I bet the industry hasn't changed since my days in it.
Re:Already proven model (Score:2, Insightful)
I would be hesitant to equate rendering and serving web pages and running and streaming a game like Crysis or Call of Duty.
Not to mention the terrific problem that network latency is going to be.
I, and many other gamers like me, can easily tell the difference between the response times of wired and wireless mice, and they think that they can run my commands back to their servers fast enough?
I frankly don't think it's possible other than maybe in the huge metropolitan areas where 100meg fiber is available.
Re:am i missing something? (Score:4, Insightful)
I agree, you'd think that with the new controller and the lower graphical capabilities, game devs would have thought "well, all we can do with this is make something new and innovative, rather than doing the same thing we did last year with prettier graphics. Spend less money, but put a little more thought into it."
I'm sure any dev with half a braincell did.
The people making the decision, however...
Re:am i missing something? (Score:5, Insightful)
I am not a expert on the process of game development, but it is possible that what you propose would actually be *more* expensive. If the games companies can reuse their research, graphics libraries and game engine software and use it to produce a multitude of similar games that presumably saves money. If they have to re-design, re-draw and re-engineer every title they produce I would think that would be the more expensive option.
How many sequels to the final fantasy series have their been now?
Where does the money come from? (Score:5, Insightful)
I read articles like this (well the summary anyway) and I am always left wondering where the money to produce these games comes from. The companies are saying that to break even they need to sell a million copies but they are typically selling 150k so therefore they are making a huge loss on every game. How do they stay in business? The console manufacturers can't be bailing them out as they are making a loss on each piece of hardware so they need to make their money from games sales so who is paying? I can only assume that when a company gets a blockbuster it makes so much money that all these total failures (from a business point of view) are paid for.
It dosen't matter how much $ they pump into a game (Score:3, Insightful)
The game industry is falling into the same traps the film and music industries are.
There are a few big name players that control 70+ % of the market share. They pump more and more money into marketing and development rather than actually making good games. They then raise the prices on a product that is inferior than what they used to put out.
When market forces retaliate in the form of people not buying their craptastic overpriced games they then resort to adding DRM that cripples the game and the rights of the users who PURCHASED and OWN the end product which further alienates their customers resulting in a downward spiral. By the way YES I said cripple the game. I have had to download a crack for a game before not because I did not own it but because the DRM make the game unplayable on my computer.
There's a reason I don't play many commercial games anymore. Myself, and people like me, are/were this industry's bread and butter. Piss us off and your industry collapses. That's why were the effing customers.
Re:am i missing something? (Score:5, Insightful)
It's the Hollywood blockbuster syndrome. Everyone spends a ton of money on big name titles, and the majority of them lose money or barely break even. A tiny number actually do make money, so people keep trying.
Re:The vapor cloud (Score:5, Insightful)
Actually, the technical part of OnLive on a small scale isn't that impossible, you could imagine that if your ISP hosted some OnLive servers close to you, you'd get a pretty ok experience.
No, the thing that makes OnLive completely ridiculous is the economy of it. They're promising the latest games, that require the best gaming-specific hardware. So how is their datacenter going to cope with 1000 people playing Crysis at the same time? Are they virtualizing the games? I could imagine that for lesser games that can be entirely CPU-rendered, but you can't use the CPU for modern games, you need a GPU. Or two. Have they found a way to virtualize that? Or do they have multiple GPUs per server? How the hell are they gonna cool it and power it? And how are they gonna afford it? How could it possibly be cheaper to buy and host and manage a server that can serve, say, 10 players at the same time, than for those 10 players to just go to a store and pick up a game console each?
Console hardware is dirt cheap and has really good price/performance. Server hardware is very expensive, and has really bad price/performance. And on top of that, you need server hardware for the overhead of virtualizing, and you need server hardware for the video encoding.
And then, assuming they could magically assemble this hardware for a price that is competitive with cheap consoles, they choose to do GAMES with it? I could think of dozens of other uses for hardware like this, and games is way, way down on the list.
No, this whole thing smells fishy...
Re:Already proven model (Score:4, Insightful)
Now, it's not FPS games, but if it's good enough for a video, it's probably good enough for pre-rendering and/or AI computation.
No, no, no. A video stream can be efficiently encoded because you can look at multiple frames when doing your compression. For a game that is rendered in real-time, you have to encode frame by frame. OnLive claims 30fps, so each frame you wait introduces 33ms lag, which is unacceptable given that you already will have lag from the game server being remote. You have to get the total lag below 150-100ms, otherwise it's really noticeable, and discerning gamers will probably react badly to lag above 50ms. Good luck getting those rates over the internet.
But the video part isn't that big a problem, I could imagine they have solved that, and there's plenty of custom video compression hardware. What doesn't exist though is custom graphics hardware that can be virtualized, and you need graphics hardware for the games they announced, you absolutely cannot CPU-render it.
Re:Return to 1993 (Score:3, Insightful)
Overproduction (Score:5, Insightful)
It's quite simple, there is a vast overproduction of games.
People will only buy so many games, and when there's just too many games, eventually some of the producers will have to throw in the towel.
Which is good for the ones that survives, as they have a greater chance of turning a profit again.
Re:am i missing something? (Score:2, Insightful)
What I don't understand... (Score:5, Insightful)
What I don't understand is capitalism!
When 25 Million dollar games are not turning profits, then either:
1) Pay less to developers and artists
2) Make less expensive games
To me, (1) makes most sense. Isn't that how capitalism supposed to work?
Re:am i missing something? (Score:5, Insightful)
Re:The answer isn't more marketing nonsense... (Score:2, Insightful)
Shoving a piece of garbage out the door can make the money which keeps the company in business. If the money's running out and you have a choice between releasing and patching later, or closing down, then only an idiot would choose the latter option.
If you don't work them insane hours at crunch-time, then the game doesn't get out of the door. Paying them decently increases the costs, which is the whole problem in the first place.
Counterpoint: Fifa, Madden, Call of Duty. Millions of sales, zero effort.
Well, that proves it then. Your single company is hiring people whilst following those rules, therefore those rules are immutable laws of the universe. Obviously companies that break all those rules never hire people...
Re:What I don't understand... (Score:5, Insightful)
3) Pay less to or fire the managers and executives who are clearly not making good decisions.
That makes the most sense to me.
Re:The vapor cloud (Score:5, Insightful)
Plus, who is their audience? People with old and clunky pc systems, who have blazing fast internet connections? There's not a whole lot of overlap, there.
Re:am i missing something? (Score:3, Insightful)
The Wii market isn't actually as big as it appears. In reality, it's quite possibly smaller than the 360 and PS3 markets.
Nintendo did a great job of selling the Wii to non-gamers. They've got a huge installed base out there now and should, in theory, have the kind of market dominance that the PS2 enjoyed last time around. But they don't.
See, the flip side of selling consoles to non-gamers is that they are... well... non-gamers. If you look at the weekly games sales charts, the only Wii games that really make an impact are Wii Sports, Wii Fit and, to a lesser degree, Mario Kart Wii. All games that are bundled with the Wii console in the most common packages. Elsewhere, the chart is dominated by your Call of Duty games, your Resident Evils, your Maddens and so on. People who actually buy games, as opposed to non-gamers who pick up a Wii and embittered slashdot posters nostalgic for the 80s, do actually tend to make HD graphics and high production values a factor in their purchase.
Your best chance to sell a game with the Wii is at the point of sale with the console itself. Once this has passed, a large majority of the consoles will sit in a cupboard unused. This was never the case with the PS2, and helped ensure that the PS2 got ports of pretty much everything bar first-party exclusives, despite being the weakest of the consoles around at the time from a technical perspective (and a well known "bit of a bugger to port to"). It's pretty much a three way race in terms of actual games sales (and there are signs that the Wii is really struggling here).
If you develop for the Wii as your main platform, you're also, by tying yourself into its control system, ensuring that you'll need significant changes to port your games over to other systems, widening the target audience. On the other hand, develop for the 360, PS3 or PC and it's not that hard to get your game onto the other two out of those 3 platforms. If you're going for one of the really big releases, you'll probably be putting out a PS2 port anyway to reach the huge installed base of people there who still haven't upgraded. It's cheap and easy to stick some motion controls onto that for a Wii port.
Or... (Score:5, Insightful)
If you are going to make a huge expensive game, make it worth buying.
The problem is this, there's a lot of games out there with massive budgets that are simply crap.
I'm not really sure the complaint in the article is exactly. They seem to be effectively complaining that the market doesn't reward games that have had a massive budget but are still crap? Well isn't that just the way business is? if you spend a fortune developing something that no one wants then you fail?
There's a reason we've always had certain studios come back time and time again with new releases - id Software, Blizzard, Square Enix etc. It's because they produce good games people want, even if they do spend a fortune developing them.
I don't see how it's a crisis that market forces affect the games industry like they affect everyone else exactly? What are they saying? That we should have to be more open to funding shite we don't actually want?
Expanding on your point - the key is to make games fun and that people want, whether it's a high budget or low budget production. What consumers wont tolerate are games that aren't fun even if companies have spent $25 million on them - that's their problem. Huge, expensive games are still perfectly valid and I'd certainly be sad if we didn't get anymore Call of Dutys, Gears of Wars, Half-Lifes and that sort of thing, but they still require the fun factor than smaller games require too.
There's one problem there (Score:5, Insightful)
Well, there is one problem there: everybody also competes with older games at bargain bin prices.
There was a time when that was a lot less of a problem, since Doom II looked like crap compared to Quake (and games based on the Quake engine), and then when you had Quake II games the old Quake I started to look like crap by comparison. Nowadays improvements are a lot more incremental. I've even played some ~10 year old games recently and while you can tell a difference, they're not exactly visually offensive either.
Gameplay has also been OK for quite a while now. It's been a long time since we had too little RAM for anything too complex, so you can go quite a bit back in time with your gaming before you run into problems.
Basically what I'm saying is this:
A) I could buy a new cutesy mini-game for casual players for 20 bucks or so. Like, say, Build-A-Lot, which I actually bought recently. Except it feels like there's a whole game missing around it. The complexity and difficulty are about right for one of the dozens of minigames in a $60 RPG, so I don't think I got much of a bargain with it.
B) I could get Fallout I, Fallout II _and_ Fallout Tactics on a DVD for around the same price. Seriously.
C) I could get a 1 to 3 year old game for the same price. E.g., The Sims 2 costs about that much by now, and it's actually a better value for casual gamers. (Though if you're a l33t FPS-er, you might not necessarily like it.) E.g., Settlers 6 is actually almost half that by now. E.g., Warcraft III including the expansion pack is also about 20 bucks by now. Slightly more money gets you Civ IV with all expansion packs. Etc.
So I think there's a finite niche for simple cutesy games.
Of course, that might not apply if you can come up with a radically new game concept that everyone just has to play. But that's a bit harder than it sounds. Designers which managed to come up with a whole new concept are very few and far in between, and even they rarely manage to repeat that. It's hardly a model for staying in business for the rest of your life, is it?
Re:The solution is 2D games (Score:3, Insightful)
It's easier and cheaper to develop 3d games. Putting a model together requires less time and skill than drawing sprites. It's also a thousand times easier to animate a 3d model than a sprite which requires a whole new drawing for every frame.
Even low-end computers can run 3d graphics, even if it's not at crysis quality. In fact, sprites can take up more memory, especially at modern resolutions.
Re:Math (Score:3, Insightful)
I'd rather risk a loss of $100k for a potential reward of $100k than risk a loss of $35m for a potential reward of $15m.
Re:Hollywood Business Model (Score:2, Insightful)
Re:The answer isn't more marketing nonsense... (Score:5, Insightful)
Or you could try realistic planning and scheduling.
Developers / Publishers clueless about.... (Score:3, Insightful)
... their markets.
Sometimes I have to wonder who is running the show at these companies, Soul calibur 2 for the gamecube for instance sold over ~700K copies, and yet when soul calibur 3 arrived it never arrived on the cube despite the previous one almost breaking a million, and SC2 was cross platform and it certainly did break more then a million in sales, yet they stiffed over 700K fans on the GC with sequels.
This kind of bullshit is why game companies are where they are, there are paying audiences for their games, but then some clueless higher up decides "meh not worth it". The truth is the people running these businesses are fucking clueless about gaming, they've lost touch with the ir customers, and think it's all about making it more like the movies, which is just bullshit.
I'm not the only tired of the endless FMV in place of gameplay (Metal gear solid 4, I'm looking at you!)
You're not making a movie, you're making a game. Many development houses don't seem to get this. Sure gaming has a lot to learn from techniques from the movie industry, but it is NOT the movie industry, a couple of the games that got this right:
God of war and it's sequel, and Call of duty 4 Modern warfare, both excellent games who's developers seem to understand - don't make your game into a movie, take the best elements of movies and adapt them for the game
Re:The vapor cloud (Score:3, Insightful)
I haven't seen it in person, I have colleagues who did though. I am not in any way questioning that the experience at GDC was awesome, I'm pretty sure it was. But, it was a tech demo in a controlled environment. I am not saying that what they did is impossible on that scale, and obviously it isn't.
I am saying that I doubt they can make this profitable on a large scale, over the actual internet, using multiple hosting centers.
I don't doubt that this could work fine in the casual market, but I don't see how this could be cost-effective for the latest games, and I don't see how they would be able to convince the hardcore gamers to switch.
Of course they get some big game companies "on board", for them it's a clear win, because it would solve a lot of piracy problems and would give them a subscription-based revenue stream, and companies love those. The game companies won't lose anything if OnLive fails, but they will gain a lot if it succeeds, so they don't care if it really works or not.
Re:The Solution (Score:3, Insightful)
Valve's price experiment proves games too expensiv (Score:5, Insightful)
Ran out of chars...
Anyway, Valve has been running pricing experiments on its Steam platform and have come up with some surprising numbers. A limited-time price drop of Left 4 Dead resulted in a 3000% increase in sales income. How can any sane developer/publisher ignore the kind of numbers he shows us? The article cites many more examples, with hard to ignore results.
http://g4tv.com/thefeed/blog/post/693342/Live-Blog-DICE-2009-Keynote---Gabe-Newell-Valve-Software.html [g4tv.com]
Re:am i missing something? (Score:3, Insightful)
Re:What I don't understand... (Score:1, Insightful)
Yes, we all know how easy game devs have it. Huge salaries, short hours. Time to cut down on this!
Re:Return to 1993 (Score:3, Insightful)
Though not my favorite game ever, I did like X-com a lot. For pure longevity in my games library, Starcraft takes the cake. Not better in every way than other games (e.g., Total Annihilation had the *best* unit control), but overall Starcraft is still my favorite RTS. If I were having a LAN party this weekend, I'd want to fire it up.
Re:am i missing something? (Score:2, Insightful)
Comment removed (Score:4, Insightful)
Follow the iPhone App model (Score:3, Insightful)
Re:am i missing something? (Score:3, Insightful)
Yeah, if it is so simple then why aren't small experimental games more popular?
Here's the answer: It's not simple, it's really hard. Everyone thinks they can make a new Tetris if they just put some effort into it.
Another problem is of course piracy: World of Goo was great, had no DRM and is pretty darn fun and experimental. It still had 90% piracy rate. Guess why? Because a 100 meg game is just too damn easy to download illegally. Not so with a full DVD release.
Re:am i missing something? (Score:3, Insightful)
I'm a fan of strategy games rather than FPS (I'm too slow and nervous to handle mobs jumping out of the woodwork at me), and I still play Pharaoh/Cleopatra (even Caesar II on occasion). The graphics are SVGA at best, but for a bird's eye view of a city, who needs more? The gameplay continues to fascinate after a decade.
The Civilization series is much the same, though Civ IV certainly has lots of "teh shiny"--but they also added some interesting extra factors (religion, better diplomacy) and cleaned up some annoying AI behavior that Civ III had. Until Civ IV came along, I thought Civ II was the best, but Civ IV has NPC nations that actually respond well to diplomacy (read: trade goods, don't beat them up), as opposed to just putting off the date of their sneak attack if you're diplomatic (read: pay the Danegeld), which they did in Civ II.
I tend to stick with a game I like for decades--sometimes I still break out Angband and play it.