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.
Hollywood Business Model (Score:5, Interesting)
The solution is 2D games (Score:4, Interesting)
The solution is 2D games
Seriously.
The obsession with 3D pushes every cost through the roof. 2D artwork (in a lot of cases) is tons cheaper, and can be made to work on very low end machines. Good luck getting crysis to run on a laptop that didn't cost an arm and a leg, but it's very difficult to balls up a 2D game enough for it not to run on an integrated chipset.
The crysis devs even admitted that their main problem was a game that wouldn't run on so many PCs. 2D games not only run everywhere, but they are easier to understand from a control POV to newcomers to gaming.
They also reduce support costs a lot because if you aren't using cutting edge 3D techniques, you are less likely to get incompatibilities and inconsistencies with video card drivers and hardware.
Of course not all genres can work in 2D, but time and time again we see 3D bump-mapped pixel-shaded shinyness applied to games where it just isn't necessary.
Imagine World Of Goo in 3D. Would it be a better game? Of course not, it would be horrid, and would lack the charm and individual art style that makes a game like that so fresh and awesome.
Journalists and gamers need to finally realise that 3D, and high dynamic range lighting are not what makes a game fun. They make it expensive, and they can make it more immersive, but they do not contribute automatically to making a game fun, which is what it's all about.
Cost analsysis time... (Score:4, Interesting)
How much money does your current generation shooter's 3D assets (Including textures) cost to produce? Let's assume it takes a week to produce a high quality 3D humanoid actor, and another month to do motion captures and animations.
Lets break that down now: 1 month + 1 week = 25 work days, give or take. If we are not working overtime (because we are on schedule-- like that ever happens...) for 8 hours a day, which comes to 200 hours for a single employee in that time frame. If we assume that the dev crew has 3 employees assigned to this task, that is 600 work hours invested. If we tabulate this up with 'Crazy California Wages' (at least 20USD/hr), we get something around 12k to pay those 3 employees for 1.25 months, to produce and animate a quality 3D actor... (*ONE* actor)
What happens to this 12k asset after the game is released? It finds itself in a backup queue somewhere, drawing dust, and adding to corporate overhead, because that model and it's animations are 'yesterday's news'. (But dont anyone else DARE copy it!)
An absurdly simple solution to this problem is a creative development commons repository, into which obsoleted, or true public commons assets (Such as textures, models and animations from public sources) are shared between a consortium of interested corporations.
EG, only one partnered company need develop a 1957 Chevrolet classic, and the other partners can use that asset later with a very minimal licensing fee. In return, that company can draw from the wide selection of physique animated, havok physics boobie girl models and textures that will be in there, rather than having to make one themselves.
Such cooperation between vendors would enable high quality content to still be available, but would drastically slash artistic staff overhead.
Similar collaborations for AI behavior, and engine tweaks/modifications could be kept, allowing work to not be replicated many times between the interested parties, and would allow these companies to continue producing innovative plots, and environments, while drastically cutting the overhead costs.
Looking for a specific make and model of car? Check to see if a partnered affiliate in the consortium has already made one that will fill your needs-- Looking to resolve an issue with AI bots jumping out in the open and shouting "HERE I AM!!" when they should be doing pop-shots behind cover? Check the AI scriptlet repository to see if another AI programmer may have had insight before.
A game title is more than the sum of it's parts, and having a shared resource of stock parts would allow game companies to focus more heavily on game DYNAMICS rather than blowing all their budget on artwork, and technical issues.
However, I won't hold my breath that such an outbreak of common sense will happen any time soon, given the current trend to ever increasing levels of escalating aggression involving tactical IP portfolio warheads.
What did the cold war teach us about standoff stalemates where we have hordes of weapons cached away, "For security"? It leads to economic problems, mismanagement, and bankruptcy.
People never learn do they?
Re:Hollywood Business Model (Score:4, Interesting)
The Solution (Score:3, Interesting)
And onlive is a farce; I can't believe that anybody on Slashdot believes that company has magical 22nd century technology.
Re:Overproduction (Score:5, Interesting)
Re:am i missing something? (Score:3, Interesting)
The trend of the last 10 years has reached gaming (Score:3, Interesting)
Gaming, up to this point, has pretty much been a safe haven from the evolving inet, web and media industry turmoil. That is changing right now, as we speak.
I've been doing regular webdev for a living the last 9 years and since 8 months ago I have a gig at a large global player browsergame company with a job I'd never dreamt of getting or even dreamt of being able to do profitably.
The groth rate our company is experiencing now is totally bizar (something like upwards of 350%!) and this phenomenon is part of the equation. I suspect that a lot of the late web users - those who came to private computing soley through and because of the web (like my spouse) just a few years ago and can't help but constantly confuse Google with the internet - are responible for large parts of this trend. They couldn't install a piece of software (or a game for that matter) if their life depended on it, but they can find a website again (if the google results haven't changed ... *sigh*) and log in and continue to play a browsergame. This is where the critical mass is at today and I'm at it's epicenter right now, having howned my PHP, Flash & AS3 skills in the last few years. ... 'Guess for once I got lucky.
Add in FOSS gaming closing in on critical mass and the 3D devpipeline getting cheaper by the day (or being comletely free [beer]) and most inovation coming from modders rather than companies anyway nowadays and you understand that gaming as we know it is a thing of the past. Any company not recognizing that will go the way of the dodo. That's a fact.
My 2 Eurocents.
Island of stability. (Score:5, Interesting)
You see, there is a strange effect, I call the island of pricing stability.
On a graph of price vs units sold there is a sweet spot that extracts maximum net profit. Basic stuff. But to bolster the bottom line businesses often hike their prices in small increments. Short term this produces a bump to your bottom line as consumers tolerate the price rise, at least initially, which gets some smart guy who suggested it a bonus. Longer term sales take a hit as consumers make other choices, loose interest or merely spend less. Time wears on and your prices creep, overall you begin to loose gross revenue. It's not immediately obvious what is going on, it doesn't show up on short term graphs shown to the brass, nor obvious how to take corrective action (roll back that price change, cut costs, fast). Naturally everything from market forces to competition to alignment of the planets is blamed instead of potentially bad business decisions.
After a number of price increments, where the profits just seem to keep coming in and nothing is really going wrong, what you eventually reach is a island of stability in pricing. Even far above the sweet spot this is often a nicely profitable model, even if sales decline a little, cutting costs drives revenue back to the bottom line. It is even somewhat sustainable mid term provided reasonable scarcity is maintained, competition doesn't get the lead and demand holds out.
But there is one problem with this model. It's bollocks. This pricing island of stability is right on the edge of a steep slippery slope ready to be pushed off by competition or the slightest breeze of change from the market. Raise your prices further, for example, to try and raise funds for your lower than predicted bottom line, you can watch sales take a nose dive. In the overall picture, you just priced yourselves out of the market.
Now if you ever were looking for an example of the proverbial epic fail. How about a price rise when your sales are already failing in a struggling market with weary consumers that's hardly profitable for anyone anymore?
In the middle of a recession also? Surely this is madness.
Zero-cost reproduction (Score:4, Interesting)
Suppose you develop something like -- ooh, I don't know, a computer -- for which there's a world market of only four examples. You have to add a quarter of the development cost to the price of each machine. Suppose you develop something like -- ooh, I don't know, let's say a games console -- of which you expect to sell a million examples. Then you need to add a millionth of the development cost to the price of each machine. But in either case there are a finite number of machines, because the machines actually have to be made, and the factories in which they are made have only so much capacity. And in any case, there's a real cost to building, packaging and shipping each machine.
But take a software product, say a game, delivered as an Internet download. There is no cost of reproduction (or at least there is, but it's trivial). So your pricing does not have to reflect how many of the damn things you can actually build. If you spend (say) $10,000,000 developing it and another $10,000,000 marketing it, then the question is, are you more likely to sell:
To some extent it depends on the genre and on the technical demands of the game. There probably aren't 20,000,000 people world wide with state-of-the-art gaming rigs and and a taste for zombie horror, so if that's what you've produced option 1 is right out.
But as the cost goes up, so does the piracy. It's not worth pirating a $1 game (provided the purchase interface is slick enough that actually buying the games is not a hassle). Not that many people are going to pirate a $5 game. For anyone who has a computer powerful enough to run a modern game, $5 is discretionary spending.
But $80 is a lot bigger bite out of someone's budget. So more people pirate. And if the demand for your game is 2 million units, is it really better to sell 250,000 at $80 and have 1.75 million copies pirated, or to sell 1 million at $20 and have a million pirated? or even to sell two million at $10 and have none pirated?
Yes, of course it doesn't work as straightforwardly as that. But my strong impression, as someone who is working up a business plan to develop a game, is that you've more chance of a profit selling more copies at a lower price than fewer at a higher.
And, of course, anyone who actually spends $10,000,000 developing a game in the current climate is this: mad.
Re:am i missing something? (Score:3, Interesting)
The NPD numbers showed pretty good sales on cross platform titles for the Wii, significantly outperforming the PS3 and about even with the 360 despite usually getting inferior versions. Yes, the Wii doesn't sell twice as many as the 360 as a pure core console would do with the userbase differences but it's also inaccurate to act like nothing ever sells on the Wii. A part of that is that obviously since the expanded market only came on board when they were given new kinds of games they're not going to buy the old kinds of games that failed to attract them the last two generations. The way to succeed is to make a game that these people want, not to blindly do the same thing you've always done and expect it to suddently work when it hasn't worked for over a decade.
One of Midway's teams actually figured out how to sell games on the Wii [wordpress.com]. The trick was to figure out the new customer and give him what he wants instead of throwing your hands in the air and going "they're non-gamers, they don't want games!" Obviously they wanted games or they wouldn't have bought a gaming system and obviously they didn't want core games or they would have bought a core game system last gen already.
Crappy dev tools and frameworks (Score:4, Interesting)
The reason these games cost a mint is that game developers work with the frameworks from hell. I'm convinced this can't just be explained by incompetence. In the end I believe the dev tools, and not just in the games industry, are made difficult to use so that people can keep charging a mint for their labour. After all it takes a genius to understand this stuff.
What we need is gaming frameworks that let you focus on the artwork etc. Core development of stuff like physics shouldn't be redone again and again with increasingly complicated frameworks that don't interoperate. Provide a simple to use physics engine. Likewise for 3D rendering. Likewise for audio. The challenge is to do this yet allow enough flexibility to create varied games that don't all look and feel exactly the same. Unfortunately I've only seen a handful of frameworks that meet these kinds of requirements and they are old and tend to compromise too much on the flexibility so focus on the "anyone can write a game" newbie market.
Then there's the tools for the artwork. Anyone not in the industry tried to use a 3D modeller lately, and import their model into a game? It shouldn't take weeks to create a simple model. What's even more ridiculous is that you have to do stuff like unwrap the texture and paint that separately (I understand the latest versions of Photoshop allow you to paint directly on some of the common 3d models but I don't have much experience with this and it shouldn't be a new expensive feature).
Big games are dying. That doesn't mean they all have to turn to crap. Take a look at some of the "amateur" content out there that's been made with the existing toolset and I'd say you've got good incentive to create easier frameworks and better tools.
Re:am i missing something? (Score:5, Interesting)
It's he same dilemma that faces Hollywood.
Yes they could develop small well-written movies, but they want to reach every idiot in the world, so they dumb-down the plot and boost-up the special defects. The game business has evolved into that same deadend. (sigh). Gaming was so much better in the 1980s when the graphics were primitive, therefore it forced programmers to focus on the fun. We got all kinds of off-the-wall ideas. Same with Hollywood, where you will find better movies in the "experimental" era of the 1920s and 30s.
Maybe games have gotten so good that... (Score:3, Interesting)
Maybe games have gotten so good that no one needs to buy anymore?
My PC addiction for some years now has been Call of Duty. I have been playing since the first CoD came out. I have purchased each upgrade as it came out (except for CoD 3, which was not available for the PC). It is the only game I play. I have been playing them for years. I have no time nor desire to play any other game as it satisfies all my gaming desires for a 1st person shooter.
Every once in a rare while I will fire up Silent Hunter III, though not so much anymore as the Grey Wolves expansion has gotten so detailed my computer will no longer run it reliably.
But almost exclusively, I play Call of Duty. The game is so good, and so fun (I play online against other players), and so challenging, that I feel no need to buy a new game for entertainment. I keep buying the CoD upgrades mostly to see how much more realistic the graphics have gotten.
Re:The vapor cloud (Score:1, Interesting)
meh.. you don't think that when they first had this idea they didn't say hmmmmmm....... it needs to be playable and consider things such as latency?
Anyone who came up with such a stupid idea very likely can't even pronounce big words like "playable " and "latency" let alone grasp their meaning.
I'm not saying it will work or it won't but for christ sakes if I read one more sanctimonious dick head say "blah blah it will never work" who has not actually tried it I will kick them in the nutz.
Well then... blah blah it will never work.
I feel quite safe in saying that because I think you have as much chance of kicking me in the "nutz" as OnLive does of making their stupid, unworkable idea actually work.
Re:am i missing something? (Score:3, Interesting)
As I said in a earlier post, the company I was working for last year made some casual games on the Wii, iphone and PC. They didn't show up high on the charts but they are still selling to this day. They made quite a bit of profit with this despite the game selling for 30$. Half the price of a normal game. I think it took 9 months to make, with a team of 4 programmers and 3 artists. Compare that to where I work now, teams of hundred, working on he same game for *years*. You didn't make a profit? No kidding!
So to me, the old model is slowly fading away, and as a game fan I think it's for the best. We're probably going to see more smaller (and arguably more fun and original) games. We are still be playing bigger titles, but they risk beign more sporadic in release.
Re:am i missing something? (Score:3, Interesting)
I do like CT, my username isn't CronoCloud for nothing, but CT is a game of it's time. The amount of characterization in it is limited by the cartridge format. In fact, I think some people look at CT with rose colored glasses. They see characterization where there is actually just enough to get by. FFXII on the other hand is a single player MMORPG. It's for those who liked some parts of FFXI, but found FFXI frustrating in part because of it's MMORPG nature. Frakkin Japanese inspired conformism ruined FFXI for me. That, and the economy of FFXI.
Alternatives exist (on the PC) (Score:2, Interesting)
The direction that the 'conventional' gaming buisness models are keeling in the current times are reminiscent of the early 80's right before the great Atari crash. The bargain bin will again be the death of (the majority of) the 'big hit' gaming industry. Other media industries show us that companies are reluctant to change away from previous buisness models that were, at one time, hugely profitable.
The good news is that there will always be people there to fill the gap, and some of them will innovate new directions for our gaming media.
I'm skeptical about OnLive and the entire 'cloud gaming' concept, but I can't say yet that it's doomed to failure. It may work. Alternatively, if Valve released it's sales figures for steam, people might actually see how profitiable the online distribution of games through steam-like services can actually be. Valve may actually be wise by not releasing it's sales figures, for fear of 'bigger' companies trying to compete with steam on the market, rather than simply using steam like they are doing so now.
Steam is not perfect, and I can't say it will be the industry leader for online digital distribution in the coming age (like I hope it will be). However Valve has dedicated itself to improving it's products continually rather than resting on it's laurels. Besides, even if Valve fails, another company will take it's place.
There will always be greedy people who 'don't get it' there to feed us shovelware, and there will always be innovators who genuinely care about their audience.
I suspect that future consoles would benifit greatly from a 'Steam' styled buisness model, and that console manufacturers are only just starting to get on board with offerings such as XBL and PSN. They will either adapt, or they will be bypassed by somone else.
Re:am i missing something? (Score:3, Interesting)
I just thought of something. In 1995, Chrono Trigger was the pinnacle of 2D RPG technology. It had a HUGE team working on it. It wasn't some kind of garage game but was meant to be a technological and graphical tour de force for the SNES in the same way FFXII was to the PS2.
Re:am i missing something? (Score:4, Interesting)
Unlike most of the others who've disagreed with my post (the whiny rant from Millennium above is an absolute classic case of slashdot wounded-pride mentality - predictable and priceless to see it coming from a 4 figure UID - especially when he throws the "fanboy insult in when I haven't even stated a preference between the 360, PS3 or PC) you make an interesting point with a degree of validity.
I've no doubt that developer expectations did harm the Wii's lineup of titles early on. None of the current gen consoles had a great starting lineup (the PS3 was arguably the best, with Resistance, but that's just picking the best of three bad options). However, the 360 in particular very quickly got a heavily fleshed out lineup, while the Wii... well... didn't. The most substantial additions to its lineup have all been first party titles, which, as in the Cube and N64 generations, have been few, far between and of variable quality (from stellar down to mediocre-verging-on-poor).
However, the Wii's runaway sales success was apparent very, very quickly after the late-2006 launch. We're now well into 2009, almost two and a half years later. By now, developers should have had time to respond. I know that development times are longer these days, but if developers were really serious about climbing onto the Wii, we would have a huge number of big upcoming Wii releases being previewed and hyped like crazy at the moment (even if they're still 6 months from launch), spanning all genres and target demographics. As it is... well... there's Madworld. There might be one or two others in genres I don't follow. But broadly speaking, it's clear that the big release target systems are still the 360 and PS3.
Nintendo's advantage was always going to decay in the second half of the cycle. Despite the arrival of the economic downturn, HDTVs are continuing their steady penetration of the home TV market. The technological gap between the Wii and its competitors is going to start becoming more apparent to the average game-player (which is to say, people who don't see themselves as gamers, but do buy and play the odd game). Moreover, the Wii-mote isn't quite the "cool new thing" like it once was. After the hype of the first year or two, there's a growing recognisation that it's basically a fun little gizmo which is good for some types of game and dreadful for others. It's fairly clear now that there are plenty of genres where it won't supplant the more traditional console controller, or the keyboard+mouse combo.
How did you get modded up to "5 Informative"? (Score:3, Interesting)