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Financial Issues May Force Changes On Games Industry 246

krou writes "According to comments made at the Edinburgh Interactive conference, operating costs of making games are spiraling upwards, and there has been 'significant disruption' to the games industry's business model. Games are getting much bigger and taking longer to develop, the console market is fragmented, and the cost of licensing intellectual property has gone up. All of this, says Edward Williams from BMO Capital Markets, means that 'For Western publishers, profitability hasn't grown at all in the past few years and that's before we take 2009 into account.' Recent figures suggest game sales have fallen 29% over the last 12 months. While westerners still relied on putting games on DVDs and selling them through retail channels, 'Chinese developers focused primarily on the PC market and used direct download, rather than retail stores, to get games to consumers,' and the lack of console users 'meant developers there did not have to pay royalties to console makers.' Peter Moore of EA Sports said that significant changes will come in the future, particularly in electronic purchasing of games."
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Financial Issues May Force Changes On Games Industry

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  • ARRRGH (Score:4, Insightful)

    by religious freak ( 1005821 ) on Sunday August 16, 2009 @03:43AM (#29081549)
    Goddamnit slashdot!!! I had an f'in essay written on this topic and inadvertently clicked on a link, thereby wiping my whole mother F#$*%^! comment out! Can you not save data in forms when I go back like every other webpage out there???

    Ugh... FRUSTRATION!!!
  • Re:ARRRGH (Score:4, Insightful)

    by sopssa ( 1498795 ) * <> on Sunday August 16, 2009 @04:01AM (#29081621) Journal

    that's why you fire up notepad when writing long comments. :|

  • by Anonymous Coward on Sunday August 16, 2009 @04:07AM (#29081635)

    I admit that I'm probably in the minority on this, but I haven't been happy about where the game industry has been going in the past decade.

    The big budget phenomena has been the very thing that's lowering my enjoyment of games. IMHO, the obsession with graphics, sequels/IP and marketing (all big budget things) has detracted from the biggest part of games: gameplay.

    Perhaps this will be an opportunity for the game industry to take a step back and reevaluate their approach to development. I, personally, would very much like to see developers choose a route of detail, gameplay and innovation rather than releasing the same game every other year with improved graphics.

    But what do I know, my ideal game is Dwarf Fortress.

  • Good thing, too (Score:5, Insightful)

    by puroresu ( 1585025 ) on Sunday August 16, 2009 @04:15AM (#29081653)
    The cost of licensing IPs has gone up? Then stop relying on licensed IPs and start making compelling games that people want to play.

    Every year there's a new Tiger Woods/NFL/WWE game, virtually identical to the last offering with a few player updates and token changes to the control system. Sorry, but I prefer actual depth over the latest and greatest graphics and accurate sports team rosters.

    A lot of developers could take influence from the greatest pro wrestling game series ever devised []. Concentrate on making a fun game and make it customisable enough that the player can change it to accurately represent a given league/company/tv show/movie/comic book (delete as required).
  • by achowe ( 829564 ) on Sunday August 16, 2009 @04:21AM (#29081669) Homepage
    If the games industry switches to a buy online / download model, I want to be able to burn that download to CD for backup. Nothing worse than paying for something and finding N+1 months later when you want to play again, that the download is no longer available and/or the seller has gone bust. For example NetStorm. Greatt game. Good single player campaign. Net play was good too, except the servers eventually died off. Still I do like to play single player from time to time. If I didn't have the CD, I'd be shit out of luck to replay later (yes I know there are online cracked versions now). The point is that if you buy something, people had better be able to burn to CD and install from CD.
  • by interkin3tic ( 1469267 ) on Sunday August 16, 2009 @04:22AM (#29081671)

    It would be nice if economic troubles caused gamers themselves to be more selective about which games they bought. A few years ago when I worked at gamestop, most of the customers (children especially) seemed to buy games based ENTIRELY OFF THE BOXART. "Hey, I have a PS2. Hey, I enjoyed the movie 'fight club". Hey, this box which appears to have been the first game I picked up is Fight club for the PS2. That's GOT to be a good one!" [] Many people are apparently buying wii games at random, the effect being that most of the games for the wii are barely playable. Developers wouldn't make movie-tie in games if they didn't sell. It would be great if the economic troubles really put a damper on people buying games on impulse without reading a single review to tell if the game was halfway decent, or shovelware [].

    Then again, I'm pretty sure even if that 29% decrease were entirely due to throwaway games, the industry would still follow the path of least resistance. Maybe they'd just make ONLY worthless games.

    While I'm making demands of millions of people who wouldn't change even if they did read this post, it would be nice if gamers were more supportive, or at least more forgiving, of games that try to do new things. A lot of "hardcore" gamers get very entrenched opinions about what a game should and should not be according to genre. It's like if moviegoers complained that a movie wasn't formulaic enough.

  • by psnyder ( 1326089 ) on Sunday August 16, 2009 @04:37AM (#29081727)
    This is the natural way it's supposed to happen.

    When SNES came out, the fact that it looked so much better than the NES added to the enjoyment. Now graphics are at a point where we can move characters around in something akin to what we'd see in a CG movie. We've hit a peek where cartoonish graphics can't really get much better.

    Next we have huge sandbox games. Again we've hit a peek, where the worlds are so expansive that by the time you've explored everything you're either addicted (like an MMO), or you've spent so much time doing the same things that the gameplay becomes repetitive.

    Then we've got games that take months to learn all the possible moves and combos.

    Flair is no longer as important
    So the old adage of more is better is no longer valid with video games. We've hit a peek in many areas where more is simply not necessary. Now we can focus specifically on what makes something "fun" besides the flair.

    This is why the Wii is so popular. And as technology keeps getting better, it becomes easier and easier for independent developers to produce graphics, game play, and complexity that are passable, so that audiences will just focus on if it's fun or not.

    Of course big game companies may soon be in trouble. A lot of their main commodities (graphics, expansiveness, complexity) are getting easier and easier to reproduce to an appropriate level. This makes what they produce less valuable. It's progress.
  • Cost (Score:4, Insightful)

    by mccalli ( 323026 ) on Sunday August 16, 2009 @04:41AM (#29081741) Homepage
    I'm buying more games than I've bought in ages at the moment, but 'the industry' may not like the reasons I'm doing so. My two primary platforms are iPhone and Wii, in that order. iPhones games are anywhere from 59p to an eye-watering £2.99, the Wii has Gamecube games available which I can get for £1.99 second-hand.

    That's about what these are worth to me. Looking at games appearing for £29.99, even £49.99 etc....I'm just not interested. The only games I've bought within the last year or so at full price have been Guitar Hero III (thinking about it, must be more than a year now) and err...err...hmm. Actually that's it. Oh yes, World of Goo which was already a download and relatively cheap. One glaring exception would be Wii Fit, depending on whether you want to count that as a pure game or not.

    It's really a question of pricing for me. I don't care about licensed IP, I only marginally care about having the latest greatest's just that games started costing a huge chunk of cash and I'm simply uninterested at that level. It's not that I can't afford it either, it's that I simply don't think it's worth it and would rather put the money towards a day out, or more bits for the bike, or something other than gaming.

    Bring down the cost, get more buyers. If it's not profitable for you to bring the cost of your current model down, then change the model.

  • overhead bloat (Score:2, Insightful)

    by Anonymous Coward on Sunday August 16, 2009 @04:41AM (#29081743)

    There is a lot of senseless cost in making many games today. Paying famous celebrities insane sums of money for voice overs, the bean bag chair mentality, the never ending focus on improving on graphics instead of just making good gameplay and so forth. Plus publishers and distribution costs. Game costs are rivaling the bloated costs of making movies these days.

    Somewhat off topic but think about this. How can District 9 which is such a great movie with some of the best unique effects Ive seen in a recent Sci Fi movie cost 30 Million and yet Transformers 2 cost $228 million, GI Joe Movie $170 million etc. All icing and no cake.

  • by Anonymous Coward on Sunday August 16, 2009 @05:35AM (#29081891)

    The dreadful sequelitis has messed up the whole industry.
    You see while Doom / C&C and whatever game here were indeed groundbreaking and innovative, Doom 25 / C&C MCXIII and Sims 2014 isn't.
    Sorry, treating a initially good idea solely as a cash-cow and milk it for all it's worth is not a feasible business model in the long term.
    This has killed many game companies and will still kill them in the future.

    The second problem is the utter lack of story telling these days. The most telling sign for this is the downfall of the graphics adventure genre. There are some exceptions, but in general the state there is terrible.
    Best example is World of Warcraft which rakes in over 100 million revenue per month but still the developer think they can get away with a retarder story a 3rd grader would make up. And add this collecting 10 bear asses. Over and over and over again. (Mind the invention of the assless bear in this setting).
    While the crappy story telling is counteracted in games like WoW by the social interaction and competitives challenges, this will kill most offline games in the long term. That's why this achievement stuff has been added to the xbox - to add a competitive challenge to overcome the shortcoming of ass-brained game stories.

  • by mcvos ( 645701 ) on Sunday August 16, 2009 @05:57AM (#29081973)

    I don't think you're in the minority here. People on Slashdot have been complaining about stupid eye candy, cut scenes, intro movies, crappy franchise games, DRM and general lack of creativity in games for ages.

    I do love the rise of smaller game developers to the mainstream, like Stardock. The big giants can die for all I care, and clear the way for a new generation of game developers.

  • by Xelios ( 822510 ) on Sunday August 16, 2009 @06:27AM (#29082057)
    Didn't Sins of a Solar Empire have a budget of just $1 million? Didn't the game sell more than 500,000 units? Wasn't it a good game? Maybe other developers should follow their lead, and for the record not every game has to be ported to all 3 consoles to make money.
  • by RobotRunAmok ( 595286 ) on Sunday August 16, 2009 @07:08AM (#29082169)

    Like calling for a meeting in a room with no chairs, the Slashdot forms discourage lengthy messages, which, after you've read enough "essays" on Slashdot, you recognize is a Good Thing.

  • by julesh ( 229690 ) on Sunday August 16, 2009 @07:28AM (#29082229)

    Someone explain capitalism to me. If I ran my own business and I made 1 million dollars last year, and only $900,000 this year....well I just pocketed $900,000.

    If a big company does the same, they go bankrupt.


    A venture capitalist or bank lender looking at this will extrapolate a trend, and assume the next game will earn $800,000 or less. The amount they are prepared to lend wioll therefore go down, perhaps to the point that producing the game becomes uneconimcal. A company raising funds via an IPO rather than VC will face a similar issue.

  • Re:Looks like (Score:5, Insightful)

    by Ren.Tamek ( 898017 ) on Sunday August 16, 2009 @07:57AM (#29082339) Homepage
    The delicious irony is that publishers and developers were the ones who decided to abandon the PC games market. There's 'too much piracy' there they say, throwing away millions in sales from the many loyal PC fans worldwide. Now they're telling us that console royalties are too much money? Well, I can't have too much sympathy there; they've pretty much made their own bed, and are complaining that they have to lie in it.
  • by tepples ( 727027 ) <{tepples} {at} {}> on Sunday August 16, 2009 @08:44AM (#29082571) Homepage Journal

    If you put out a computer game though (be it Windows, Linux, Mac, whatever), you generally don't have to pay royalties to any company just to publish your game.

    But if you go PC, your game generally becomes single-player unless it targets the college demographic, which can afford a separate gaming-class PC for each player. Very few major-label PC games take into account the case of one PC, one 32" monitor, and four USB gamepads; most 4-player party games are either single-console exclusives or multiplatform in the sense of "both country and western".

  • Re:economic growth (Score:2, Insightful)

    by KDR_11k ( 778916 ) on Sunday August 16, 2009 @08:58AM (#29082651)

    Yeah, that analyst seems to forget the old adage about correlation and causation. China uses online and China has growth therefore online means growth? No, China grows by itself and it uses online because they can't get people to pay in any other way. Makes you wonder what kind of sucker hands this guy a paycheck for faulty reasoning like that.

  • by KDR_11k ( 778916 ) on Sunday August 16, 2009 @09:01AM (#29082673)

    The thing with the PC market is that it's fairly small and relying only on it when you've sunk a hundred million into your game is suicide. The number of people who have a PC that's gaming ready and care about having it is fairly low though there is a HUGE market of people who have a PC, don't care about its game readiness and want something simple to play. PopCap is serving that market.

  • by SmallFurryCreature ( 593017 ) on Sunday August 16, 2009 @09:25AM (#29082755) Journal

    Anyone remember the old x-wing and tie-fighter games? What did these games have? Relative long gameplay, you couldn't finish those games in a weekend. And then when you were done, there were TWO expansions for both games, released at a small price that offered another few days of gameplay.

    Compare that to Kotor and Kotor2. You can't of course compare gameplay of an RPG with a space-sim but you can compare the expansions. Or rather the lack of them. Had Kotor2 been produced as an expansion right from the start and not been shuffled out of house AFTER lucasarts realized that a sequel might make some extra money (gosh, a SW rpg might be a success, who would have thought).

    If games were tv, then they would produce a pilot to test the audience, tear down the set, kill the actors and de-invent the camera. If the pilot happens to be liked, they start filming. One episode at the time. But no more pussy-footing about. They don't just tear down the set but nuke the state. Kill the actors entire lineage through time-travel and get god himself to remove light from the universe.

    What exactly is taking so long with Mass Effect 2? They seems to be adding a lot of stuff (yet more planet surveying, my favorite part of the game) but the delay really shouldn't be necessary to tell a story. The series really should have ended now OR at LEAST we should have had a few expansions produced for some quick cash and extra gameplay.

    Games really just don't to be produced sensibly.

    Of cours the tech has to advance, but it doesn't have to happen for every game.

    Tell me this, if a producer had simple done Planescape: Torment 2 with absolutely no advances to the engine, just purely another story, would you have bought it? I think the answer is yes.

    So why do companies produce so few "expansions" and so many year long sequels that look fantastic but are the equivelant of making a television series with episodes 2-3 years apart.

  • by east coast ( 590680 ) on Sunday August 16, 2009 @09:40AM (#29082857)
    Someone explain capitalism to me.

    It's not a matter of capitalism. If you're happy with your 900k that's fantastic. But if you're asking others to invest (stockholders, money loaners) they want to invest where they get the most bang for their buck.

    Believe me, if every business had to show a continuous profit increase there wouldn't be many that would last. Small businesses do what you're talking about and one of the reasons they can do it and survive the dry times is because they knew enough to invest in themselves. They don't need to go asking others for money the second they become unprofitable. Business owners who ride the edge of reserve capital are the ones who falter in difficult times.
  • by KDR_11k ( 778916 ) on Sunday August 16, 2009 @11:54AM (#29083839)

    Go play them then but don't assume every one wants the same thing as you and don't live in the illusion that simplistic game play can cut it for the mass market today.

    I think the only illusion here is that the more demanding customers form the mass market. They're the minority, it turns out that the mass market doesn't really need great stories and whatnot and is perfectly happy to play a game of tennis where you don't even control your character's leg movement.

  • by Reapman ( 740286 ) on Sunday August 16, 2009 @05:09PM (#29086247)

    I think what the GP is trying to say is as long as you can write code on a PC, you can write a game. Therefore, gaming will exist. For example a lot of games made in the 80s and such were done by hobbyists, and even the EA's of the world were small fries. Gaming on the PC will never ever die. It'll grow, it'll shrink, it might even be considered marginal someday, but it will never ever be dead.

    And using your example, I could "popularize genres that deployed consoles still can't handle, such as RTS's, FPS's (still can't beat the mouse!), where the computers controls are superior, or the fact that games on the PC are cheaper especially for the Mom and Dad's of the world, not to mention the inherent openness of the PC"

  • by binarylarry ( 1338699 ) on Sunday August 16, 2009 @05:28PM (#29086343)

    Unless the gameplay itself is tied to a service on a remote network.

    Then you've effectively killed off piracy.

  • [$300 for a computer without a monitor is] well within a Christmas budget for most families, and PLENTY cheap enough for each kid to have their own

    Compare $1,200 for a 4-pack of computers to $400 for the most expensive console (PLAYSTATION 3 or Xbox 360 Elite), and then add the cost of monitors and the cost of buying extra copies of each game for each computer because almost no games nowadays have the sort of "spawn installations" that you see with the original Starcraft or Tetris DS.

Solutions are obvious if one only has the optical power to observe them over the horizon. -- K.A. Arsdall