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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