The Rise of Costs, the Fall of Gaming

http://www.notenoughshaders.com/2012/07/02/the-rise-of-costs-the-fall-of-gaming/

by pclark • 14 years ago

47 47 14 years ago

jonny_eh• 14 years ago

I'm surprised they didn't mention the new Android powered game consoles. Wii U game should be easier to port to these newer, cheaper, simpler devices.

stickydink• 14 years ago

The problem with that (for this first generation; OUYA, GameStick et al.) is that the hardware isn't comparable to the WiiU. When they're released in the next few months, and even right now, most high end phones out-spec them. The article points out that the WiiU would be comparable to an iPad 4, which is well behind what any of the announced Android consoles are aiming for. They're generally going for the 'we can use last years hardware and sell it cheap' angle, rather than a AAA console experience.

Perhaps when/if this first round of consoles prove the concept, a second generation high-powered Android consoles will appear.

ekianjo6• 14 years ago

ANother rant on "big budgets are killing the industry!". We see this coming every 4-5 years and this never ceases to make me laugh. There's never been as many games sold as now. And of course there will be winners and losers, as always.

NoPiece3• 14 years ago

I agree with you, and am sure if you could make large list of small developers that closed during any given period of time.

But there are downsides to the current trends. When big companies have to take bigger financial risks they are less likely to take creative risks. So while we are seeing really beautiful well crafted games, many are cookie cutter sequels and copies. The industry is large enough that there is innovation (and a vibrant indie scene), but I wish there was more interesting AAA stuff.

ekianjo6• 14 years ago

Well the AAA stuff does things right too. Look at Far Cry 3. It's hardly a indie game, and most people who played it loved it and found it refreshing.

Look at Witcher 2. Hardly a small game either, and they managed to pull off one of the best RPGs in recent history, with non-linear paths in the story.

Indie or AAA, there's crap everywhere anyway. There's a lot more people buying crap than ever, too, and that is exactly why crap endures : it's profitable. This would not have happened in the same way in the 80s/ early 90s when gamers were more of an "elite", educated and curious bunch of people, rather than the average Joe nowadays who buys Video Games just because they can.

rvasa• 14 years ago

Attention and time are also being split across a range of devices (esp. tablets, smartphones) -- this may also be having an impact.

svachalek• 14 years ago

I think economics will prevent the industry from going out of business by spending too much, but the more visible effect of the high budgets is similar to what we see from Hollywood -- total fear of risk resulting in tepid sequels, remakes, and lowest-common-denominator titles. If the market gets disgusted enough to stop buying Call of Duty 29 (Reskinned) we could have another 1983 on our hands, but I don't quite see that coming, yet.

pinaceae• 14 years ago

interesting definition of gaming and its platforms. as if console-makers are the only players in town.

let's see here: http://www.asymco.com/wp-content/uploads/2013/01/Screen-Shot...

xbox360, ps3, wii ... all child's play. a niche industry. the true gaming platforms are android and ios, with ios users more likely to spend money on apps/games.

serious game "journalists" dismiss casual gaming as beneath them. halo, skyrim, yes, but angry birds? cut the rope? no.

interestingly the industry ignores journalists and goes to where the users are. hence the release of titles like baldur's gate for iOS - taking an old, known game and porting it back. no big budget needed. a lot of turn based games are perfectly suited for touch, from Jagged Alliance, XCOM, Panzer General to all the adventures to RPGs (where are all the Ultima games on iOS? Final Fantasy and Chrono Trigger already are available).

and then you have indie gaming, Minecraft, Torchlight, FTL, Hotline Miami, etc etc etc.

Big budget shit games are dying. Max Payne 3? yes, good riddance.

corporalagumbo• 14 years ago

If you grew up playing console and PC games then yes, iOS games are a joke. If you loves games, touch-based UIs just don't cut it.

potatolicious3• 14 years ago

> "all child's play. a niche industry. the true gaming platforms are android and ios, with ios users more likely to spend money on apps/games"

I question this wisdom, and will continue to do so until the day an iOS title breaks Halo 4's first-weekend sales record. Or hell, lifetime sales record.

The core gaming industry moves far fewer units than iOS/Android games (in which case "units" is more ephemeral of a concept), but succeeds in extracting $60-90 at a time, as opposed to $0.99.

We had our love affair with "casual gaming is the future" when the Wii came out - that didn't pan out then either. Attach rates were abysmal, and people soon bored of the platform after one or two titles. It failed to find a long-term place in the living room, that's for sure.

This isn't about some supposed superiority of core gaming vs. casual gaming, it's simply skepticism because every time someone has said that casual will eat core for lunch, it has failed to occur.

Sales for iOS/Android games are terrible on a per-title basis, and even including only the top titles don't come close to console sales numbers. The only real corner of that industry making eyebrow-raising amounts of money are microtransaction-based, treadmilly, slot-machine type games, and I have my doubts as to whether or not it's a sustainable trend.

> "a lot of turn based games are perfectly suited for touch, from Jagged Alliance, XCOM, Panzer General to all the adventures to RPGs (where are all the Ultima games on iOS? Final Fantasy and Chrono Trigger already are available)."

"Re-releasing old games on mobile" is a profitable segment, but it won't last, mostly because we will very quickly run out of games people actually give a shit about.

And once you start contemplating development new adventure games, RPGs, and strategy games, the economics of this falls over. Even without the notion of modernizing graphics and gameplay, developing something like Chrono Trigger would hardly be worth it when the market bears $0.99 a copy, or less.

More likely, we'll see Chrono Trigger, where enemies are overpowered and you pay microtransaction credits to revive your party members when they die. This is, after all, the only way mobile devs have found that generates any substantial revenue. What a marvelous progression of this industry.

The future of the indie gaming scene lies with the PC, and potentially surprise core-gaming-targeted platforms like the Ouya. These are the only platforms where users are prepared to spend any real amount of money on gaming. Revenue extraction on mobile platforms inevitably involves fairly unscrupulous (and simply not fun) mechanisms.

tluyben22• 14 years ago

Casual will not eat core; they exist in their different places (phones are definitely perfect devices for casual) and you need original content (RPGs, strategy etc), but I think original content is not what drives the price up for the studios. The whole package is what does that; Ultima can now be made by two people in an attic; that doesn't cost a lot while it's fun to play. The problem is that 'people' want a FPS with superior graphics and that whole package is very costly. For me (but i'm old), the great graphics, like 3d effects in 3d movies currently, wear thin after a few minutes of ooohhh and aaaah and then it's about gameplay. Something which a lot of AAA 'sell $100 million' games lack. Nintendo their strategy (lowish graphics, small teams) but with non-casual, original games would (and did in the past) work fine and would be profitable IMHO.

hayksaakian3• 14 years ago

Sales vs Profit.

Mobile titles can have much better ROI.

ekianjo6• 14 years ago

Well I have never seen anyone spending 3 hours in a row on Angry Birds. ALl these iOS/ANdroid games are for people who either have short attention span or who need to distract themselves for a few minutes in transports. Who believes these are serious games ?

Obviously serious games are those where you CARE and put dozens, hundred of hours of your life into. And releasing old games on new formats cost nearly nothing. If the industry was as dead serious as you think it is, they would be making NEW, ambitious games for these platforms and make big bucks out of them. But that's not going to happen because nobody will play games for hours and hours on these devices - that's not the right public nor the right place for it.

Big budget shit games are not dying. You are living blindfolded.

marcosdumay• 14 years ago

"serious games"

I get a smile in my face every time I see those two words toghether.

sspiff• 14 years ago

That's not a fair comparison: everyone who buys an XBox or a PlayStation, intends to play games. Only a fraction of Android and iOS users want to play games on their devices.

msg• 14 years ago

Holy moly that was tl. I did r, but I regretted it.

The big problem with this article is cherrypicking examples. Even though it contains a list of 120 game companies (yes, tl) that folded between 2006 and 2012, it doesn't set them in context. How many companies are there of which these are a subset? How does this failure rate compare with historical norms? How big are these companies really? Other lists of large budgets, large layoffs, large numbers of units required to break even make similar non-points.

The larger point is that game art is expensive. Will Wright was making the same point with Spore, I would say. The art was so expensive he outsourced it to the cheapest laborers he could find, players. It turned out the tools were better than the game itself; nevertheless I think you have to feel he was on to something.

There is not going to be an asset apocalypse in a world with a Minecraft mod API (Real Soon Now), the Steam Workshops, and procedural generation. Unless you mean the kind of disaster that kills off dinosaurs.

Is AAA gaming unsustainable? Of course it depends on what you mean by AAA. But I think the big studios have an eye on their wallet at all times. They make big games because at the end of the day they are profitable on the average. There is just a wide variance. If a smaller studio has all its money on black on its AAA title, you might wish them luck, but not be completely surprised when their success is raked away.

The AAA titles that succeed do so through solid gameplay. That is unlikely to change no matter how shiny they become.

thisone2• 14 years ago

>Even though it contains a list of 120 game companies (yes, tl) that folded between 2006 and 2012, it doesn't set them in context

Indeed. I went looking for Flagship and found it.

Flagship went under because Hellgate London was a MMORPG title, with AAA MMORPG costs that, unfortunately failed in it's mission as a game. It, unfortunately, wasn't very good. Failure meant not enough purchases and not enough subscriptions, therefore not enough money coming in.

Tiktaalik• 14 years ago

Charts that show a decline in console retail sales don't really reflect the health of the gaming industry. One thing that must be kept in mind is that there has been a shift toward online sales, both on the PC, which is currently enjoying a renaissance, and on the console, and these are not reflected. Furthermore the console industry is cyclical, and sales are expected to decrease in this fashion prior to the launch of new hardware (Wii U just arrived, more coming in 2013).

brianchu2• 14 years ago

I think consoles are a dying segment. Casual won't eat console, though. Mobile will eat console, because of 1) greater audience and 2) a shift of console-quality games from mobile to console.

We're talking about a platform that more than 50% of all US teens own (and growing), a platform that is carried around nearly everywhere by most users, a platform that is expanding globally.

Because of that audience, we're looking at ROIs that can outpace console games. Halo 4's dev and marketing costs are estimated to be well over $100MM. Its first weekend gross was $220MM. Halo 3's first weekend sales were roughly $170MM and Halo 3 ended up selling roughly $600MM total (10 million copies sold [1]). So based on that let's be generous and extrapolate Halo 4's total sales as $800MM. Keep in mind that I'm not even taking into account 1) eventual discounting on each unit and 2) retail markups and packaging costs. Angry Birds (first version) cost $135k to develop. It grossed 7.35MM (after Apple's "retail" cut) [3]. Angry Birds has a ROI of 54x. Halo 4 has a ROI of 8x (and I'm being liberal).

It's also a mistake to think that smartphones are purely for casual games. Console-quality games are already moving to the iOS/Android platforms. So-called mid-core games are very profitable on mobile. There is a trend of games charging greater and greater amounts of money, as the Final Fantasy ports do. The market most certainly does not enforce a $0.99 price point. Games with higher production values routinely push past that price point.

Bear in mind that the iPhone 5 is considerably more powerful than the Xbox, and is roughly 1/4th as powerful as the Xbox 360 on one metric (texture rendering). Given 1) exponential growth in mobile processing/graphics power, 2) the increasing delay between console launches which allows for catching up (8 years between the Xbox 360 and Xbox next-gen, assuming a 2013 release date), and 3) diminishing marginal returns in graphical quality when hardware quality is increased past a certain point, in 2-3 years smartphones will be capable of Xbox 360 games, and a few years after that will have caught up with next-gen consoles. This gap is narrowing even faster with tablets. The article mentions how the Wii U is comparable to an iPad 4. There are tons of startups out there building game controllers to overcome/augment the limitations of touch UIs. Mobile games are already being wirelessly hooked up to televisions/monitors.

Big budget console games won't die. Not completely. There will always be a market for the absolute bleeding edge. But I think it's clear that mobile gaming will eat up huge segments of the console market. One "type" of console that I see as a potential commercial hit would be immersive AR platforms, like the Oculus Rift. But there's no reason that mobile can't eat that too after several years.

Looking even farther into the future, I think there is great potential for other advancements in mobile such as actual physical buttons that are programmatically generated over the touchscreen [4].

[1] http://www.vgchartz.com/article/4787/halo-3-sells-10-million... [2] http://www.mobilewebgo.com/how-did-angry-birds-become-blockb... [3] http://www.symbian-freak.com/news/010/12/angry_birds_hits_42... [4] http://techcrunch.com/2013/01/13/this-is-the-future/

nazgulnarsil2• 14 years ago

I think we're seeing the beginning of the endgame already. Casual users will have one processor in their phone and it will plug it in to everything (tablet, tabtops, television, monitor and keyboard)

batgaijin• 14 years ago

Bullshit. I dare you to show a video of CoD alongside any casual game to kids under 10 and I guarantee that the kids would go nuts for CoD. That is assuming no prior experience to video games.

Mobile is just making it 'fashionable' for people to play games and imho just a funnel towards the diehard model.

Who stopped at just Pokemon?

brianchu2• 14 years ago

I very clearly made the point that casual gaming != mobile gaming. The rise of mobile gaming does not mean the death of hardcore games. There is no reason hardcore games can't exist on mobile. Console-type hardcore games are already showing up on smartphones. Like I said, once smartphones catch up with consoles and wirelessly connect to your television/external gamepad (the latter already being a reality), smartphones will be able to do 95% of what consoles do. The point is that CoD five years from now may very well be on your smartphone-television-gamepad setup.

In fact, your example perfectly illustrates the potential of mobile gaming (casual gaming particularly). First: getting CoD requires buying a $200 console and paying $60 for the game. That's huge. That requires a kind of commitment (i.e. "I plan on buying and playing lots of games to make the console worth it") that few customers have.

Second: I'm reluctant to hew to stereotypes, but hardcore gamers are overwhelmingly male. In saying that your under-10 kid would go nuts for CoD, you seem to be assuming that he is not going to be a female. That's nearly 50% of the population that's ignored. Yes, I personally know many girls who play FPS's. But the fact remains that girls are overwhelmingly unlikely to play FPS's, relative to guys.

Who stopped at just Pokemon? The vast majority of women (iPad board games sell particularly well among females). Most (but obviously not all) adult men. Basically any people who gave up video games or never really got into them - the vast majority of the population. Let me give you a data point. Me. I used to play tons of games - Halo, CoD, PC MMOs, etc. Due to school and then working at a startup, I've stopped. Now I only have time for quick game sessions when I'm waiting in line, riding in the car/bus/train, and taking quick breaks from work.

Hardcore games capture a tiny slice of the total market. The potential of mobile gaming lies precisely in the fact that every demographic is accessible.

On an unrelated note, I'd like to correct a typo in my previous post. When I said "a shift of console-quality games from mobile to console," I meant "console to mobile."

jdietrich• 14 years ago

Exactly the same thing is happening in the movie industry.

The critic Mark Kermode has written at length about the phenomenon of the "motion picture event" - a movie so expensive that it is newsworthy regardless of creative merit. People will go and watch lousy-but-expensive films, just to see what all the fuss is about. The canonical example is the 2001 film "Pearl Harbour", which was an absolute stinker but made a profit of $60m on a $140m budget.

We're currently in the era of the mega-blockbuster - vastly expensive superhero and fantasy films that are a relatively safe bet financially, because they very effectively capture the casual market that might only see one or two movies a year. Even adjusting for inflation, nearly all of the most expensive films of all time were shot in the last decade.

At the other end of the spectrum, it's possible to make a genre movie for a niche audience on a tiny budget, knowing that even without a theatrical release you can promote it virally and turn a good profit on DVD sales.

You can spend $150m on Call of Warfighter XVII, knowing that it'll sell a gazillion copies in every superstore in the developed world. You can also spend a tiny fraction of that on Garbage Truck Simulator, in the knowledge that 100% of your potential customers will be able to find it on Steam with no real promotional spend necessary.

robmcm• 14 years ago

I think the industry will just find a way, things like steam will cover marketing, 3rd party developed engines and frameworks will cover development costs, and auto generated environments will aid with increased environment size.

If it doesn't produce good games, then the market will dictate what it want's by not buying games...

lifeisstillgood• 14 years ago

Hence the retail truism - there is no room in the middle.

Luxury goods will always have a market. Cheap as chips will sell as long as there is stock on shelves. Reasonably priced good quality stuff - you will lose your shirt.

WhaleBiologist2• 14 years ago

http://warhorsestudios.cz/index.php?page=blog&entry=blog... is a very good blog post, outlining how poisonous executive management of large video game companies is, and how there are inordinate numbers of useless/inefficient positions in games development.

I remember reading a blog post by the guy who did the fire for Far Cry 2. He spent a year on it. He didn't even do any of the graphics. He spent an entire year just playing around with fire spreading algorithms. An entire man year, spent on making the effect of one weapon look cool. Absolute madness.

On your mention of Garbage Truck Simulator, Euro Truck Simulator 2 came out not too long ago. All you do is drive a truck, that's it. It's selling pretty well, and has a development team of about 10 guys.

Why don't people in the big games companies realize all they need to do to be successful is make small, focused, FUN games, that have development teams of 10 or so. The rise of the indie game genre pretty much proves that it is financially viable.

patio11• 14 years ago

Why don't people in the big games companies realize...

It is roughly similar to "Why doesn't Google realize you can ship a product with $1 million of yearly revenue with 2 engineers working for 3 months?" No needle at Google would move if they did that -- it's objectively a worse use of those engineers' time than supervising A/B tests which marginally affect the display of 3% of all searches in South American Portuguese.

Similarly, you could ball up a hundred ludicrously successful indie games and still not hit the numbers that World of Madden's Duty 2013 will hit within two weeks of retail launch. Those also have much better characteristics to leverage the non-gaming capabilities of game studios, like the ability to spend $60 million (1x~2x the development budget) on saturation-bombardment coverage for all US men between the ages of 15 and 30 and thereby sell $90 million worth of WoMD2013.

AAA games companies would be interested in creating Minecraft if you successfully sold them that you had a reproducible process to Minecraft, like they have a reproducible process to create Call of Duty games. Non-reproducible Minecraft is not a victory condition. Reproducible name-a-successful-indie-that-isn't-Minecraft is not a victory condition. ("We skim 30% of the top off of a catalog of titles, which in aggregate must include successful-sub-Minecraft in a reproducible fashion", on the other hand, is a victory condition, and that's why all the AAA companies are trying their damndest to be platform companies and leave the game development to suckers^H^H^H artists.)

Edit for elaboration: Rough numbers so non-gamers can follow things: Minecraft is an independently developed game with north of $50 million of sales spread over several years. Minecraft is sui generis: hitting 6 figures makes you notable enough to achieve press coverage on that fact alone, and a supermajority will never come close to matching imputed opportunity costs. Call of Duty is an architypical AAA ("big budget from big company") game; the most recent version sold $400 million (not a typo) in twenty four hours on a development budget in the mid 8 figures and a marketing budget probably in the high 8s or low 9s.

paganel• 14 years ago

> Exactly the same thing is happening in the movie industry.

And I personally hate it. I remember a time when "blockbusters" included stuff like Total Recall, Die Hard, Terminator II or Aliens, I just want that again. There's still the casual Sucker Punch or Watchmen, but they're too few and far between.

nazgulnarsil2• 14 years ago

Why is this surprising? In the movie industry each blockbuster finances 2-10 flops IIRC.

venomsnake• 14 years ago

The game industry is in trouble (well except for PC, digital distribution, indies which we assume don't exist)

And with Trine 1 & 2, Mark of the ninja, Bastion and Borderlands 1 and 2 and Dishonored we have very successful and profitable example of studios and projects that break with the graphic whoring and bet on an art style.

And majority of the failures listed were mediocre games anyway. We haven't had the psychonauts, torment and Shadow of the colossus of this generation yet. Top critical acclaim and no sales.

Budgets are insane and spend on stuff that don't add much value. Total voice over of games is one of the things I can do without.

LatvjuAvs2• 14 years ago

Star Citizen, Wastelands 2, Double Fine Adventure, many others.

It just looks like finally I can participate in making game I would like to play.

I am tired of playing some half-assed interactive movies that costs half a billion to make.

Niche will survive, and it just recently started to rise again, thanks to niche people themselves funding games.

There is no void and there will not be, in death, something will born again, and sometimes it is built upon recognizing failures of previous generations. Call it evolution, as dire it might look, it is a progress.

zokier• 14 years ago

> Star Citizen, Wastelands 2, Double Fine Adventure, many others.

how many of those has actually shipped?

...yeah.

LatvjuAvs2• 14 years ago

You know, when reading product description and watching some mock-up video gives me more excitement than playing 8 hour epic AAA title, the industry for sure is on wrong path :D

The Rise of Costs, the Fall of Gaming

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