What is going wrong in the game industry at the moment?

Normandie sinking, New York

There are a lot of doom and gloom headlines around at the moment. Lots of development staff being laid off, games selling far less than expected, major publishers making massive losses and release schedules that look a little thin. What is happening here?:

  • The industry have become even more lemming like than normal. We get a successful game like Guitar Hero and suddenly everyone thinks it is the second coming. Other people do “me too” imitations whilst the owner of the original title flogs it to death with countless variations. Then we have the inevitable, a Beatles game that flops. Publishers are just not thinking from the customer’s perspective, people really don’t want all these similar titles.
  • Annual iterations of popular titles. Another way of flogging a successful IP to death, try and get the customer to fork out every year for a slightly updated version. This is incredibly inefficient as you end up with lots of customers just buying alternate iterations. Or being turned off by the cynicism of the whole exercise. Leave 2 years between releases on popular franchises.
  • Modern Warfare 2. Every publisher is frightened of being in the same market as this 800 pound gorilla. So loads of games have been launched early for Q4 ’09 and loads more have been moved into Q1 ’10. This is a good thing as it has spread out the previous very silly Q4 congestion. This is a bad thing because not every customer wants an adult rated war game.
  • The customers are moving to online faster than the publishers are. Lots of publishers have misread just how quickly the market would change. Apple’s App Store getting one and a half billion downloads in a year and Evony getting 10 million registered users in just a few months whilst boxed cardboard and plastic retail games gather dust on the shelves is the new reality.
  • Unwillingness to experiment with new IP. This is just pathetic. So many publishers now are just sitting there flogging their old IPs to death because they think it is safe. It isn’t safe at all, those IPs will not deliver for ever. Publishers need to build value in their business and the only way is with new IP. Sure it is risky, but publishing is about risk. And these days you can experiment on a cheap to develop platform and then if it works move the IP to the expensive to develop platforms. And the Apple App Store has loads of brilliant new ideas for IP.
  • Awful marketing. By and large the industry markets incredibly inefficiently with advertising that preaches to the converted. Instead they should be trying to engage with the public so as to switch their spend from other pursuits. Nintendo have done this incredibly successfully but the rest of the industry have failed to take this on board.
  • Secondhand sales of boxed games. Customers now buy games with an eye for the resale value. This inevitably has the effect of concentrating the market into the blockbusters, at the expense of worthy, less well known titles. And the purchasers of the secondhand games are not putting any money in the developer’s pocket.
  • Mid generation lethargy. Most publishers have now released all their franchises for this generation of platforms. So they are waiting for the next generation platforms to release them all again. In the meantime they can’t think of anything for their developers to do.
  • Piracy. The 360 is being hit quite hard with this now. Microsoft really to need to put a whole pile more IP protection into the Xbox 3/720/phoenix, especially if it is a mainly, or all, online machine.
  • Recession. A convenient excuse. Most of the world is out of recession now (except for the UK, which has the worst run major economy). And even in recession people give up paying for their entertainment last.

So it is the management’s fault. And the few well managed companies are making hay.

9 comments ↓

#1 IronM@sk on 11.06.09 at 11:46 am

Developers that promise DLC then never deliver, due to the fact they were seemingly relying on DLC to sell the title, but never made enough money because the original release content was so crap people just traded it in.

Developers that spend too much of their resources on stupid gimmicks, like “bullet-time” and “rewind/flashback”, neglecting more important concepts like “story-telling” and “just more content”

Developers with a morbid fascination for hardware technology that provide little or no in-game benefit. **Cough** Tesselated crowds and water in a game you will never appreciate them in.

Lazy developers coding for one platform, then porting titles to other platforms, either making them run poorly or alienating the platforms fanbase.

The list goes on, but yeah Bruce I agree with you on every point. I’ve almost given up on gaming altogether.

#2 Steven Holland on 11.06.09 at 11:51 am

In a recession people give up on food last

#3 AC on 11.06.09 at 1:12 pm

As always, another informative article that touches on the raw nerves of autocratic styled corporations. Of course many progressive German companies have seen this many years ago, long before Evony came into being. Companies like Gameforge http://www.gameforge.de/component/option,com_frontpage/Itemid,1/lang,en/, InnoGames http://www.innogames.de/en/ and TravianGames http://www.traviangames.com/content/what-we-do understand this well and are years ahead of the competition even if their products are becoming dated. Perhaps this is why Disney and Sony are doing the same with Club Penguin and Free Realms.

But free MMO browser games that make money through micromarketing tend to follow the same existing models too, this is why informed experienced browser based MMO users were fully aware that Evony was nothing new, it was just marketed in an incredible tasteless manner once it abandoned the name of Civony and UMGE. Its attempt to avoid offering a valid office address is irreprehensible. So some MMOs are likely to focus on tax avoidance. I very much doubt the German concerns see it this way. They are in the MMO industry for the long haul and understanding the benefit of obtaining corporate integrity.

Consumers need to trust the products that they purchase; this is why I have very much appreciated the articles on this site about Evony. The German companies understand this, which is why I have always admired them for complying with the law and listing their office addresses on their products and showing their users what their offices and staff look like. But even these organisations employ unknown users to deal directly with their customers in their forums. Personally I consider this unsafe.

The real hazards of browser MMOs pertain to how they run their social networking sites that are connected to the game. As MMOs do attract very young users very serious questions over how they protect the privacy of their users do need to be posed. Many MMOs therefore turn into harassment games where one person threatens another. In such situations users are sometimes intimidated into providing a third party communication system. When this is done minors tend to be bullied in a manner that is hard to track. Some are required to provide pictures or addresses of themselves or face an attack in the MMO game they choose to play. Naturally this means some sinister people with different agendas use these type of MMOs to harass children – they actually enjoy it and the world at large is quite ignorant of this. This is why I applaud the preset communication systems like those that can be found in the safe servers of Club Penguin. I just wished Disney configured all servers to work the same way or demanded new privacy agreements in their open communication servers because the child concerned can play on any server of their choice.

So while I think Disney need to address this issue, my vote for the safest browser based MMO goes to Club Penguin. Here I can throw snowballs at other players without being called a cxxx.

A game needs to be a game, not a platform where personal abuse transpires all the time.

AC

#4 ErdTirdMans on 11.06.09 at 3:57 pm

I assume that the only reason piracy is on this list is because you intend it to be an absolute complete list full knowing that the vast majority of people pirating games are people who had no plans to buy it in the first place. Without piracy, they wouldn’t be paying for it, they just wouldn’t be playing the game at all.

It’s a fringe minority that like a game /and/ can afford to buy games /and/ choose to steal it rather than support its developers with honest purchases. Even then, I think it’s mostly people that couldn’t afford it at the time and then, having already beaten it, don’t buy it when they finally do have the cash like they normally would.

#5 Rachel Blum on 11.06.09 at 8:51 pm

@ErdTirdMans That’s the usual defense rhetoric for pirates, yes. And yet, looking at PC sales dwindling and number of pirated copies increasing, one cannot help and wonder if that’s really true or just a way to appease a guilty conscience.

@Bruce: By virtue of requiring an online connection, it becomes much easier to prevent piracy. You can tie games to specific consoles (or user IDs, as you prefer), move some of the storage online, etc.

As for the new IP: Publishers who do try new IPs get unfortunately smacked in the market place. The number one publisher right now is ATVI – and a lot of their work is sequel based. Sure, it’s nice to have some new IP, but it needs to be balanced for cash-flow.

And the recession is over? Really? Those 10.2% unemployed people in the U.S. just haven’t gotten the memo yet, then? Stock markets recovering does not equate an end of the recession. Until consumer confidence and spending go up, things remain bad for the games industry (and entertainment as a whole).

But overall this is a great list what’s plaguing the industry. I’d just like to see the list of companies you consider well-managed ;)

#6 wat on 11.08.09 at 6:42 am

“Other people do “me too” imitations whilst the owner of the original title flogs it to death with countless variations.”

Um.. I beg to differ? Guitar Hero 1 and 2 were made by Harmonix, then they jumped ship and made Rock Band. Rock Band 1 is what Guitar Hero 3 would have been if they stayed with the brand name. I wouldn’t count Rock Band to be a “me too” because they made the damn original game… But i agree with you on the beatles. I knew it wouldn’t sell that well. No one wants that.

I also disagree that the “recession is over”. Unemployment is at a 26-year-high… yeah. :/

#7 Chris on 11.12.09 at 10:50 pm

Bruce I LOVE your blog. I’ve been in videogame marketing for 13 years and your article pretty much takes all of my key thoughts of late and summarizes them beautifully. Great stuff.
Here’s some more shocking stats on sales for you!

What does it say for traditional console model ‘health’ when the highest rated game of all time, Uncharted 2, can’t even scratch 1.5m units global sell-thru? Naughty Dog’s dev spend must at LEAST dictate a 2m unit sell-thru to BREAK EVEN!
Brutal Legend – probably needed 1.5m units to break even given the marketing, dev and licensing costs – can’t even break 400k!!
Dead Space Extraction – incredible Wii title, can’t crack 30k units globally!!
Forza, Borderlands, Batman, Killzone, Ratchet and Clank [100k units sell-thru globally!!!] – the list of titles that never likely got out of the red goes on and on.
The game blogs haven’t even cottoned onto the sheer severity of this industry tilting over permanently, because the three success stories paper over the true bloodbath.

Social media has decimated the ‘football pitch’ – 2010 will continue to be a bloodbath for any publisher / developer who doesn’t retool for the ‘true’ next gen platform… the internet and community networks.

#8 Charlotte on 11.18.09 at 8:30 pm

You know what’s sad, none of this surprises me and I saw a lot of it coming and I’m just some nobody with no connection to the gaming industry (aside from having spent lots of money on games, ha) and no economic training either! I think if they applied some common sense to the “market trends” and “what’s popular at the moment” they would have more success.

#9 Matthew Bowes on 08.29.10 at 6:58 am

Hi there,I am warning as many people as possible to avoid INNOGAMES products.I will not let my 16yr old son play this companies games.due to ingames abuse,threats,sexual innuendos and after going to moderators and getting banned for trying to make them follow company policy or even internation laws.I suffered threats and bans and was talked down too with no actually help being offered.I will ring this company to express my complete shock and horror that it is their companies practise to support Fascism.Plz watch what your children play online.as I noticed my sons behavior change b4 finding out what was causing it. and this company just said “prove it”

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