I was actually in at the very beginning of this in the late 70s and early 80s. Back then if you wrote a game you had to manufacture, market and distribute it yourself. You became a publisher because there was no other way to market. This is what happened at Bug Byte and Imagine in Liverpool, the owners of the companies were, initially, the guys that wrote the games. Once you were up and running, other game writers, who couldn’t be bothered with all the publishing work, came to you and asked if you would handle their stuff too. This was the beginnings of our industry.
So what do game publishers actually do?:
Provide finance for the entire industry. This is not just paying studios, in stages, to develop a game. It is also the publishing costs which can often be far, far more. For one top console game the total cost is now into the tens of millions, so this isn’t insignificant. However, some development studios make the big jump to self financing their work, then they own the IP and can choose how it is published.
Take the risk. This is a pretty big job, especially for current generation console games, most of which don’t make a profit. This is partly why many of the world’s biggest publishers are making losses just now whilst the industry booms.
Market the game. It is a simple fact that with zero marketing a game will have zero sales. The game industry is a very young and fast changing industry so much of its marketing is inefficient and over expensive. Which means that many publishers aren’t doing a good job here, another reason for their losses. However what marketing expertise there is in the industry resides mainly with the publishers.
Create and build brands. A lot of the industry for a long time just piggy backed other people’s brands, so had no equity in their IP. We used films, books and celebrities. And it wasn’t good. Now the industry is growing up and nurturing its own brands with some startling successes (GTA) and a lot of painful growing pains.
Physically manufacture, warehouse and distribute inventory. Logistics. This is a huge pain. Vast amounts of plastic and cardboard are used to move digital information around the world. The problems boggle minds. Just getting the timing of everything and the inventory levels right is impossible, it will always go wrong. So retailers are out of stock of one game whilst another game is remaindered in the discount bin.
Manage the whole industry. People only buy consoles to play games. The games are everything. And the publishers have total control over the games. So they have total control and power over the industry. So they decide what happens, how it happens and when. A big responsibility and, to be fair, they tend to try and act for what they perceive to be the good of the industry. We don’t have any significant Enrons yet.
The most important thing about the traditional game publishing business model is that there are enormous competitive advantages of scale. The bigger you are the easier it is to run your business, if you much smaller than the biggest players then you simply cannot compete. This is why we have seen so much publisher consolidation, the laws of economics mean there should only be a handful of global publishers. It is what happened to film and recorded music.
However events are not just conspiring against global publishers, they are conspiring against publishing per se.
The cost of making games is, in many cases, coming down. This is partly down to better tools, libraries and middleware. It is also down to the far smaller scale of product required for many platforms, including some of the big ones like XLA and XNA. Which means that we have returned to the age of the bedroom coder, or to loose affiliations of a few people working together on a project. This has become massive. There are now more games being developed this way than in formal studios.
With the above the risk has come right down. You make a game in your spare time, if it works you buy a fast car and a holiday, if it doesn’t you just shrug your shoulders and try again. Which is exactly what happened in the old 8 bit days. I know, I was there!
Platform proliferation. This has really crept up on us. About a decade ago there were two viable platforms, the Playstation and the PC. Now there are lots. Xbox 360, PS3 and Wii, each of which is multiple platforms because of the online offerings. Xbox 2, PSP, DS, iPhone, Android, nGage and of course the PC, which is also now mutiple platforms with casual gaming, MMOs, portals, boxed games etc etc. A big global publisher just cannot do it all any more, they have to cherry pick.
Product proliferation. It used to be very simple, there were a handful of genres and it was easy to keep up and publish a stream of releases into each one. Now we have total fragmentation, an infinity of genres. Just look at the thousands of iPhone games to see how diverse and sometimes bizarre gaming has become. This has left the big global publishers dead in the water, they don’t understand what is going on and even if they did they are too slow witted and cumbersome to do anything about it.
Marketing has changed and much of it is now free or nearly free. The traditional big publisher marketing model of throwing millions at television advertising is outdated, inefficient and an immense waste of resources. But they continue because of inertia and because they know no better. These days we have something called the interweb and with no money (or very little) and a little time you can run a very effective global marketing campaign. And the smart people are. Popcap is a prime example.
Digital distribution. This is the big one. Without plastic and cardboard it is difficult for publishers to justify themselves. As we have seen with iPod, once you remove physical inventory most games come to market without a publisher. This leads to an explosion in creativity as tens of thousands of new games appear that a publisher would never have given the time of day to.
Brands. The publishers have actually been mostly very bad at creating and building brands. It is a new thing to most of them and they don’t know what they are doing a lot of the time and it shows. Individuals can build brands too. They often have in history. All it takes is an instinctive feel for the brand experience they are creating, the brand image they are presenting to the world and the brand values they need to maintain and they have cracked it. The Oliver Twins did this with Dizzy.
So, as you can see, the big global publishers look like a threatened species. Everything is conspiring against the reasons for their very existence. So expect another period of rapid change. Publishers who adapt quickly away from plastic and cardboard and who learn how to profit from genre and platform proliferation will survive. Those who hang on to the old business models of physical stock, AAA blockbusters and TV advertising will go the way of the Dodo.
This is going to be absolutely fascinating. When it comes to absolute simulation of motor racing the best game in the world, by a huge margin, is rFactor on the PC. But add in a bit of arcade elements and the two daddies are Gran Turismo and Forza Motorsport. We have moved, in this generation, to a market where you tend to have one massive game in each genre with the “me too” games selling far less successfully than before. But these two games are different because they are platform exclusives, GT5 is only on the Sony Playstation PS3 and FM3 is only on the Microsoft Xbox 360. And they are both due out in Q4 ’09. So we have war.
GT5 is the latest game in the biggest selling Playstation franchise of all time with over 50 million sold. It is famous for featuring a huge number of cars and for absolutely amazing graphics. This fifth edition is due for release on 1 October 2009 and has been under development for many years. For the first time (other than as a test) it features online play, with 16 cars. Also for the first time it will have vehicle damage, a weakness of previous versions.
The original Forza Motorsport was Microsoft’s answer to the GT series, had a Metacritic of 92% and a GameRanking of 93%. It is famous for it’s realistic physics engine and had vehicle damage right from this first version. FM2 introduced online play with 8 players and sold 5 million units. Forza 3 is due for release on October 27 2009 and has over 400 different cars and over 100 different circuits.
So we have a unique situation. Two of the biggest game brands there are going head to head on different platforms. The importance here is not the number of sales that each of these games gets. It is how many machines each of them sell, because these are two of the biggest system selling titles there are. Lots of people have been waiting for GT5, for instance, before buying their PS3. And lots of people who have one of these consoles will end up buying the other one as well, just to play one of these games. These two games will increase the installed bases of both consoles significantly.
So which will win? They both will of course because they are platform exclusives. But Gt5 should win on the sheer content of the game and the huge amount of polish it has received. FM3 will win online because the Xbox 360 is a far better online platform and because they have solid previous experience in this area.
And the biggest winner is gaming. This is what we want, massive global brands of the very highest quality. Brands that are comparable with the very best that the film and other media industries can produce.
All three current generation home consoles are about to or have had substantial price cuts. Sony have been forced into it by being ridiculously overpriced, Nintendo are doing it to counter a huge slump in Wii sales and Microsoft are doing it because they can and because they want more market share. So let’s look at the current state of the Xbox 360.
Firstly for every three Sony Playstation PS3s in the world there are four Microsoft Xbox 360s. A considerable success considering that this is only Microsoft’s second machine and that they entered a market dominated by Sony.
All this will change going into Q4, not only will the hardware price cuts be felt (for instance with PS2 owners upgrading) but there is a veritable glut of new AAA blockbuster titles on all three platforms, a glut that is continuing into Q1 ’10. It will be very interesting to see what the state of the industry is like in March, after the dust settles.
In an extensive interview John Carmack, co-founder of id Software had a lot to say about the next generation home consoles.
Like this site he is a fan of using online instead of plastic and cardboard to ship inventory: “I think that Xbox Live… the advent of that and the App Store with the iPhone are wonderful signs of the future of digital distribution. I think there’s a decent chance that one of the next gen consoles will be without optical media… the uptake rates of people who have broadband connects surprised everyone this generation. It’s higher than what the core publishers and even the first party people expected.”
As the title of this article says, he thinks that Sony will launch first: “The whole jockeying for who’s going to release the first next gen console is very interesting and pretty divorced from the technical side of things. Whether Sony wants to jump the gun to prevent the same sort of 360 lag from happening to them again seems likely. As developers, we would really like to see this generation stretch as long as possible. We’d like to see it be quite a few more years before the next gen console comes out, but I suspect one will end up shipping something earlier rather than later.”
And he knows what will be inside these machines: “We do have a very good sense of where the technology is going because we talk to NVIDIA, we talk to Intel, we talk to ATI/AMD and they’re all pursuing variations on massive multi-core processor integration. There’s lots of interesting things about that, about how we need to think about things on the game development side to take advantage of that.”
All good stuff, and there is loads more in the videos.
My thoughts are that the PS4 and Xbox 720 will just be the application of Moore’s Law to the current consoles. So they will be about 8 times more powerful and 100% backwards compatible. They will have 2 to 4 Gbytes of memory and terabyte class hard drives. Obviously they will all come with gesture interfaces and there is a very high likelihood that they will incorporate 3D technology.
At long last we can see Sony starting to act with some aggression in the console war against the Xbox 360. They are very clearly positioning themselves to make up lost ground this holiday season.
We are just heading into the release of what will probably be the biggest two games of this platform generation. Modern Warfare 2 and Grand Turismo 5, both of these titles will set the market on fire. This is going to be very interesting.
If you do a graph of ice cream sales in a April, May and June, then extend it you will find that you are going to have absolutely enormous ice cream sales in November.
The graphs of every consoles sales in every generation fit under a curve, not a straight line. Why should this generation be different and follow a straight line?
Sales of consoles are demand elastic for price. The cheaper they are the more you will sell, all other things being equal. Microsoft have demonstrated that they can sell the 360 vastly cheaper than Sony can sell the PS3. This is because the 360 is a far more elegant design and because Microsoft have lots of money whilst Sony don’t.
If you really want to know what the comparative sales of these two consoles you would be far better off starting a flame war on a forum about it. You would still be wrong, but at least you would be having some fun.
Then Microsoft said that they would be relaunching the 360 on the back of Natal, as it would be like a new platform generation. Fair enough, this is obviously getting more massively significant.
Then it takes Bill Gates to drop the bombshell in this CNET interview. Natal is not just for Xbox, it is for Windows too. And for far, far more than just gaming: “I’d say a cool example of that, that you’ll see is kind of stunning, in a little over a year, is this (depth-sensing) camera thing… Not just for games, but for media consumption as a whole… If they connect it up to Windows PCs for interacting in terms of meetings, and collaboration, and communication.”
He then goes on: “Well, I think the value is as great for if you’re in the home, as you want to manage your movies, music, home system type stuff, it’s very cool there. And I think there’s incredible value as we use that in the office connected to a Windows PC. So Microsoft research and the product groups have a lot going on there, because you can use the cost reduction that will take place over the years to say, “Why shouldn’t that be in most office environments?” ”
This is big. It is a long time since the mouse was added to the keyboard as the standard PC interface. Now we are going to an altogether higher level. Face, skeletal and voice recognition brought to the PC in one go. The possibilities are limitless and it will allow us humans to do so many things that we couldn’t do before.
