Last week's column outlined what I believe to be the ultimatum facing the core games industry - the harsh economic reality presented by spiralling development costs and seemingly stagnant market growth. It's a reality which is forcing publishers and developers to explore new business models and new markets, or to entrench deeply in existing franchises and proven genres - a reality which may even herald the end, at least temporarily, of the graphics technology arms race which has defined the games business' cycles for decades.
Most in the business seem to agree that we are reaching this kind of crossroads in the industry's development, although some are quick to point out that this kind of problem has been predicted before. Indeed, every console transition of the past 15 years (and probably further back than that) has been met with wailing and gnashing of teeth from those who hold the industry's purse-strings, watching with horror as development budgets skyrocketed - and there have always been those who claimed that this time was the step too far, the straw that would break the camel's back and bring the industry crashing down.
Each time, of course, they were wrong - spiralling development costs have always been more than matched by the industry's powerful growth. Certainly, each transition lays low a certain number of companies who don't manage to weather the storm - but everyone else ends up enjoying the fruits of a rapidly expanding market, even if the stakes involved do keep getting higher and higher. So why should the boy who cried wolf get a hearing this time around?
Even as the world stumbles through its halting recovery, the core games business doesn't seem to be following suit
Firstly, it's worth pointing out to anyone keen to employ the "boy who cried wolf" analogy that while we always remember this tale as a parable against issuing false warnings - at the end of the story, it's the villagers who ignored the boy who end up getting eaten. It might as well be a cautionary tale about letting your guard down because you've heard the same warning so often before. Secondly, it's important to note that the warnings this time around aren't actually the same as in previous generations.
In this case, it's not spiralling development costs that are being highlighted as the problem - those, quite simply, are a fact of life in such a technology-driven market. Clever tools and middleware ease the burden, but the reality is that if you want graphics and content that's markedly better than what's gone before, you have to pay for it. However, it's only worth paying for it if doing so makes more people buy your game - and that's where the problem lies this time. More people aren't buying core games.
The market started contracting around the time of the financial crisis, which allowed people to shrug it off as being the global recession's fault - even when plenty of commentators sounded warning notes about this being more fundamental to the games business than that. Now, even as the world stumbles through its halting recovery, the core games business doesn't seem to be following suit. The money is going elsewhere; the growth has slowed, stopped, and in some cases, may even have reversed.
But rather than bemoaning this situation, I think it's important to look at the sectors which can actually benefit from this change - because this is, undoubtedly, a change in the industry rather than a decline. The money is still there. The consumers are still there. The growth is still there - it's just switched focus, away from easily measured boxed-game retail revenues, and into a variety of new areas.
I'm not talking here about the growth in mobile and social gaming. That's undoubtedly a hugely important feature of the gaming landscape in recent years, even if there's definitely some truth to Denis Dyack's assertion that a bubble mentality has emerged. However, it's a little far-fetched to claim that any great number of former core games consumers have started playing social games instead, or that any of the would-be core gamers who would normally now be growing the market organically have decided to stick to casual titles exclusively.
No, those people are finding their entertainment elsewhere, certainly, but it's happening in sections of the market that's still recognisably "core gaming" - even if it doesn't involve £40 game purchases from high street retail.
It's the PC and its burgeoning indie scene which is benefiting from the battening down of hatches in the console market
Where is the benefit being felt? Well, subscription gaming is definitely one part of it, even if right now World of Warcraft remains about the only show in town in terms of sheer numbers. Other publishers, however, have games on the market whose size pales in comparison to WoW, but whose subscriber bases are comfortably large enough to support continued development on the product. Yet others are experimenting with business models that eschew subscriptions in favour of paid-for content updates.
Handheld gaming is another area that's booming, and likely to keep doing so for some time. iOS is a hugely exciting platform, and one that's very gradually earning its stripes even among core gamers, but the DS, 3DS and PSP are also obvious beneficiaries of the current upheaval in the market. Coverage of the 3DS in particular has focused on how hard it's going to be for Nintendo to duplicate the success of the original DS in much tougher market conditions - which is entirely reasonable.
However, that assumes that the lower end of the market is more likely to keep playing smartphone games than to buy a new dedicated console - a fair assumption - and ignores the possibility of a major influx of developers and consumers alike who are fleeing the risky, high-priced home console market. Handheld games are vastly cheaper to develop, and as a rule priced much more competitively than home console titles - they are essentially the mid-priced mid-range of gaming which console fans so often lament the lack of. Expect many core gamers to find more and more of their gaming expenditure going on handheld rather than home console software in the coming years.
The final boom market? The trusty PC - a platform whose death has been predicted countless times in the past decade, but which actually finds itself better equipped than almost any other to capitalise upon the market conditions in which we find ourselves.
Ironically, the PC's death has been predicted so many times precisely because the platform is so open and so network-friendly. As such, piracy has always been rife on the PC - so much so that plenty of publishers have hinted darkly about abandoning the platform entirely. Yet it's those same factors which now make the PC into one of the most exciting and dynamic games platforms on earth - now that bright developers have seen past the increasingly tired market for monolithic, £40 boxed games - a market which is so easy for piracy to destroy.
The PC's openness, its easy access to digital distribution services and its limitless potential for experimentation with new business models has led to a new breed of indie developers, creating some of the most fascinating games of recent years and increasingly joined by veteran studios and developers who find themselves energised by the possibilities of this resurgent platform. It's easy to get carried away, though - this is still a movement in its infancy - but more than any other platform, it's the PC and its burgeoning indie scene which is benefiting from the battening down of hatches in the console market. For the first time in years, the boy has stopped crying wolf over the death of the PC. Instead, everyone is watching this platform intently for a glimpse of what is almost certainly the future of the core games market.