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Charging more for games won't rescue triple-A

Charging more for games won't rescue triple-A

Fri 05 Jul 2013 6:43am GMT / 2:43am EDT / 11:43pm PDT
BusinessPublishing

If AAA can't grow its audience, it will become irrelevant - and trying to wring more money from players is part of the problem

The announcement, public backlash and swift withdrawal of Microsoft's ill-fated DRM plans for the Xbox One isn't exactly the brightest or most glorious chapter in the history of the games industry. There are plenty of us who'd like to move on from the discussion - it's been done to death by now, surely? Yet to me, perhaps the most fascinating thing about the Xbox One's traumatic first few weeks has barely been touched upon at all in media commentary. The fact is, this controversy laid bare a fault-line in the industry - it brought all of the fears and nightmares of the industry out of the box under the bed and blinking into the light, revealing the vast chasm that has opened between some game makers and their consumers, and the awful hostility which exists on both sides of that gap.

"AAA development isn't sustainable. That's the fear that won't let some of this industry's most talented and creative people get to sleep at night"

AAA development isn't sustainable. That's it, in a nutshell; that's the fear that won't let some of this industry's most talented and creative people get to sleep at night. The business is broken. Games cost too much to create and release, and don't make enough money in the end. A handful of enormous hits generate most of the profit, while everything else feels lucky if its losses aren't too huge; the industry has always been hit-driven, but never has the gap between the hits and the misses felt so large. Studios stagger from one release to the next without ever seeing a royalty cheque, just delighted that their work on the last game was good enough to get them a publisher contract for the next, probably unprofitable, title - just another shot at making the next Call of Duty and actually working on something that doesn't piss money up the wall.

It's a bloody horrible state of affairs, and even if it's not always that bleak, the reality is there in black and white in publisher financial statements - the exclusive club of money-making franchises dominates the industry more than ever, but gaining entry to that club has never been tougher or more expensive. AAA isn't working. Something has to change.

That's the origin of perhaps the most common and illogical sentiment among supporters of Microsoft's late unlamented DRM policies - "at least they were trying something new". It's the frightened statement of someone who knows that the status quo is broken and is willing to embrace anything new, anything at all, which attempts to change the situation. It's also, however, the origin of a more firmly rooted and yet even more worryingly wrong-headed notion which has taken grip of many people in the games industry. AAA isn't working, this notion says, and the reason for that is that consumers aren't paying enough money for games.

The logic is simple, of course. The problem with AAA development and publishing is that it costs more money than games are making. One solution - logically, mathematically - is for consumers to pay more money for games, thus increasing revenues and magically solving the problem, at least for a while. Proponents of this idea glance around the industry and see that while some consumers pay the suggested retail price for games, the average amount paid is dragged down by second-hand sales, by lending and borrowing among friends and by steep retailer discounts to boxed copies of games. The SRP of a game may be $59.99, but factoring in all of those issues, the actual amount of money a publisher charges for a game, on average, is quite a bit lower - perhaps half as much, or even less.

"The last thing we need is for the industry to turn inwards on itself, honing its ability to extract the maximum possible cash from an ever-shrinking niche market"

The intuitive leap from that understanding to deciding that these practices are all bad, and wrong, and hurting the industry - selfish consumers! bad consumers! - is very simple to understand. Remove all of those factors, as Xbox One intended to do, and you end up with the average price paid by a consumer shooting back up to the $59.99 SRP, just as the publishers intended in the first place. All those bad, selfish consumers pay proper prices, the games all make more money, AAA development is saved and everyone's jobs are secure. It's a tempting and utterly understandable line of argument, but it simply wouldn't work - in fact, it risks being hugely damaging to an industry that's already in trouble.

Here's this approach in summary - "save AAA games by making more money from the same consumers". If you think you can rescue AAA by following that strategy, I'd submit that you're part of the problem, not part of the solution. AAA development isn't in trouble because its consumers don't pay enough money - it's in trouble because the growth of its consumer base has stalled. After years of meteoric growth, AAA games have hit a ceiling - new people are playing games in droves, interactive entertainment has gone every bit as mainstream as anyone dared to dream, yet AAA experiences are utterly failing to encourage new audiences to jump in, to swim upstream and become fully fledged video game consumers. The problems are myriad and they're all interrelated. There's a content problem, a marketing problem, a perception problem; there's an industry which struggles with the difference between "adult content" and "content for adults", which still isn't entirely comfortable with women or minorities, which exists in thrall to risk-shy management that stifles any chance of opening up new genres or speaking to new audiences.

None of those problems are going to be helped in the slightest little bit by increasing the financial barrier to entry into this industry's creations. When your ability to grow your market has hit a barrier, you overcome that barrier with creative talent and brave management, not by hiking your prices to make your market even more unappealing to newcomers. Like I said - if that's your strategy, you're part of the problem.

This isn't to say that there aren't valid strategies which increase average revenue from existing AAA customers - but they're focused on raising the ceiling, not the floor. Limited editions, merchandise, add-ons, events, DLC and a host of other approaches can allow your most devoted fans to spend vastly more money on your game. Focusing too heavily on this side of things risks breaking your covenant with the majority of your audience, but giving your top fans the ability to spend more in order to feed their love of your game is a great strategy that some companies have been slowly mastering over the years (even in the pre-DLC era - how much money do you reckon the biggest fans of Final Fantasy 7 have spent on the game and its various tie-ins and merchandising items in the many years since its release?).

"Salvation must come not from price hikes but from a resurgence of creativity and a concerted effort to engage with a wider audience"

Merchandise, DLC and the like functions, however, to increase revenue by raising the ceiling on how much people can spend. Crucially, the floor remains the same; the step up to enjoying your game is no higher than it ever was before. Raise the floor, and you limit your audience even more than it is already limited - and believe me, it's limited enough already. We're at a crucial point for the games industry right now, and the very last thing we need is for the industry to turn inwards on itself, honing its ability to extract the maximum possible cash from an ever-shrinking and increasingly niche market.

You think that can't happen? It can, and it has. For a sobering example of where this policy of increasing the industry's costs of entry would lead us, look at where Japan's animation industry - which only a decade or so ago looked on the verge of a major international breakthrough - has ended up. After producing break-out hits in the late 1990s such as the internationally acclaimed and hugely popular Neon Genesis Evangelion, the anime industry in the mid-2000s ran into difficulty in further expanding its audience - and began to focus instead on jacking up its price of entry, concentrating efforts on those fans who were willing to pay large amounts for box sets and merchandise. The trend accelerated rapidly, resulting in an industry which - apart from occasional hits which break the mould - is largely focused on producing series which cater to the esoteric tastes of a relatively small band of hardcore fans who are willing to part with enormous amounts of money for Blu-ray discs and high-end merchandise, at the expense of any hope whatsoever of capturing a wider audience. Confined to this virtual Galapagos of its own creation, the stunted anime business is now deeply unlikely to make any significant headway as a global media force. Needless to say, this is not a path which anyone wants to see AAA development following - yet as soon as you start arguing for jacking up the price of entry to AAA gaming, this is exactly the path you are walking.

The fear felt by people working in AAA gaming - or people who love AAA gaming, as I do - is completely understandable. The existing business model is not sustainable, and those who get their games in ways which drag down the average retail price (second hand, lending and borrowing, waiting for sales and discounts, etc.) are an easy target to lash out at. It's the wrong target, though. If AAA games are going to be a thriving part of the entertainment world and not a niche backwater catering to an esoteric slice of the existing audience, their salvation must come not from price hikes but from a resurgence of creativity and a concerted effort to engage with a wider audience.

This isn't beyond possibility, but sometimes, it feels like we've given up on the dream - that we've decided that the existing audience for games is big enough, and nobody else would be interested in the kind of experiences we could offer. Yet we live in a world where offices across the country buzz with chatter about Game of Thrones or Doctor Who, where Avengers Assemble is one of the most successful films of all time - where action, fantasy and escapism has never had greater currency. In this world, there is a path games can take to a bigger audience and a secure future even for expensive AAA development - but coming up with ways to wring more cash out of people for playing games isn't a step on that path. It's a step down a road that leads to oblivion.

54 Comments

Isaac Kirby
Studying Computer Games Development

40 37 0.9
Popular Comment
A very nicely written article, thank you.

I would like to throw an argument into the ring, that the struggles AAA is seeing now is linked to the death of "A" Games.
"A" games were a great tier, not the AAA sure, but often very good, very competent games. But they suffered by being the same price as AAA.
When confronted with 2 similar products at the same price the customer would be mad not to go with the more polished looking package. "A" gaming then decided it had to chase the quality of AAA. I believe this was the first mistake.


This failure to create a two tier system at the higher end of the gaming ecosystem simply saw the "A" game chewed up and spat out as "not the same value". Whats the easiest way to create a better sense of value? Drop the price.

I know there are probably more informed people than I when it comes to finance, but if an "A" game costs less, then surely it can retail for slightly less and expand the market by interesting people with its lower price.

Edited 1 times. Last edit by Isaac Kirby on 5th July 2013 8:56am

Posted:A year ago

#1

James Prendergast
Research Chemist

735 430 0.6
Completely agree - make a product that reflects the financial size of the market, not the product that reflects the financial size of the market you wish it was.

As many people keep pointing out on here and elsewhere - the size of the market for gaming has increased and continued to increase over the years but the average spending power of consumers who wish to spend on gaming has diminished overall.

Another call we keep hearing from "the industry" is that gamers are asking for these ever increasing budgets in games. I don't think that's true at all. People will ask for the moon if given the chance - who wouldn't want a million pounds? However, they will accept reality when presented with it - just like in every other market.

[edit]
@ Isaac:

Edited 1 times. Last edit by James Prendergast on 5th July 2013 8:56am

Posted:A year ago

#2
It isn't just AAA games that are having a tough time. They make the headlines because of the brands and huge sums of money. Notice the dearth of mid-tier games? The boxed model alone (as opposed to boxed + addons) isn't "sustainable" because the same product can be sold multiple times with next to no physical wear (so please do not mention cars or books in any counterarguments) - there is no benefit in choosing the copy that costs a couple of quid more. When there is a significant secondhand trade in digital software the problem will be worse because there will be no difference at all between copies. Increasing the trade price might well appear attractive if you don't anticipate any re-orders (remember that the publisher sells to retail and retail sells to and trades with the consumer).

Like any other business, publishers have to break even or go under. They have been trying a variety of things to stay in business: changing price, DLC, IAP, added value items (maps, soundtrack CDs), deluxe editions, merchandise, online pass, season pass, monthly subs, becoming more risk averse or leaving the boxed model.

Just a couple of comments on specific bits of text:
The SRP of a game may be $59.99, but factoring in all of those issues, the actual amount of money a publisher charges for a game, on average, is quite a bit lower - perhaps half as much, or even less.
The publisher doesn't tend to sell to the consumer, so that doesn't make sense to me.
Remove all of those factors, as Xbox One intended to do, and you end up with the average price paid by a consumer shooting back up to the $59.99 SRP, just as the publishers intended in the first place.
Surely the average price is unlikely to be equal to the upper bound (assuming the SRP is the upper bound).

And I have never heard consumers described as "bad" or "selfish".

Posted:A year ago

#3

Tameem Antoniades
Creative Director & Co-founder

196 164 0.8
We've had 20 years to establish multiple price points. This would have encouraged a healthy mix of blockbusters and creatively risky games. If the machine really is too stubbornly broken to fix, then the efficiencies of creators and consumers trading bits for cash directly will get us out of this AAA-hole

Posted:A year ago

#4

James Prendergast
Research Chemist

735 430 0.6
@Tameem - Or we have another "reset" like in the 80s. :)

I'm not convinced that "digital" is any less costly (in fact, I'm pretty sure it's more costly over the longer term) than physical to produce and maintain.

Not that I should be smiling. :/

Posted:A year ago

#5
There have been and are multiple price points, so I'm not sure why people are saying there aren't. Perhaps it's because of the dearth of product that would ten years ago be at those price points. Retail tends not to be interested in "creatively risky" product.

Posted:A year ago

#6

Benjamin Crause
Supervisor Central Support

79 36 0.5
This is one of the best articles I ever read on here. Great job.

I too believe we do not need to milk customers for more money via SRP, DLC, IAP or horrible expensive and overdrive-mode collectors editions. What we need is content that reflects the price. Games that deliver fun and entertainment. If you do that customers will happily come back and buy more. Also if you offer DLC with actual content that does not scrutinize or cut the main game and is not just cheap cosmetic stuff that you deliver real content for a price. Again a reason to buy it.

Trading and borrowing games is also something that I think is a good thing for the industry. It gives more customers the chance to meet a new franchise, to buy DLC and to become a first hand customer.

After all I think many customers who do borrow out games are your games advocates who encourage others to try it out. What is a better way to get more people in touch with your games?

Edited 1 times. Last edit by Benjamin Crause on 5th July 2013 9:42am

Posted:A year ago

#7

Adam Campbell
Associate Producer

1,154 941 0.8
In my mind (ok and often on forums) I'm running a bit of a campaign for lower boxed game pricing, I'd like to see it much closer to the latest movie formats (i.e. Blu-Ray), which of course, is a stark contrast to the increasing prices used make up for ever inflating budgets.



I would also be a supporter of alternative pricing models and approaches to game releases - i.e. more episodic content with lower pricing and more manageable development cycles, and further to than overall rethink on the amount being spent making these games, knowing that astronomical sales are required just to break even.

Posted:A year ago

#8

Andreia Quinta
Creative & People Photographer

214 535 2.5
That was a great read, right on the money.



Since I can't compare it to cars (as Defries mentions) I'll use the industry that the games industry is constantly trying to mimic, the movies.
So it's estimated that The Hobbit cost somewhere between $200-$315 million to make, it would be in comparison a AAA title. Now let's say (from what very little numbers I managed to scavenge on the internet) that Black Ops II costed maybe $30 million, but to be more accurate, $200-$250 million, already taking into account development, marketing, manufacturing, distribution and console royalties.

They are very similar in a sense that they had similar budgets, both require a hefty marketing strategy, both only sell once per consumer and make no more profit of it after the initial sale apart from merchandising & limited editions 'swag', which both industries can provide. Both are digital mediums, in a sense that the disk won't wear off with care, the film / game won't degrade over time to help lose value.
Now adding to this similarity list, there are two main differences:
- Games can make extra revenue after the initial sale through DLC, which movies can't.
- In 20 years I can still play my BR copy of The Hobbit; But we can't say the same about playing BLOPS in multiplayer, or a better example, I can't say the same about playing Diablo III or the new Sim City.

Edited 2 times. Last edit by Andreia Quinta on 5th July 2013 11:04am

Posted:A year ago

#9

Darren Adams
Managing Director

231 414 1.8
AAA development is very top heavy and I would argue most of the money spent on development is never seen by the people that actually make the games. You only have to look how much some of the publishing CEO's and top management get. Don't get me started on marketing!

This is why I am really excited by the Indie movement and the risks that can be taken with low cost development. Don't get me wrong, I love playing the big AAA games like GTA and The last of us, but they are an endangered species unless some of the costs are reduced. As Rob pointed out, passing on the costs to the consumer is business suicide.

But then again, most of the 'big money players' in the industry don't give a flying fuck whether the games industry lives or dies. They will just swan off with their 20 billion dollar bonus and jump on the next bandwagon, leaving all the passionate game developers to pick up the pieces.

On one hand I hope the industry implodes so all the greedy bastards at the top that really only care about profits and bonuses think the cash cow has stopped giving milk and bugger off to some other industry. Then on the other hand I do like my AAA games and the way things are done these days means you need shit loads of money to do so.

A change is needed, but not one that punishes the customer.

Posted:A year ago

#10

Isaac Kirby
Studying Computer Games Development

40 37 0.9
@ Andreia:
I do not really think it is comparable to films at all, they have the Cinema Ticket takings that are a huge part of the income.
And here, customers can and do pay twice for a flim, once or more at the cinema, then the Blu-Ray/DVD to keep.
Part of the reasons Blu-Rays are cheaper is that they are not the films only revenue stream.
Also, the EULA for games is appreciably different from that of a Blu-Ray. Games sell you a software license, full of loopholes for publishers to scrabble out of. I'm sure fully reading some of them may shock. Blu-Rays sell you a copy, yours to do what you will except distribute prated copies

I appreciate the effort in making a non-car argument. But Games are not comparable to other media, though they are in the same family. The industry has it's own problems, and it must evolve to overcome them or die out trying.

Posted:A year ago

#11

Adam Campbell
Associate Producer

1,154 941 0.8
This is why I am really excited by the Indie movement and the risks that can be taken with low cost development.
Yup.

Posted:A year ago

#12

Jim Webb
Executive Editor/Community Director

2,246 2,233 1.0
Popular Comment
Profit problems? Reduce budget.


Too many games these days appear to target a high budget point rather than a high quality point. Almost like they are making an expensive games just for the sake of being an expensive game.

While quality does come with a price, it doesn't have to come with a $100 million price. If you are budgeting that much, do the industry a big favor and quit your job.

Posted:A year ago

#13

Dan Howdle
Head of Content

280 810 2.9
Better middleware. I can't rationalise this argument when there's still studios out there shouting about their 'brand new engine', built 'from the ground up' every five seconds.

Better, more efficient middleware solutions need to be looked at across the board so that games are cheaper to make. This would also solve the problem, would it not? I anticipate companies specialising in human resource-minimalising middleware applications being the true winners this gen.

At least, that would be the solution I would look for because it compromises neither quality nor consumer expectation.

Edited 1 times. Last edit by Dan Howdle on 5th July 2013 12:17pm

Posted:A year ago

#14

Andy Bastable
Lead Programmer

12 22 1.8
Popular Comment
@Dan,

That would be true if the engineering cost of AAA games was the biggest drag on development cost, but I'd wager most of that comes from content creation, and marketing costs - neither of which are mitigated by an "off-the-shelf" engine...

Posted:A year ago

#15

Dan Howdle
Head of Content

280 810 2.9
@Andy

Fair enough. Your knowledge in this exceeds mine by quite a bit, I'll wager.

Posted:A year ago

#16
Andreia, don't let me stop from you talking about things you want to talk about, I just think 'the car argument' is an unreasonable and tired analogy. Films and other digital products on physical media or those distributed digitally seem a more fair comparison than cars but some differences remain as you suggest. So far as I know, the movie business tends to try to recoup money from selling to cinemas - sales from DVD and Blu Ray are on top of that. The potential audience for a film is orders of magnitude larger than it is for a console game.
Why doesn't the game industry mimic RRP as well when the total budgets are similar?

Reducing price doesn't solve the economic problem of a product competing with an essentially identical, slightly lower priced copy. Unless it's so low that there is no value to the consumer in hauling the used product to the retailer for trade-in.

Incidentally, I don't think secondhand sales should be stopped. I just dislike the polemics against responses (generally speaking) to the economic problem; e.g. "i hate DLC" instead of "I hate this particular DLC", or "this particular IAP".

Edited 1 times. Last edit by Tristram Defries on 5th July 2013 2:01pm

Posted:A year ago

#17

Joćo Namorado
Project Manager

51 16 0.3
Great article Rob.

People only have a limited amount of money they can or are willing to spend on videogames. If you charge more for games people will not spend more, they will only buy less games. Actually they might even spend less, since the price asked might get too detached from the value people think a game's worth. It's amazing how many intelligent people in this industry seem to believe that if they charge double the price they will make double the revenue.

@Isaac:
With IAP, DLC and other additional revenue streams I think the comparison with movies is much more valid today. It's true that the games' industry has it's own problems, though, but it also has much more opportunities, I believe.

Posted:A year ago

#18
Personally I would prefer games to be around 10 hours long and about a 1/3rd of the price to complete the main story. If it requires longer to tell the story it should be split into more parts - If it's not popular enough to justify the sequels then the audience has spoken.

How popular would cinema be if every movie was 6 hours long? How expensive would TV be without pilots? Having overly long games only caters to the real hard-core fans plus if they're really keen and it doesn't achieve the sales to justify the sequels then there's always kickstarter.

Shorter games would naturally lead to smaller development costs and a more evenly distributed market. Call Of Duty wouldn't take 50% of all sales or whatever it does.

Unfortunately this model really requires digital distribution to work effectively.

Posted:A year ago

#19

Greg Wilcox
Creator, Destroy All Fanboys!

2,156 1,076 0.5
I can remember when a game came out first, sold well and gained a following,THEN the merchandising wagons were rolled out over time. For the past few too many years it's been ass-backwards for newer IP as well as titles that really don't need so much over-merchandising. Early adopters snap these sets up quickly, but these sets are generally over produced to the point of not being so "limited" once the initial excitement dies down.

The idea of box sets and CE/LE versions is cool, but I think with few exceptions, the thrill is gone thanks to so damn many games getting them and the fact (save for some interesting examples of well-done overkill) that most sets are filled with cheaply made junk that never "enhances" the overall experience. You can't make a bad game better with a figure, mask, art book, RC toy or soundtrack, that's for sure.

Besides, as I keep saying...that stuff should be sold direct from publishers and not in stores because you always see unsold or returned stock lying around a few weeks after some of these AAA games hit and not make much of a splash critically or with some of those folks who want to wait for that inevitable price drop.

And yep, WAY too much money is spent on marketing some AAA titles, particularly sequels with large enough fan bases that those fans themselves can probably be used as the best promotion for some of these games rather than over-bloated TV spots and billboards all over every conceivable surface.

Of course, a bizarre paradox exists where SOME gamers (who complain about pricing being too high) seem to think that in terms of console titles, a higher SRP means a "better" game while a budget price point means a "low-quality" experience (which as we all know here, isn't true at all)...

Posted:A year ago

#20

James Ingrams
Writer

215 85 0.4
I think it's already too late. We have had 10 years of risk aversion leading to today, where the new console (Sony and Microsoft) games are 90% shooters, 5% racing games and 5% everything else - if you're lucky!If 40 shooters come out in the next year, most gamers will only get two or three as they are all pretty much of a muchness in gameplay,albeit with different stories. Just look at the E3 trailers to see ho many modern day shooters there are! Very very few gamers will by even half of these, even if they absolutely love shooters! The average console gamer bys 12 games a year and maybe gets a couple more as presents. Yet I counted 16 trailers that were shooters!

I think the success oft he Witcher series, Demon Souls, GOG.com and the ever growing indie and "AA" market shows that gamers no longer talk about how you don't need great graphics to make a great game without actually meaning it, but now thinking it with the fibre of their soul! Also now you regularly get $20 "AA" games like E.Y.E. Cybermancy and the recently released Explorations: Conquistador and Mars: War Logs Certainly these games are 80% as good as AAA equivalents but for one third the price, and are bought to market for $1- 5 million. Even The Witcher only cos $8 million and the Witcher 2 $12 million, all these games will probably be perceived as not being "hits" and ye they will all be very profitable!

Posted:A year ago

#21

Jennie Sue
Developer Relations Manager

2 1 0.5
Thank you for the article Rob.

A thought: base number of users and hardware install rate.

You mentioned that triple A games aren't encouraging new users in as frequently anymore. But borrow a page from Mobile games, Facebook or even Steam. Why do these platforms continue to grow at such a high rate? Because the base number of users is so high. When you have billions of potential gamers to work with, you have more opportunities and more variety that can be created and still succeed. Think back to PS2 and how successful that market share was. Everyone could take a piece of the pie because the pie itself was bigger.

So consider to start, rather than putting the responsibility and pressures fully on third party developers, put it on 1st party hardware guys and consider lowering the costs of all consoles drastically or give them away for free with a subscription. The point is, to do whatever you can to widen that base number to provide more opportunities.

One last point: mobility.
You can play you mobile, Facebook, and Steam games from any computer/mobile device. But instead of making the consoles more portable to fit the current mobile lifestyles, or focus on compatibility between console and mobile devices, they've gone up in size, and the compatibility with mobile just scratches the surface. Sony's on the right move with Vita and PS4 compatibility. But go broader. Get your games so I can play them on my iPad or iPhone.

Posted:A year ago

#22

Sergio Rosa
"Somewhat-Creative Director"

62 35 0.6
Profit problems? Reduce budget.

Too many games these days appear to target a high budget point rather than a high quality point. Almost like they are making an expensive games just for the sake of being an expensive game.
My thoughts exactly. For some reason devs like saying "this game cost all these millions to produce," and they forget the fact they need to sell more just to break even. I am amazed at how many "this game was a flop, it only sold 3M copies" stories I read, while smaller devs would be more than happy to even reach 300K copies.

Posted:A year ago

#23

Bruce Everiss
Marketing Consultant

1,692 594 0.4
1) Get rid of plastic and cardboard. Persisting with them is plain stupid.
2) Treat games as a service, not a product. React to and look after the customer.
3) Embrace different and multiple business models.
4) Stop developing so ridiculously inefficiently. There is absolutely no need.
5) Broaden the genres of games on offer thus increasing the demographic appeal.
6) Open your eyes and realise that it is not 2008 any more.

Posted:A year ago

#24

Jennie Sue
Developer Relations Manager

2 1 0.5
Yes

Posted:A year ago

#25

Tim Carter
Designer - Writer - Producer

556 293 0.5
Of course it's sustainable.

The problem is that game developers are constantly trying to re-invent the wheel. If they'd stop trying to rebuild everything from the grouind up they'd find that that solved half the problem....

(Oh, but the the poor programmers wiould be out of work... TOUGH!)

Posted:A year ago

#26

Darren Adams
Managing Director

231 414 1.8
Popular Comment
The problem is that game developers are constantly trying to re-invent the wheel. If they'd stop trying to rebuild everything from the grouind up they'd find that that solved half the problem....

(Oh, but the the poor programmers wiould be out of work... TOUGH!)
You really don't have a clue do you. Without programmers you would have no game, who do you think writes and maintains the middle-ware? tech fairies!!

Anyone can come up with an idea, but it takes real talent to put that dream into a fully functioning game. Show a bit of respect to people that are far more important than you like to think you are.

Edited 3 times. Last edit by Darren Adams on 5th July 2013 6:12pm

Posted:A year ago

#27
And we're back to F2P.

F2P naturally leads to focusing on merchandising and crappy IAPs which are detrimental to the game. It's as if TV was completely made up of Reality TV programs that made their money of product placement, appearance money and sponsorship deals.

However there's also a market for HBO dramas and that's the business model AAA games should be looking at. It could be either the subscription model where you sign up to a channel, Netflix/iTunes where you buy individual episodes or DVD box-set model.

F2P only works for casual games where the cost of development is cheap, it will end up ruining AAA.

Unfortunately Microsoft shot themselves in the foot and then followed up with a bullet in the head for good measure but that's the argument they should have been making rather than "stopping used games". I suppose pissing of retail was too much of an issue although ultimately I still think they'll get there.

Edited 1 times. Last edit by John Owens on 5th July 2013 6:33pm

Posted:A year ago

#28

Andrew Jakobs
Lead Programmer

230 89 0.4
I'm sorry, but if I read most comments from gamers all I see is that they complain about the graphics not looking good (even though it never looked better before), people want to see even better graphics, better graphics means higher budgets.

Also you see a lot of people trying to get into the business or setting up shop themselves, because it's so easy these days, but all they produce are small little games. Yes that's nice for a moment, but a lot of gamers just won't see the games anymore because of all the floods in all digital stores.. Hell I don't even really check out the digital store anymore because it's all screaming for you attention but once you played it, it's just games I used to play and a lot of times not even better (yes better looking)..

It's been quite a while (years) since I last seen a really new idea in games, all it is these days is a rehash of what we've already had.. And claiming that little indie-shops come up with fresh and new idea's is also real BS, as I said all they show is games we've already had a decade ago.. nothing new.. And things like kickstarter is somehting that will also stop when gamers have been 'burned' too many times.. because yes haven't we heard most talk from the big studio's before? but from a little indie of a industry-oldie people tend to believe it, until they notice it's all the same crap time after time...

When I see stuff like battlefield 4 (as an oldie my yaw just dropped) I even wonder how a real indie/small team is able to do such a thing on a small budget, as IMHO it isn't possible, and even with footage like that, you'll notice enough gamers bitch about the graphics not looking good..

Posted:A year ago

#29

Alfonso Sexto
Lead Tester

788 598 0.8
It would rise the imports from UK in Europe, that's for sure...

Posted:A year ago

#30

Craig Page
Programmer

382 218 0.6
They'd probably be better off charging less for AAA games, and definitely less for AA games. When I was a kid NES games cost around $80 to $90 each, and I had maybe 5 of them. Now as an adult who waits for most 360 games to go on sale for $20 or $30, I must have between 60 and 70 of them.

Posted:A year ago

#31

Axel Cushing
Writer / Blogger

103 129 1.3
@Darren
What I think Time was taking issue with is the mindset of "new project, new everything" that seems to happen when new titles are laid out. And yeah, he might have been a bit more graceful about it, but he does have a point.

Ideally, there should be a partnership between the programmers and the content people. The programmers build the tools that the content people need to create the content. The content people providing feedback to the programmers to help improve the tools. It should be a perfect circle where the content people are producing more content and fewer improvement requests to the programmers, and the programmers should be freed up to lay down the foundations for the next generation engine and tools.

Past a certain point, yeah, I can understand the need to build a new engine and new tools to take advantage of new technologies. But starting from scratch every time is a major investment of time and money which could be spent elsewhere.

Posted:A year ago

#32

Lee Hewes

11 10 0.9
Fantastic article, while it didn't make for happy reading, it got to the heart of the matter without worrying about who was going to get upset. Clear and analytical pieces aren't always easy to find these days!

I think the budget for AAA games really needs to be addressed. If as pointed out you look at it mathematically, the most obvious way to make a profit is to up the prices. However, it will never work especially with the average consumer having less disposable income at present. Gamers are cautious about new releases after the hyperbole passes and they were left with a product which wasn't quite what they hoped it to be.

These days, it seems more about the perceived risk as a consumer, is this game worth spending X amount on and what incentives are there to entice me? Skins, DLC and extras are nice but are not viewed as being enough to make a consumer part with their cash.

If the game costs even more then surely the percived risk is greater yet the incentives are exactly the same, your not getting more then what the consumer expects. Yes, the game itself should be a higher quality then a previously lower tech game but eventually, once multiple games come out at the current tech level, your brand new shiny product become the norm.

Edited 2 times. Last edit by Lee Hewes on 5th July 2013 9:36pm

Posted:A year ago

#33

Chris Wise
Game Developer / Entrepreneur

6 0 0.0
Great article and some very interesting comments.

As mentioned earlier, a point made about better middleware solutions for developers and I believe this also relates to art assets and content creation tools. There's an incredible amount of wastage in the games industry, especially in terms of art assets that could be reused/modified and licensed/shared among developers, thus lowering costs dramatically across the board. However we're still seeing an attitude of developers wanting their own 'unique' assets, or 'we can do it better ourselves' ...pride can be such a foolish thing.

Posted:A year ago

#34

Anthony Gowland
Lead Designer

176 561 3.2
But starting from scratch every time is a major investment of time and money which could be spent elsewhere.
Can you give examples of recent AAA games that were "started from scratch"? You talk about it as if it's the norm, but I don't think it is - I think I've worked on one title ever that was built completely from the ground up, rather than on parts of an existing engine or content pipeline.

Posted:A year ago

#35

Chris Wise
Game Developer / Entrepreneur

6 0 0.0
Anthony I'm not talking about devs/publishers reusing their own assets, I'm referring to devs making use of asset libraries that are available to anyone.

Posted:A year ago

#36
Finally a little bit of truth, bravo.

Yes the major issue with the AAA industry is when budgets of projects went up, it was decided to similarly raise prices, of course the higher the price the less people buy it, and they would likely have made if not the same then more money by charing a more reasonable amount seems to have passed publishers by.

Frankly prices are appropriate at the 30-35 range, statistics I read recently places 48% of the UK's population earn 18 thousands 600 pounds and less, when you factor in other increasing prices such as rent where applicable mortgages where applicable, car insurance, mot's, increasing food prices, so and so forth the budget left for entertainment looks somewhat squeezed in recent years, charging more is not going to encourage more overall money to come in, rather the opposite, it encourages used markets, and ensures only a fraction of players buy new games.



Greed might look good in a board meetings, but rarely serves the aim of actually making more profits in reality, usually to much greed = to little profit not the other way around, they've squeezed out the number of people capable of affording new games to a smaller percentage of gamers then every before, and those that do tend to buy only a couple a year, then everyone elses waits for its budget release a few years off or buys 2nd hand cutting out the publisher entirely, its entirely logical, entirely inevitable, and its a telling problem with this world that publishing boards aren't bright enough to have foreseen this would be the only possible consumer reaction. Willful ignorance serves no one, you cant just raise prices and make more money, but they're truly stupid enough to believe you can, which is why the industry has the issues it has today.

Edited 2 times. Last edit by Alexander McConnell on 6th July 2013 4:14pm

Posted:A year ago

#37

Aaron Brown
BA Computer Science Student

56 21 0.4
The conclusion of this article is ridiculous and cowardly. You can always blame creativity in the industry as the source of stagnation. But creativity is impossible to measure because its both qualitative and subjective.

The industry needs to make the existing infrastructure more efficient and profitable. Thus, the industry needs to make quantitative, measurable changes to its business model going forward.

You cannot hire or attract top tier creative/technical talent, if you cannot pay for them.

Apart from the region locking, Microsoft was taking a step in the right direction. Their initial proposal could have helped alleviate the financial constraints that publishers and developers face, enabling more CREATIVE risk going forward.

Edited 6 times. Last edit by Aaron Brown on 8th July 2013 4:04pm

Posted:A year ago

#38

Rick Lopez
Illustrator, Graphic Designer

1,269 941 0.7
Ok this is the way the gaming industry works. It BLEEDS MONEY! Its like a jar with a hole at the bottom and no matter how much water you pour in it, it will never reach the top. I keep saying development methods and business practices need to change.

And here I go with my rant....(if you dont wanna read the whole thing read whats in BOLD)

Adding 200 people to your team everytime a game actually makes money will simply offset the cost of profits. Also game companies need to to make virtual equivalents of props and movie studios. And when you see guys like John Mattrick, getting 50million dollars for just sitting on a chair and dont participate in any way to making games. A single man should not be making 50million dollars in 1 year!!!! I can hardly see the games business as an effective profitable venture. I also think game studios avoid publishers at all costs. In the short term it may be great, but alot of times developers suffer in the long term. And how about lowering marketing costs. Sometimes publishers spend more on advertising the game than what it costs to make it.

Oh and lets not forget rediculouse sales projections. I cant see how is it, that its prudent to make a game and budgetting it around sales expectations of 12million units sold? Thats a fail right there....

the list goes on... as in maybe choosing a differant visual aesthetic/art style for the game, thats cheaper to develope for but not necessarily less impressive that way you dont have to sacrifice gameplay or story elements. Which to me are very important. Solid Snake or commander Shepard wouldnt be the great characters they are with poor writing. And people probably wouldnt love the games as much no matter how great the graphics were.

Saints Row IV may look like the previouse game, but judging from the financial status of the development studio I think it was prudent for them to develope a sequel that uses much of the same assets of the previose one, while making a different story and tweaking existing gameplay mechanics and in all this time thinking or even starting development of new gameplay graphics for part 5 and carrying over the perfected gameplay mechanics of number 4. They save money developing graphics for number 5, durring development of number 4 because they are using the same graphics of number 3. At the same time thy carry over a gameplay engine that has evolved since the 3rd game to be further enhanched in number 5. Im not saying this is what they did. Im using it as an example. Honestly I dont mind that the 4th game looks so much like the 3rd game and I can go along with a new game that looks similar to the 3rd game because I enjoyed it so much. And this is only a practicle point of view, not a point of view from a developer.

As much as I love the video games and care about the gaming industry, I think there are many things that can be done differently. You can sell games for 100$, and it still wouldnt solve the real problems . In fact higher prices will make things worse for everyone, less people will buy games and everyone will make less money, and then less games will come out and not as many games will be released. Except for cheap clones and crappy mobile apps because they are the only games people can be afford to make.

Edited 5 times. Last edit by Rick Lopez on 7th July 2013 3:17am

Posted:A year ago

#39

David M Lopez
Studying Game Art and Design

8 2 0.3
I have no idea if this is still true or not. My teacher at school used to work for Midway. He said that the first year of development is use to just mess around and trying new things. They would waste an entire year on things that would be cool but never made it into the game. I wonder if that still goes on today. I honestly couldn't just mess around all day and feel like I earned a paycheck. If a year is being wasted so is the cash.

Edited 2 times. Last edit by David M Lopez on 7th July 2013 5:02am

Posted:A year ago

#40

Darren Adams
Managing Director

231 414 1.8
@David

It is usually called pre-productiion and it is still commonplace. I would argue that good pre-production is worth it's weight in gold though.

How many times have you played games and thought 'Hmmm they really didn't give this game a lot of thought'? Well pre-production is supposed to negate a lot of the unknowns and allows teams to test out game play features.

Many people think that someone designs a game and then everyone works through it like some sort of IKEA flat pack instruction pamphlet. From my experience and anecdotal evidence of other developers, this is rarely the case.

There is a huge difference between an idea sounding great on paper and it actually working in the real world..

Edited 1 times. Last edit by Darren Adams on 7th July 2013 10:18am

Posted:A year ago

#41

David M Lopez
Studying Game Art and Design

8 2 0.3
Thanks for clearing that up for me, I am fairly new to all of this. My opinion on the pre-productiion is that it is a good idea but only with a goal in mind. People lose focus and then you waste time on ideas that are just impossible at the time.

Posted:A year ago

#42

Gil Salvado
3D/2D Artist

33 37 1.1
A very good written article.

@Tristram Defries
A shrinking mid-tier is a sign of struggling industry and ours has nearly died out already. This article is as much about mid-tier as it is about AAA development, because due to the latter struggling our mid-tier is dying out in the first place.

I don't see any reason to not compare the used game situation to car or book sales. Games may not loose any quality by usage, but they age just like all consumer products. All nostalgic values aside, most wouldn't pay the original release price for a 10+ year old game.

Edited 1 times. Last edit by Gil Salvado on 7th July 2013 10:08pm

Posted:A year ago

#43
Could we perhaps look into areas such as Marketing.

I often wondred how it was that marketing budgets, often were equal to or larger than the budget of a game being produced. Is it naive to reckon this could be significantly reduced to at least 1/3rd development cost?

Posted:A year ago

#44

Andreia Quinta
Creative & People Photographer

214 535 2.5
I do not really think it is comparable to films at all, they have the Cinema Ticket takings that are a huge part of the income.
And here, customers can and do pay twice for a flim, once or more at the cinema, then the Blu-Ray/DVD to keep.
Part of the reasons Blu-Rays are cheaper is that they are not the films only revenue stream.
Also, the EULA for games is appreciably different from that of a Blu-Ray. Games sell you a software license, full of loopholes for publishers to scrabble out of. I'm sure fully reading some of them may shock. Blu-Rays sell you a copy, yours to do what you will except distribute prated copies

In the end we've spent with that movie in total, that movie studio won't get any more money for that movie from us unless we buy merchandising or a digital copy somewhere (which anyway comes free as a UV copy a lot of times now).



This not taking into consideration any merchandising 'swag' which is available in both industries; So in the end movies have a possible 3 to 4 ways to profit from a similar budget blockbuster, games have... well, I've lost count. And again let's not forget that games can span somewhere between 2 (Electronic Arts) to 10 (Blizzard) years, whilst a Blu-Ray is indefinite.

Games have more possible ways to profit over medium-long term than movies that have to wait until the next magical format to arrive (VHS;DVD;BR). But with that much revenue over such a short period of time for a short game, we're still paying more than we pay the industry that needs to wait some 10+ years to sell us another movie copy.

In the end I have to agree that yes, those two industries are not fairly comparable, but only in terms of by what means they earn their revenue. It baffles me that an industry that can make so much more in so little time can be as expensive or more than an industry that makes maybe half of that, and even lasts decades upon decades. Talk about value...

Comparisons are bound to happen, but if not the movie industry (which gaming tries so hard to copy anyway) than what other industry is remotely comparable?

Movies make easier money than games because they are everywhere and they are everything, from award winning and endearing to distasteful and pure sickening, the movies want and know how to target everyone. They print so much more money because simply there's a lot more people to give them money.
Games? Games get (even more) flak just because a game dips a foot on sex, rape, guns or drugs. It's no wonder they want to charge more with such a limited market niche, everyone sees movies, not everyone plays games (and the pricing doesn't help).

I think I've extended myself too much, I'll shut up now.

Edited 2 times. Last edit by Andreia Quinta on 8th July 2013 12:21pm

Posted:A year ago

#45

Jim Webb
Executive Editor/Community Director

2,246 2,233 1.0
Dr. they could easily reduce their marketing budget by removing the Doritos/Dew/Dude reviewer funds.

Posted:A year ago

#46

Keldon Alleyne
Handheld Developer

434 406 0.9
@Dr Chee: The thing with marketing is, up until a certain point (which is very high) every additional penny on marketing brings in more revenue. The same is true of charities, all those administrative costs people complain about actually result in more money going to the cause despite the large amount that is not. This phenomenon, I'm sure you already know, is rent seeking.

I think the games industry could gain a great deal by including a mechanism for ads during loading and pause screens. I'm sure that ads and supporting mechanisms could do a better job than the current advertising market.

Edited 1 times. Last edit by Keldon Alleyne on 8th July 2013 12:41pm

Posted:A year ago

#47
Gil,
due to [AAA] struggling our mid-tier is dying out in the first place.
I'm sorry, I don't understand what you mean.
I don't see any reason to not compare the used game situation to car or book sales. Games may not loose any quality by usage, but they age just like all consumer products. All nostalgic values aside, most wouldn't pay the original release price for a 10+ year old game.
It is because cars "lose quality by usage" that I think they are an unreasonable analogy with things that don't "lose quality by usage". The loss of value over time is a different issue - of course I would expect products to lose value over time, especially as competitor products are released and certainly after ten years.

Posted:A year ago

#48
@ Keldon - thank you for your insight. Invariably though that high point might be analagous to high footballer wages whereby the returns, will not be commensurate to brand awareness and additional revenue (tu*d polishing only goes so far). As such, when we look at all the work that went into the recent E3, one can have a spectacular time trying to figure out how much manpower/cost went into producing presentations, trailers, ads, billboards, design, typography, goodie bags, hospitality to launch a effective charm offensive on local attendants/general televised audience

@ jim - I would love to have more relevant fun ad tie ins that was in vein with the spirit of the games for sure. Maybe marketing doesnt have to be AAA in cost to be cost effective?

Posted:A year ago

#49

Aaron Brown
BA Computer Science Student

56 21 0.4
@Dr.Chee Ming Wong
would love to have more relevant fun ad tie ins that was in vein with the spirit of the games for sure. Maybe marketing doesnt have to be AAA in cost to be cost effective?
The spirit of games?

Posted:A year ago

#50

Greg Wilcox
Creator, Destroy All Fanboys!

2,156 1,076 0.5
All nostalgic values aside, most wouldn't pay the original release price for a 10+ year old game.
CHAPTER TWENTY-SEVEN
Looking at the blank spot in his library where the extra copy of Earthbound sat for ages before being sold for a small fortune, he just smiled, but only a little. "Man, I'm sure going to miss that damn game", he said out loud before immediately thinking "but that offer was just too tempting to pass up..."

Posted:A year ago

#51
middleware is a weakness i've always touted. should be building smarter, not harder. this isn't always engine related, either. sure, it won't help with marketing expenses or big salaries at the top, but when you're closing in on 200-person teams over 3-5 years, clearly there are development costs getting up there.

Posted:A year ago

#52

David Serrano
Freelancer

299 270 0.9
"Salvation must come not from price hikes but from a resurgence of creativity and a concerted effort to engage with a wider audience."

But this can't happen until the development community (and academics) acknowledge the orthodoxy they collectively subscribe to about what constitutes a game and play is now a greater obstacle to engaging wider audiences than the problems created by business and marketing execs. In other words, the design philosophy behind games like COD (insert number here), Dark Souls, Bioshock Infinite, Assassins Creed III, etc... is a far bigger problem for the medium than the business philosophy behind the Xbone, day one DLC, season passes and DRM. And until all parties concerned acknowledge this... sales will continue to decline.

Edited 1 times. Last edit by David Serrano on 8th July 2013 10:58pm

Posted:A year ago

#53












Retail can buy a unit and sell it say three times (I've heard five or six but some people say that's an extreme). Will they take a million units or a third of a millon? Will they take the game if we haven't done any marketing?





Yes, gamemakers need to broaden appeal. But it isn't easy money.

Edited 1 times. Last edit by Tristram Defries on 9th July 2013 1:35pm

Posted:A year ago

#54

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