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Capps: $60 SKUs under threat from mobile games

Epic president expresses uncertainty over pricing of next gen console games

Epic's Mike Capps believes that the proliferation of cheap mobile apps could damage the next generation of console games.

Speaking to Industrygamers, Capps explained that 99 cent games pose less of a threat to a premium iOS release than they do to AAA titles like Gears Of War 3.

"I'm more worried that you can get a really good 99 cent game that occupies you for hours and hours on end and how that impacts $60 SKUs," he said.

"I'm not as worried about how it impacts Infinity Blade – I think there will always be room for a premium SKU on a mobile platform. And I think as more buyers [enter the mobile market], there will be more people who are willing to spend a bit more for quality."

"But I do worry about what it means for the next generation of console games. Are people really going to want to spend $60 on a game?... It's not a sustainable business model. I'm not sure how it all ends up."

This echoes similar comments made by EA Sports' Andrew Wilson to last week, when he said that, "there will come a time where the consumer is simply not prepared to pay $60 up-front for a game."

Capps also cited the availability of services like Netflix on Xbox Live as more damaging to Shadow Complex than rival games like Limbo or Castle Crashers.

"If you fired up your dashboard right there, if you already bought Netflix, you have tons and tons of awesome content that's bite sized in 1.5 to 2 hour chunks. So that was our competition, getting mindshare in the dashboard, more than it was against the other games in the space."

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Latest comments (23)

".....Are people really going to want to spend $60 on a game?... It's not a sustainable business model. I'm not sure how it all ends up."

Yes Mike, there are those of us that will. If the game is on the level of Mass Effect, Elder Scrolls, Uncharted, Metal Gear Solid, etc, then yes we will.
I am sorry but these articles about game industry veterans who think they got the whole world figured and then go on spouting bull are retarded. There will always be those that prefer console and PC games, in depth games and games that take so much investment and so many people to make that you have no choice but to charge so much.
I am sorry but there is still a lot of us that do not care about these little apps and mobile gaming.
Had they said that these mobile apps will force console industry to evolve I would give them credit. But this is just too ridiculous to be taken seriously. If these people think there is no future for console style games or $60 games, they are more than welcome to turn their backs on millions of hard core gamers. In the long run loss will be theirs. It's a lot easier to deliver a product to already built up fan base then to a general public that for the most part doesn't care that much about gaming.
I understand expending business and creating customers in other areas , but prophesying an end of long, complex games seems a bit naive.
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Aleksi Ranta Category Management Project Manager 10 years ago
Judging by the pre-orders for MW3 and BF3 I wouldnt be too worried just yet Mr Capps.
It has always been the case that quality sells and I dont see that changing for the unforseeable future.
But then again im not the president of Epic Games.

"I'm more worried that you can get a really good 99 cent game that occupies you for hours and hours on end and how that impacts $60 SKUs,"
Well, is this a case of either/or? I dont think so. People spend more time on entertainment today than 5years ago. That time can be easily split between small chunks of mobile entertainment and bigger bytes of AAA stuff. Whats the problem?

Just deliver content and quality that matches the 60 pricetag and your sorted. It is all very simple.
But then again, im not the President of Epic Games.

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The donkey complaining about ears!

Dear Zlatan Beogradlija I will say this to you:"I am sorry but these post about students who think they got the whole world figured and then go on spouting bull are retarded."
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Show all comments (23)
Matthew Eakins Technical Lead, HB-Studios10 years ago
@Rios, Zlatan might be a student but I agree with him.

Saying that mobile apps will eliminate AAA games is silly. It's like saying BigMac's will won't sell any more because plain hamburgers are available. I'm sorry but there will always be a market for things you can really sink your teeth in to.

But, I do think that there will some pricing adjustments in the next decade. More and more we are switching to digital distribution. As with CD's I believe there will be a decline on physical sales. When that happens charging the same price for the digital and physical copies becomes less and less justifiable. Physical games have the overhead of the physical product itself, distribution, retail markup, etc. Those factors don't apply to digital distribution and I believe that the obscene digital markup will eventually come down due to competition. I wouldn't be surprised if we see digitally distributed AAA titles come down by 40-50% as the retail market dries up.
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@Rios, Ouch! You are so bad!!
@Zlatzan, Maybe a better choice of words next time.

But I agree with BOTH.
1- Its not intelligent to criticize harshly a opinion of a man who has a wider vision (and much more experience) than you.
2- Still, maybe a price adjust will be necessary in the future. Digital distribution will be the default way to get games and discs will be just the "colectors edition" very soon. This game will change, and I believe that everyone will win.

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Alfonso Sexto Lead Tester, Ubisoft Germany10 years ago
Still people like me cares for a sngagin story inside a big world. As as of now no Iphone game gan give a world & story combo like "Dragon Age".
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Taylan Kay Game Designer / Programmer / Marketer 10 years ago
I don't know why people have this black or white mentality when it comes to competition. When OnLive was first coming out, people were asking if this was the end for the console makers. Now people are talking about whether mobile apps are the end for the AAA game makers. In either case, it's not the end, but that does not make it any less significant. The internet is not any less significant just because it failed to kill print media. The reality is, and that what the article says too, it will hurt. Hurt, not kill.

Yes, there will always be people willing to pay $60 bucks for a game. Just like there will always be people willing to pay even more to get the collector's edition. The question is whether there is enough of those people to bank on for commercial success, and Capp's point is that it's not going to be as easy as it was in the past. I am actually very glad to see such insight that does not define competition in narrow terms and understands what any game is up against. Ultimately a game is entertainment, and it competes against anything and everything that also entertains, for the dollars in my pocket and the hours in my evening.
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Nicholas Lovell Founder, Gamesbrief10 years ago
You are underestimating how unimportant the fact that *some* people will always want to play AAA games is to the future of AAA.

Enders Research estimates (for other media sectors) that the transition from physical to digital leads to a permanent reduction in revenues by 50-75%.

It doesn't matter that some of you want to play AAA games. If 30% of gamers stop playing AAA games, that is very bad news indeed for most big publishers. AAA is a high-risk, high-return market that needs big volumes to survive.

Unlike social, browser, smartphone, tablet etc.

In other words, deciding that you like AAA games so the industry is safe is a dangerously narrow perspective on the industry.
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Kieren Bloomfield Software Engineer, EA Sports10 years ago
Why are people so blinkered that they only see the two extreme ends of the scale? It's a large scale 99c - $60, there must surely be plenty of profitable strategies in between.
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What's that Rios did I touch a nerve? Donkey? How old are you? Yes, your argument clearly presents what a professional and a grown up person you are. I am a student because I went back to school to get a Master degree, not because I never worked.

I wasn't talking against the man or these apps, but against claims that without shred of proof spread childish doomsday fantasies.
The fact is economy is bad all around and of course people are spending less money. That is not a definite proof that console games are dying. There will always be market for AAA, they just might have to evolve and developers might have to rethink how they invest and spend money. There is place for both, consumer base will grow, not move from one product to next.

And with digital distribution we can all see the changes taking place all around.
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"It doesn't matter that some of you want to play AAA games. If 30% of gamers stop playing AAA games, that is very bad news indeed for most big publishers."

Nicolas, you are assuming that player base hasn't grown with development of 99 cent apps.
You are saying is that people that played AAA until yesterday are suddenly all on mass switching to these downloadable 99 cent apps.

"You are underestimating how unimportant the fact that *some* people will always want to play AAA games is to the future of AAA."

What are you going to say when most AAA became downloadable?
We are talking about millions of players not a handful. Besides even if most publishers move over to those apps, new ones will come to take their place. Valve realized that and they started digital distribution.
Are you assuming that the price of AAA games will not go down, ever?
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David Robinson Product Manager, Mighty Play10 years ago
The rise of television didn't kill the movie industry, and the rise of the internet hasn't killed either of them.
The console industry is definitely hurting, but the recession mainly wiped away the B-games portion of that industry.

Contexts are very different - social games, mobile games and console games all exist on the same axes, but they all have different types of demographics.

I don't think we'll see $60 SKUs going away anytime soon so long as we're talking about high quality/production titles like Gears of War, Mass Effect and TES Series.

What we will see are more and more freemium model games on consoles. Console games will fork along payment models, but I don't think we're anywhere close to one overtaking the other yet.
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Thank you David, a much saner version of what I was trying to say.
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Honestly.. I cant say that he is wrong or right. I think sometimes we believe that the past dictates the future and for the most part it does.. However in technology those rules do not apply. The consumer has a ever changing mind and they determine the future and the leaders. Hard core gamers love what they love. But if someone introduces something with a great experience on a different platform, you will have some takers on it. In 4 years apple has FOREVER changed the gaming scene. even for folks who dont play mobile games. IF it were not for apple, there would be no android, no new htc phone launching every week. no samsung touch screen with super amoled. 1, 1.5 and dual core cpu phones with 1gb ram. etc. no huge explosion of free to play with microtransactions. The technology in these phones is changing dramatically. Tegra is dual core with plans of quad core. As someone in the industry your focus should be on mult-platform game engines and not getting to comfortable with the current trends and being on the lookout for the latest and greatest
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Matthew Green Producer, Solar Studios Inc10 years ago
I am planning games that will retail for 100$ us (99.99) The consumer is programmed for inflation in every aspect of life from bread to cars. Similar to itunes killing the recorded music biz, Itunes is killing the gaming biz. Unlike music with concerts to make up the slack, games dont get made at all without profits. Steve Jobs does not deserve to absorb the wealth of the game industry as he has done with music. Stand up for your rights.

The line has to be drawn in the sand by content creators. Pay the makers and pay them well or have nothing made at all.

Edited 1 times. Last edit by Matthew Green on 25th July 2011 8:58pm

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Taylan Kay Game Designer / Programmer / Marketer 10 years ago
@Zlatan: I think you are over extending your argument in your fervour to advocate for the AAA games. Do you actually have any solid numbers or growth projections on the size of the AAA segment for the years to come? Or are you projecting what you would actually like to see happen? I am not trying to be hostile here, but just trying to understand the basis of your argument.

It might help to think of AAA PC games market; I remember many people back in the day saying "People will always want to play hardcore games on their PCs" or "Some people will never want to give up the power of PCs" or even "Digital distribution will make PC gaming king again." Well... do I need to remind how much ground PC gaming has lost in the last decade? Even the segment you call hardcore gamers is changing, with their preference of genre, their attention spans, their expectations.

@Matthew: Recorded music business had it coming. They deserved it richly, and mostly for their own ignorance of change. This is the ultimate take away from what happened to the music industry. The games industry can either argue day and night about who "deserves" what, or they can accept the new reality and adapt to it.
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Paul Gheran Scrum Master 10 years ago
Dear Mr.Capps,

You should be worried. Your games are run-of-the-mill suckfests. The 'GI Joe: Rise of Cobra' and 'Hancock's of triple A. If your titles were more fun, then they would not be at risk to loss of marketshare to things regular people can make in their garage during spare time.

GPG? Not at risk due to this evolution.

Thank you for your time.
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Johnathon Swift10 years ago
Ten dollars for a movie when I could just watch a tv show? Pphht, movies are dead.

Or, well that could be seen as something of a decent analogy. But "fun"... that's the key here. What is "fun" in a game? What do people buy and play games for? What does a $60 title do that a $2 title can not? Production value, expansiveness, variety. If people want these, they'll need to pay $60. So the operating hypothesis is that people don't want these... But if they didn't want them, why do higher production value games sell better, why do more expansive games sell well, why didn't we just stick with Tetris type games for the past 2 decades... Maybe because people like production values and most video game businessmen such as Saturo Iwata and Mike Capps, or hell even most of the mouthy casual/social game guys don't understand anything about economics.

The real question is why people spouting off about stuff they only have loosely tangential knowledge of makes "the news". If John Carmack says stuff about Graphics Programming or Rocketry I'm interested. If he's talking about game design, I'm not. If Mike Capps says something about production of triple A shooter titles or Middleware licensing I'm interested. If he starts talking about the rise of social/casual games, I'm not. Just as Carmack does not actually spend his days designing the gameplay of games, Mike Capps does not have a doctorate in economics, nor does he spend his days studying the rise of new business models in media and entertainment industry. Just because someone has an association with the subject at hand, does not mean they are highly qualified to evaluate that subject.
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Dennis Wan Game Designer, Nanyang Polytechnic10 years ago
If anything, prices of games are generally going down. 20 years ago, a popular Super Famicom or (SNES) game easily retailed for a hundred dollars (Super Robot Wars @ 9800 yen). The price of humar resource and technological investment then don't hold a candle to modern development, and yet the prices are being suppressed at about $60. Quite a winning situation for gamers, isn't it? At the moment triple-A development for PS3 and Xbox360 is already a multi-million dollar gamble, amd it won't get any better with the next generation of consoles. There's definitely still room on the lower end of the spectrum to grow, but console development definitely needs a good, hard look at itself, and the very real potential of extinction...
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I am sorry Taylan but you need to get off the pie charts, numbers and projection estimates. Those things alone, without any reality check, are not accurate prediction. I am projecting what I see people buying and they are buying both, AAA and 99 cent games. They are not in competition because consumer base has obviously grown and not shifted. That is a historical fact not wishful thinking. More people you have playing the better chance of diversity you have. There will always be those that want AAA games and there will always be someone to make money from it. So things might not be as they were in the last two decades but AAA will not completely die.

And, like you said PC games have lost a lot, but they are not dead. And, yes, things like digital distribution and quality of those products have helped them improve their chances. The more tech we invent and produce the more it becomes affordable. Production and delivery of AAA games might drastically change but it will not die because people still want those. The 99 cent games can't ever deliver quality and complexity that AAA budget can.

You bring up genre and expectations but please name one genre that has completely died out. Some of them might be much less successful but they are still made, even stupid musicals. And please don't bring "attention span" into this, that is like arguing that human race is getting dumber and going backward in evolution.

The fact is entertainment is a luxury and people are willing to pay premium to get it. People still want luxury cars and boats, and people still make them. There is a building bust but people still want skyscrapers. Economy is bad but people still go on vacations. Millions of people still go to theaters even though you can watch movies through Netflix.

To say that a businessmen will completely stop making one product just so that they can move to next new untested thing is unrealistic. Just because one side sais our charts and numbers predict the end it is over blowing the importance of those. Those are the things that got economy where it is. It looks like no one has learned from the last gaming crash and yet games have made a comeback. What you are predicting is that we'll take a step back when it comes to game development and nowhere in human history have I seen that.

Game industry should look to film industry on how they saved themselves by reinventing their business practices not by making shorter 99 cent movies. Shorter production time, utilization of new technology, unionized freelance workforce, involvement of smaller studios on a big budget productions. When TV came around Hollywood didn't die, when online streaming became possible TV didn't die. They reinvented their business. They still make successful shows for TV and movies for theaters.

What I see here is a handful of people attacking my counter argument to what these articles try to dish out solely on the basses that I am a student or without charts. Blind elitism abound. I might not be Marketing Strategist but I know to get my head out of charts and numbers.
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Unlike the music analogy, the products being sold are completely different.

The hard fact is there is *more* profit to be made selling games at $30-$60, than there is selling them at $1-$3: if this wasn't the case, games prices would have dropped years ago. And as fun as some of the iPhone/iPad games are, the majority of AAA games just don't work - or work as well - on these platforms.

If anything, the mobile game platforms will help improve the quality of 'AAA' titles in general - there will be less "crap" AAA ($40-$60) titles released, and a greater emphasis on creating titles that would never work on non-game dedicated platforms.
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Taylan Kay Game Designer / Programmer / Marketer 10 years ago
@Zlatan: Seeking objective evidence and facts to back up a claim is not blind elitism; it's called rational thought. And outside of politics, people will demand that of you frequently, just so you know. This discussion does not make sense anymore so I will stop adding to it. Have a nice day.

Edited 1 times. Last edit by Taylan Kay on 26th July 2011 4:37pm

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Curt Sampson Sofware Developer 10 years ago
A few points people seem to have missed:

First, It's not hard to find examples of specific expensive production forms that have more or less died out. The four-hour epic film of the '60s, for example, is gone, and has had no replacement. The combination of high production costs and being able to show only one screening in an evening simply made it uneconomical. So you can't say that this never happens.

Second, while a AAA game may be sold for $60 initially, a lot of copies get into the hands of people for less than that as the price goes down over time. I buy a lot of AAA games, and a fair number of them new, but paying full price for them is a relatively infrequent occurrence for me; I paid $20 for my (new) Borderlands GOTY edition, for example. So you can't just look at the market as, "who's willing to pay $60 for a game?"; you need to look at it as, "who wants this game at all, and what prices are various sub-groups within that group willing to pay?"

My impression of the situation, based on that second point, is that there's a negative feedback loop built in that strengthens the AAA gaming market as production shrinks. If publishers start to release fewer of these games, the ones that tend to be dropped will (generally) be the weaker ones, leaving an increased success rate for what remains. As well, as the selection shrinks and consumers are selecting from a smaller pool of games of overall better quality, they'll be able to spend more per game unless they start buying fewer games. Someone who's got Homefront and is still playing it is much more likely to be willing to wait a few months for the price of Battlefield 3 to come down than someone who's not seen anything he likes since Battlefield: Bad Company 2.

That, whether we like it or not, does seem to indicate that existing franchises will become even more dominant over time, and new AAA IP even less common, unless the developers and publishers find some way around this. One possibility is for the nascient "start system" to become more prominent: new IP will be sold based on designers, studios, or even actors that are known for the quality of their previous work.
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