Gaming's White-Knuckle Transition

Every part of the games business is transforming. That's both terrifying and exciting, argues Johnny Minkley

The death of specialist retail? The end of optical media in consoles? The last stand for dedicated gaming handhelds? Now more than ever the defining mood of the video games industry is uncertainty.

Take retail. GAME Group, which accounts for a third of the market in the UK, is on the brink of administration. Will GameStop step in, interest piqued by the lure of instant market leadership, to salvage specialist retail?

Or will games lose their presence on the high street, denying casual shoppers the chance to browse and try before they buy, and stripping variety from shelves, as the remaining supermarkets stock the key chart titles and little else?

Entire conferences are devoted to weighing the pros and cons of the business models available to content creators, but no-one is sure which way the wind will blow

The shift to digital is inevitable, but there is no "mp3 moment" for video games given the file sizes involved and current broadband speeds. Intuitively, everyone knows digital is growing rapidly, but by how much? How big is the market?

The official story, based on Chart-Track numbers, is one of decline - yet this analysis is fatally undermined by a lack of data, stubbornly tied as it is to physical sales.

Efforts, coming to fruition, to deliver a digital software chart in the UK are laudable and overdue, but will only ever paint part of the picture without giants like Apple and Valve in the mix - the latter's Steam service now so significant and powerful in PC gaming the man in charge of it is a billionaire.

Take the media. British magazine publishers weep at the might of Game Informer in the US as their circulations collapse and, having wrestled for years with the division of content between dead tree and online, now fret over how to handle the exploding tablet market.

Meanwhile, for professional publishing houses that have scarcely come to terms with the temerity of amateur bloggers to encroach all too successfully onto their hallowed turf, they now have the new broadcasting stars of YouTube to contend with, like Tom Syndicate, a lovely young chap who's amassed tens of millions of hits and hundreds of thousands of Twitter followers with his ultra-lo fi, hyper-enthusiastic videos - making a small fortune in the process.

Even reviewing a game is no longer a straightforward task, when it's increasingly hard to determine when a title can be considered "finished"; where games can be transformed with a free content update, and where the day-one patch has flung timings into chaos. And it's probably for the best I don't have the space to go anywhere near the can of worms marked "embargoes".

No longer, too, can the media rely on the old PR blueprint that ensured the press were the gatekeepers of new product information. In the age of the app, with hundreds of games going on sale every day made by studios with zero PR or marketing budget, the roles have reversed, with professional publications now heavily reliant on their readers for word-of-mouth tips.

Those stranded in-between, still peddling resource-intensive console titles without the marketing or franchise clout of the big beasts, are feeling the squeeze. More will inevitably fail

Take hardware. In the limbo of transition from one generation of console hardware to the next (which, most seem to agree, will be the last cycle as we know it) the clamour grows for news on what's next, hence the frenzied reaction to whispers that the next Xbox will not feature a disc drive.

Yet, as David Cage demonstrated so powerfully at GDC with his Quantic Dream's Kara short running in realtime on PS3, and as the release this week of thatgamecompany's phenomenal Journey shows with equal force, there's plenty of life left in these ageing platforms.

As the medium has matured, many games have come to be defined by the limits of technique, not technology. After all, Nintendo only joins the "HD era", ushered in so noisily by Microsoft in 2005, later this year.

And anyway, what on earth is a third-party developer supposed to make of Wii U? What about cloud gaming? A TV made by Apple that could easily do games? A Steambox from Valve?

Speaking of which, take developers and publishers. The old distinction means little to digital micro-studios bursting into life. Gaming's audience has expanded wildly and the market has polarised, with success enjoyed by heavyweight franchise blockbusters at one end and cheap apps/freemium casual titles at the other.

At the same time, those stranded in-between, still peddling resource-intensive console titles without the marketing or franchise clout of the big beasts, are feeling the squeeze. More will inevitably fail.

Entire conferences and acres of analysis are devoted to weighing the pros and cons of the business models available to content creators today, all very thoughtful and worthy, but no-one is sure which way the wind will blow.

Mills, who heads up UK app developer ustwo, offers a fascinating real-time case study via his Twitter feed (@millsustwo) of one studio's journey through this shifting landscape - sharing details with a degree of transparency unthinkable from a traditional games company.

Those of us fortunate to have lived, worked and played our way through four decades are a lucky generation that has borne witness to the birth and development of a new form of entertainment

As his most recent tweet suggests, there's no safe route to success: "Does anyone else out there feel a little completely and utterly disillusioned by the state of the madness that is digital?"

And then there's Double Fine's sensational Kickstarter crowdfunding experiment, which has set tongues wagging across the globe, while even the UK's most acclaimed and decorated game maker, Peter Molyneux, has seized the moment to jump from the Microsoft mothership and rediscover a passion for indie development.

No wonder the industry has cleaved so passionately to the current "coding revolution" narrative. Couched as it is in the soft blanket of nostalgia, the Raspberry Pi story is at once fresh and exciting, but the philosophy behind it is known, familiar, consoling - redolent of an era when Britannia ruled the gaming waves.

The games industry is barely 40 years old. Those of us fortunate to have lived, worked and played our way through those four decades are a lucky generation that has borne witness to the birth and development of a new form of entertainment, with a rate of evolution unlikely to be experienced again.

And yet the games biz today finds itself in an unprecedented state of flux at every level. That's both terrifying for hundreds of business and tens of thousands of employees, with lives and livelihoods in limbo, and terrifically exciting as the nature of the entertainment created and consumed transforms.

As the screenwriter William Goldman said of Hollywood, nobody knows anything. The questions being asked right now are leading us into a future of uncertainties, mysteries and doubts. But also one brimming with possibilities.

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Latest comments (14)

Bruce Everiss Marketing Consultant 10 years ago
It is utterly brilliant. 1982 all over again. The greatest of times.
Some industry dinosoars are unable to adapt, they are in denial and they are floundering. Hundreds of millions are being lost by long established publishers who have been badly led through these changing times.
And the opportunities are boundless. Not mentioned above is that the low barrier to entry has been the catalyst for an explosion in education by gaming. Something that has been artificially held back for so long.

Of course there are the fanboys, wedded to their obsolete boxes and who just cannot face the reality of what is happening around them. Grasping at straws they are providing much amusement.

Meanwhile app gaming is growing at 2,000% pa and Angry Birds has 700 million customers. Gaming is at long last becoming truly mainstream.

Edited 1 times. Last edit by Bruce Everiss on 13th March 2012 9:11am

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As the article states, no one knows anything. its all up in flux.
And that is really the honest truth.
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Russell Watson Senior Designer, Born Ready Games10 years ago
and yet everybody claims to know it all :P
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Show all comments (14)
Nick Parker Consultant 10 years ago
I am totally sold on digital distribution platforms and am actively involved in many, but there is a little devil sitting on my shoulder whispering words of caution about the decline of the console market. The hardware may change but the need for the experience will not go away. We can rejoice at a growing mass market of gamers, the majority of whom pay nothing, but we should never forget that it's the core gamers on any platform who pay our bills and these include those millions who want to spend billions on a console game experience. Roll on Heavy Rain, Gears of War and Mario Kart in the browser or streamed to any device/playtform anywhere.

Edited 1 times. Last edit by Nick Parker on 13th March 2012 11:35am

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Peter Shea Games Director, Chunk Games10 years ago
Great article- couldn't agree more with the core sentiment- and the fact it is exciting as well as scary.

I'm also getting pretty bored of certain evangelists (usually self-serving) claiming the future is definitely one thing over another, with scant regard for history or facts.

Had similar arguments recently with fellow developers about the demise of GAME- most are rejoicing as the company was loathed in dev circles, but to lose 1/3rd of the UK retail market overnight is pretty terrifying- could cause all manner of domino/ripple effects.

And yes Online Retail and others will pick up some of the slack, but no question overall sales will slump for awhile with inevitably bad consequences for many- not just those of us in the console space.

And Bruce- yes it is a bit like 1982 again, except instead of being 50 bedroom programming teams there are now 15,000 and instead of being 100 games available at 1.99-9.99 (or 30 for a "megagame") there are now 10,000 at 50p or less- most free.

Good luck to all entering that market as it's arguably the toughest there's ever been and only a few will prosper.
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William Usher Assistant Editor, Cinema Blend10 years ago
I think it's more exciting than frightening (from the outside looking in). It is unfortunate about GAME but the future looks a lot more promising for many emerging developers out there who have found platforms to share their creative voice and artistic flavors. Platforms, mind you, that were infantile just a generation ago and highly criticized (i.e,. Steam).

I'm definitely curious to see how AAA publishers adapt. EA already seems to have their hand in the honey pot known as "free to play" and Ubisoft seems to be getting creative with the ManiaPlanet route, which is interesting to say the least. Even Capcom seems to be experimenting with a different approach to content delivery (for better or for worse).

No doubt, the article is dead-on about no one knowing anything for certain. I suppose that's what makes it so exciting.
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Nicholas Lovell Founder, Gamesbrief10 years ago
You do know that average price of a transaction in a free-to-play game on iOS and Android is $14, right? And that 50% of revenue from those games come fro transactions valued at > $20, 30% at > $50.

Those games on iOS are not the disposable $0.99 apps that you think they are.
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Peter Shea Games Director, Chunk Games10 years ago

This is a case of whales pushing up averages though isn't it? What are the Median numbers? What % of people who download the free game spend any money whatsover?

I think Freemium models are interesting and lucrative for some, sure, but I also wonder if they are more of a necessary phase we must go through before digital download prices rebalance and people basically get bored of, or wise to the hidden costs in many of these products.

I imagine back in the 80s, some analyst somewhere was predicting Mastertronic was the future and no game would ever cost more than 1.99 ever again! ;-)
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Nick Parker Consultant 10 years ago
The majority of apps are free, not even freemium, completely free. Of those which enjoy freemium revenues, I agree the average transaction price is quite respectable.
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Andrew Goodchild Studying development, Train2Game10 years ago
Bruce. You have made it clear you think there is no future in consoles or traditional boxed product. This is fair enough, no one knows for sure, but we all are inclined to guess, but I struggle to reconcile this view with your comments on how strong prospect Activision is, in that it seems they have hedged their bets more than any major traditional publisher that there is a future in premium boxed product, and apart from the Blizzard side, are mostly console-orientated, even their increasing digital revenue seems to be largely due to downloadable extensions to premium retail releases. I could be droll and point out that with Skylanders they have found a way to make the dlc a physical boxed product.
So if you are borne out as being correct about the future of console and premium product/blockbuster development, does this not indicate a curtain call for Activision?
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One further consideration to ponder. Rare earth metals. China is hoarding it all.

Lets say, tommorow China stops all rare ear metals being exported. Bye bye compact battery design, stronger smart phones, etc..
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Sandy Lobban Founder, Noise Me Up10 years ago
In my own personal opinion....

Its just a technology explosion that's going on. Not an ideas explosion. Movies can be played on any of these devices, but the reason movies succeed is because they have a strong storyline, great production or they are simply an interesting and creative idea. Its nothing to do with the device they are played on. Just because there's an easy entry to market on a platform, doesn't mean you automatically have good ideas. If you're making games then you still need to have good ideas. Content will matter more in the future, not less in my opinion. Don't lose focus and get lost in the tech I say.

@Pete Hope all is going well mate. :)
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Tim Carter Designer - Writer - Producer 10 years ago
@Peter: Who cares who is paying the money as long as they pay it?
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Peter Shea Games Director, Chunk Games10 years ago
@Tim- who cares who is paying the money- not me!

Luring whales is part of the model for many of these games.

My concerns would be about long term sustainability though- if the majority of your income comes from a small percentage of your customers paying a lot rather than all of your customers paying a little, then I'd say that's a riskier business strategy for the long term. Whales can migrate to other oceans, or end up beached!

Will be interesting to see how the big social games companies adapt these models over the coming years- or whether they need to.

@Sandy- hello! Yes going very well here in sunny Glasgow- still loving making games even in the topsy turvy world we're discussing!
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