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American McGee on the "unsustainable" console model

Spicy Horse co-founder claims earning out on console is like "digging out from under an avalanche"

American McGee believes that the free-to-play business model offers developers an escape route from the the crushing pressure of turning a profit on console games.

In an interview with Game Informer, McGee describes the market conditions that prompted him to re-focus his Shanghai-based studio Spicy Horse on free-to-play and mobile games.

"Earning out on a console title is like digging out from under an avalanche," he says. "If you don't get out from under the advances within a very short period of time it's all over.

"Free-to-play offers an opportunity to release something into the wild and improve it continually until it returns a profit. Making good on the opportunity is in no way guaranteed, but the option is there."

According to McGee, Spicy Horse is already generating more profit from its free-to-play games - BigHead Bash and Crazy Fairies - than it did from its last console release, Alice: Madness Returns, and he expects that gap to widen in the future.

His perspective is influenced by Spicy Horse's Shanghai location: many of the people who work at the studio are local Chinese, and their entire gaming culture is built on free-to-play titles.

"Though the console market extracted two decades of profit and mind-share from Western developers and consumers, it was unsustainable from inception. Looked at from the perspective of external markets where consoles aren't the foundation of the gaming ecosystem, the idea of physical media (discs) and fixed location gaming (consoles) now seems anachronistic.

"But it's worth examining where the money flowed in a market where consoles dominated and how they helped consolidate power among a handful of publishers. The transition we're now seeing is a revolution of the model that will lead to greater freedom for future publishers, developers and consumers."

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Latest comments (7)

Bruce Everiss Marketing Consultant 9 years ago
Nice addition to the debate.

One problem with the current gen consoles are that they are seven year old technology and an even older business model. Basically they are history. In technology, marketing and business models terms we now live in a completely different age.
Now we have Facebook, app stores, microtransactions and free games, for starters.

Also it has been a pretty rubbish console generation. The cost of development and market entry rose to ridiculous levels. So just about all that was sustainable was blockbuster sequels. This took innovation and creativity out of the market. And drove away customers, diminishing the user base.
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John Bye Lead Designer, Freejam9 years ago
Sorry, but I have to call you on this, Bruce. You talk a lot of nonsense, but this takes the biscuit. Sure, there have been a lot of sequels this generation, but that's always been the case, and there's been plenty of big new franchises introduced this generation, and lots of innovation and creativity which you've conveniently ignored because it doesn't suit your limited world view.

We've had Assassin's Creed, Batman: Arkham Asylum, Bioshock, Borderlands, Dead Space, Gears of War, Heavy Rain, Little Big Planet, Mass Effect, Mirror's Edge, Red Dead Redemption, Uncharted, Valkyria Chronicles...

We've still got new IP like The Last Of Us, The Last Guardian, Beyond and Watch Dogs apparently coming to this generation in the next year.

We've seen XBLA and PSN publishing innovative titles like Journey, and opening up consoles to indie developers through Minis and XBLIG.

We've seen the first free-to-play titles appearing on PS3, with Microsoft sure to follow suit soon.

We've had Kinect, Move, Wii. Sure, we hardcore gamers often turn our noses up at them, and none of them really work as well as advertised, but they've opened up huge new markets and original gameplay experiences. Who would have thought seven years ago that two of the best selling titles of this generation would be yoga games bundled with a glorified pair of plastic bathroom scales?

Edited 1 times. Last edit by John Bye on 17th July 2012 6:03pm

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Andrew Jakobs Lead Programmer 9 years ago
And you think with newer consoles/handhelds/mobiles/smarttv's/pc's that will change? Costs will only rise much higher as people want even more beautifull games.. Innovation and creativity is something highly overrated, as what's calles 'innovating and creative' is nothing more than a rehash of old gametypes in a newer slicker shell.. I haven't seen an REAL innovating/creative game for many years..
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Xavière Hardy Project Manager, THQ9 years ago
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Robert Oelenschlager Independent Game Developer 9 years ago
I think this article helped me figure out why I dislike the F2P model. For the longest time, I thought it was baseless prejudice, and I needed to learn to grow with the times more. Now, I realize it's actually the mindset of developers that use the model that bothers me. I always hear about how it makes more money, costs less to develop for, low risk vs. high yield stuff. Rarely do I hear about how it helps them make better games. The argument is anecdotal of course, but it seems in my limited experience people are shedding a level of creativity and exchanging it for profit and success. I don't condemn them for it, but I don't like it myself.
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American McGee CEO, Spicy Horse9 years ago
Robert, I'd love to invite you to our studio so that you could see the level of creativity at work here. It's as great as with any console project we've ever worked on and in some respects less constrained. Not having a publisher tell us to make "bigger boobs" or inject "more blood" is freedom to focus on the things we feel make our games engaging and fun. Not the things the publisher feels will appeal to the base instincts of an audience they lost all respect for ages ago.

In any case, this article contains only a snippet of my overall thoughts on where the industry is heading. I don't think F2P is the only model we'll see in the future and I don't think consoles are going to go away. It just happens that my studio decided to work on cross-platform/device multiplayer games and found that F2P (or pay-as-you-go or freemium or whatever you want to call it) was the only option for making that sort of experience work cross-platform (on a financial level).
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Dave Herod Senior Programmer, Codemasters9 years ago
I just wonder what will happen once consumers become more aware of the true cost of F2P. Personally, I've seen a few games on Steam lately where I've thought "oh, that looks interesting", and the moment I saw "Free to Play", it instantly turned me off and I wouldn't touch it with a barge pole. To me, "Free to Play" interprets in my mind as "no limit to how much this game will cost". Once consumers start to get the idea that they're most certainly not free, and run up hefty bills, they might start viewing F2P with more suspicion too.
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