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Regular franchise updates "a very risky path"

Blockbuster developers risk becoming "execution monkeys" at the whim of accountants, says investment bank IBIS

As more publishers focus on blockbuster games to score big sales and boost the yearly bottom line, IBIS Capital has warned they must be careful not to hand too many crucial decisions over to accountants rather than creative talent.

Speaking in an interview with published today, IBIS director Tim Merel said investment in triple-A games is high because of the lucrative financial gain of titles like Call of Duty: Modern Warfare 2 – but the lack of innovation in the long-term could damage the games business.

"The major franchises are attracting increasing amounts of investment and generating increasing returns, but this doesn't come without risk," said Merel. "The gaming equivalent of Eddie Murphy's Pluto Nash ($100m cost, $4.4m revenue) is what scares the money men, so the risks of launching new franchises or making a mess of existing franchises becomes enormous.

"The concern is that this end of the industry goes the same way as Hollywood, with accountants and lawyers running the show and the creatives and techs being managed like execution monkeys. Hopefully the majors are smart enough not to let this happen."

Ubisoft said yesterday that it would look to push out updates to its biggest sellers every 12-18 months, and Electronic Arts is going down a similar route, with titles such as Mass Effect 2 and Dante's Inferno – which the publisher hopes will be the first part of a trilogy – supported by multi-million dollar marketing spend.

"To state the obvious, the majors are doing exactly the right thing by investing in and acquiring big franchises," said Merel. "In the short-to-medium term that makes perfect sense, but in the long term I think they're going down a very risky path."

"If the gaming business is all about innovation and new unimagined gaming experiences driving growth, churning out the 25th incarnation of most franchises won't cut it. If the majors effectively become utilities, then they run the risk of becoming like traditional media companies. Cash generative, but declining and cost driven."

The full interview with Tim Merel, where he discusses investment opportunities and the commercialisation of games, can be read here.

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Latest comments (4)

Richard Ema Design 11 years ago
OK so 4 years until the next modern warfare game would mean a loss of over 2 Billion USD potential profit to Activision and all its investors.

....I have huge love for the game industry and I would hate to see it dilute itself but I'm also a realist.

Edited 1 times. Last edit by Richard Ema on 16th February 2010 5:14pm

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Simon Peter11 years ago
EA just doesn't get it. Maybe Dante's Inferno, Dead Space, Mass Effect, and the likes are technically new IPs, but they are still extremely tired, for being set in traditional genres, even before they turn them into "cash cows".

As far as the market is concerned, Mass Effect 2 could be called KotOR IV. Sure, for the artists, and the gamers, new story, style, and content are significant differences, but they are not "driving growth". Even when they are successful, they do it by the virtue of having more resources to spend than the competitors, that is a self-destructive dead-end on the long term.

On the contrary, Mario, for example might be technically ancient, but when there are 2D platformers, 3D platformers, RPGs, racing games, and various other genres, even completely new ones used, it feels fresh, and it brings new people into gaming.

First and foremost, developers should revitalize the entertainment experiences. The artists should be allowed to revitalize the old franchises of the old genres, if they feel more comfortable with them, or revitalize the old genres with new franchises, if they feel it is a more creative thing to do. From the business perspective, it doesn't really matter, as long as "something gets revitalized".
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Andrew Clayton QA Weapons Tester, Electronic Arts11 years ago
I think that management at many companies are looking to be slightly lazy. They want to find cheap, predictable games that can be churned out every year or two for a profit. It's the equivalent of the Saw movie series.

Hopefully they keep in mind the problems that lead to the industry bust of the late 80s. We don't need one of those again. I know that companies like Valve and Bethseda (amongst others) would keep us going if that ever did happen, but way too many jobs would be needlessly lost as a result.
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Thomas Luecking11 years ago
This is always the same discussion in creative industries... it will level out eventually. It has been always a steady cycle of money making-focussed professionalism (sequels) interrupted by some innovations everybody picks up sooner or later (e.g. cover mechanics from Gears of War). Even if all the new games would be Call of Duties and alike - there will be one creative studio and one "brave" investor and they will bring out this "totally new and innovative" gamestyle, storytelling - you name it - and they will go gangbusters - and will be bought by one of the established players/publishers. Imitation will follow and the cycle begins again...
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