While speaking to the Edinburgh Interactive Festival, former Sony CEO Chris Deering had some bold statements about both the present and future of the intereactive entertainment industry. From DevelopMag.
Quote:
Traditional games platforms like DS, Wii and PS3 will hit a total installed base of 500m by 2011, Deering predicted – citing sources like Screen Digest and other industry sources – with alternative mobile platforms and gaming PCs accounting for a billion users each.
--
But even with the support of two billion potential players through more fractured and non-traditional platforms, Deering warned that “traditional revenue sources will not be sufficient to fund games development” as the market grows, and studios should explore new business models.
Deering said that currently only 3 in 10 games recoup their development budgets. And that trend will continue in a future where an array of companies, such as mobile networking operators, cable, satellite and DSL operators plus TV networks and many others “will be in the competitive array”. So developers will have to turn to new revenue sources to cover their losses.
“Something is going to have to be there to make up the difference,” he said, citing a “creative use of hybrid online/offline advertising revenue models” as one key way to succeed. “These business models must be explored.”
His statement that only 3 games in 10 recoup their development costs is pretty stark. If true it's a bad indicator for the health of the industry going forward.
Nonetheless, the industry is obviously lucrative enough to support a few major development and publishing houses.
Lets face it, if it really was that bad, MS and Sony would pull out and make money through other means. As everyone is, they are in it for the bottom line.
You could rephrase that to say, "3 games out of 10 make enough money for the other 7 to flop"
__________________
Quote:
Originally Posted by Oxonian
The last time someone went around being tolerant of everyone around him, we nailed him to a fucking cross for being a preachy asshole.
Well, I'm sure that EA games lose money quite frequently... since 7 out of 10 EA games are shovelware. How many games published by Nintendo lose money? How many games published by Microsoft lose money? Maybe big publishers like Activision, EA, and Ubi need to stop trying to pump out one game for every two people on the planet, and put that funding towards quality products?
__________________ City of Heroes: Virtue
WoW: Cenarion Circle
Gamertag: Heretic Machine
Currently Playing: Castle Crashers, Prince of Persia: The Sands of Time, Beyond Good & Evil
I work in the industry, and that claim reeks of corporate BS to me.
A more accurate statement would be: "7 out of 10 games make so much money that we are unable to fake the books to avoid paying taxes to the governement, and royalties to the people that actually did the work."
I don't see it as anything the industry can "fix", there's no sure bets out there, even with sequels. You've just got to produce and try to cover the widest range of IP/genre out there and see what sticks best for the current market, while moving along with new trends.
The PS4 and Xbox 3 will have only two software publishers because of cost and loss ratio.
Industry needs to stop trying to push forward so much and stand still for a bit. Games are going to only get more expensive, so let's have console generations last much much longer, a la PS2. People that need cutting edge can go play on the PC.
Nonetheless, the industry is obviously lucrative enough to support a few major development and publishing houses.
Lets face it, if it really was that bad, MS and Sony would pull out and make money through other means. As everyone is, they are in it for the bottom line.
You could rephrase that to say, "3 games out of 10 make enough money for the other 7 to flop"
Sony and MS HAVE an alternate revenue stream, they get a slice of every game sold on their platform, doesn't do much for the 7 other developers who are flopping.
The PS4 and Xbox 3 will have only two software publishers because of cost and loss ratio.
Industry needs to stop trying to push forward so much and stand still for a bit. Games are going to only get more expensive, so let's have console generations last much much longer, a la PS2. People that need cutting edge can go play on the PC.
This. At least hardware and graphics wise. Things look like what they look like and that should be fine for a while. Start selling via creativity and content instead of shiny. So many games are visually impressive but last for no time at all (speaking in terms of singleplayer games).
I don't see it as anything the industry can "fix", there's no sure bets out there, even with sequels. You've just got to produce and try to cover the widest range of IP/genre out there and see what sticks best for the current market, while moving along with new trends.
There's a few things they could do. Longer console generations, an open standard console (so the market wouldn't be fractured, and required two/three different versions of every game to reach anyone,) or even embracing of digital delivery to cut costs.
I just really don't want us to be forever stuck with the model of "a few hits to pay off the rest." See how good that worked for the music industry... The problem with not wanting that is we gamers may think "Make new games with new ideas!" but the people with money in say "Make safe games with proven ideas." And that sucks as well.
__________________
You've read Jeffool's post, now read Jeffool: The Blog!
I'd always figured it was a worse ratio than 7 out of 10, but still, the few games that really succeed clearly make up for the losses of the failures, but regardless it’s clear why that has resulted in a greater degree of studio consolidation. I’d say it’s pretty clear what needs to be ‘fixed’, if you want to try to make the next big thing, then expect a massive bill to make it, and a great risk. Make games short, and cheap, by lessening the investment required of your consumers you make it easier to get people to try something new. Still, I doubt we’ll see that ratio change much, I don’t think it’s all that bad, I expect most entertainment industries have a higher failure to success ratio.
What surprises me is the number of publishers that seem to have unreasonable expectations on their game sales, seems many are expecting twice the sales they’d have seen from the same type of game last generation. Seems like silly wishful thinking, or just numbers being inflated to match the production costs they’ve let spiral out of control.
Err, whats wrong with calling those traditional platforms? Regardless of what you think of their interface mechanics, to a salesman they are no different from an XBox. They still require a capital investment in the hardware, have accessories that the customer can buy, and also large libraries of games. No difference.
The online aspect is the only non traditional aspect, and even that is hardly new.
__________________
Quote:
Originally Posted by Oxonian
The last time someone went around being tolerant of everyone around him, we nailed him to a fucking cross for being a preachy asshole.
You want to hear something that's even more depressing? How many of that 30% is made up of either Sims or EA Sports annual iterations?
BTW, I agree with Farsight. If 7 out of 10 games were actually losing money the industry as a whole would have collapsed already. It's just accounting BS.
His statement that only 3 games in 10 recoup their development costs is pretty stark. If true it's a bad indicator for the health of the industry going forward.
I wouldn't be surprised if that 3 in 10 number has always been the ratio. There is probably some equilibrium that prevents the number from going up and down.
Think about it, if 8 in 10 games were profitable you would see a lot more companies spring up, more games being made, larger budgets as companies feel the risk/reward for making the next AAA Halo or GTA series is worth it.
Then the market gets overcrowded, a bunch of big budget games flop, game companies fold and cut back on budgets, safe low-budget sequels. Sort of like now in Japan as you see a quite a few franchises not moving to next-gen yet (Persona, Dragon Warrior, Fatal Frame) or looking like hi-res last gen games (Disgea, DOA).
