The Unsustainable Gaming Industry

Games are currently running on purely unsustainable business models. And I mean both AAA and indie studios when I say this.

Let’s take a look, shall we?

First off, this blog post at NES goes over the rising costs behind games, and the ridiculous amount one needs to sell before breaking even in the AAA industry. As things currently stand, the indie market is making far more profit, mainly through the freemium business model. As an example of games with ridiculous sales targets they brought up, Dead Space 3 needs to sell 5 million to break even when Dead Space 1 and 2 combined only sold 3 million. Several other games were brought up that needed to sell 2-3 million to break even.

And where does most of that cost come from? You’d assume the polygon counts, and that’s probably part of it, but that doesn’t explain why a game like South Park: the Stick of Truth will need 2 million. To make matters worse, that isn’t money, that’s units. Yes, that easily puts all of the required break even numbers I mentioned into the hundreds of millions of dollars. Yes, this means one failure is enough to shut a developer down.

Hilariously enough, Epic Games is on record saying that the Infinity Blade series is far more profitable than Gears of War. This is despite most Infinity Blade games costing somewhere in the $10 range while Gears of War retails for $60 in North America and God knows how much in other regions (since for instance, Japan has no standard price, so games can cost upwards of $100 there). There’s just something about making games for consoles that sucks away money, and I’d think it’s a two-fold issue.

Not only are developers generally bullied into trying to use the full power of the platforms they sell for, but they spend so much doing that that they need to market the title like there’s no tomorrow, since they know from games like Bulletstorm that having solid gameplay means jack squat if you don’t communicate what the game is about and the fact that it exists to the mass population. But that doesn’t change the fact that their budgets exceed the amount they should be spending when you account for the amount of consumers.

Perhaps this is why Nintendo seems to be making such steady profits for every year except 2011, which had a perfect storm of the 3DS’ price being too high and the Wii U’s announcement slowing down Wii sales to push them down. Meanwhile, Microsoft and Sony are still posting losses for this generation. The whole while, fanboys belittle Nintendo for not catering to the hardcore.

But I think this solidly shows that the hardcore gamers, while they’re willing to spend, are a niche. An expensive niche. Much like the anime market, I’d not be surprised if this market were to collapse upon itself, or even if we have a new industry crash soon that takes most consoles out.

But I really wouldn’t want that to happen. Most of the surviving developers would be small indie developers, who primarily sell freemium games, usually with an exploitative business model, to make lots of money off of a small percentage of players. I don’t want to see the future of gaming go that way, but as it stands, making freemium indie games for smartphones and tablets is far cheaper and makes more money than the AAA markets…

I want the industry to survive and not stagnate nor end up being all fremium, but this means that Nintendo needs to become more indie friendly, which appears to be happening, if this recent Gamasutra article is any indication.

And, since Nintendo’s the main force pushing gameplay innovation outside of indies, if they don’t cater to indies all that much with the Wii U (and that article says the 3DS eShop is apparently “a little goldmine”, so the 3DS could do well, too), indies are just about screwed since every other platform is hell. In which case it would be time for a cheap indie game system with Gamecube or Wii-level graphics to come into play.

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2 thoughts on “The Unsustainable Gaming Industry

  1. I liked the article, but I had that ET game when I was a kid. I read an article not long ago where they made fun of it for being such a let-down, but I remember liking it. You just couldn’t replay it over and over like baseball or football.

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