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Game Industry Faces Adoption Challenges
The BBC reports that, while gaming continues to grow in popularity, the industry still faces numerous challenges in attracting new customers. From the article: "Although gaming is a huge industry, the report warned that turning a profit will become increasingly difficult. For players such as Microsoft, Sony and Nintendo the fact that the market is reaching saturation point coupled with the increasing costs of producing both games and consoles means profit margins may not be a big as they would like. "
Isn't that sort of the whole point of the Nintendo Revolution? To attract newer, different gamers. People that aren't necessarily hardcore gamers, or of the established market?
First of all, you have the fact that despite the money the industry makes (income, mind you, not necessarily profit), games have a much higher average price of goods for a consumer than the other entertainment industries. Sure, there are still the bargain bin games, and a quite vibrant used market, but those cannibalize the companies' ability to exist. Essentially you have something like an average CD or DVD costing in the $15 range, while games CONSISTENTLY push the retail price up, with new next gen titles going to the $60+ range. What does that mean? Total market / higher price = smaller audience.
The fact that the game industry is essentially the largest niche market EVER seems to be lost on everyone in the industry. So, considering the price of the goods combined with a much smaller audience than movies or music, you get market volatility. A smaller trend can radically affect things.
Second, games are reaching the end of the technology curve. Games have been existing for years on the "ooo, lookie" factor. However, it's getting to the point where many of the non-professionals have a problem seeing the leap from PS2 to PS3. Sure, there will be detail, but the wow factor that was there from, say, SNES to N64 just isn't there.
Third, the rising development costs are bringing two things to light: first, developers can't cut it and are going under/being absorbed at an alarming rate (in the US at least). What that means is that there are fewer and fewer outlets for creativity and less motivation to "take risks" (as if it's somehow not risky to keep doing the same thing forever, but whatever). Second, those costs are making it more and more necessary to amortize development over multiple platforms. By doing that, companies CAN'T spend the money to fully utilize the systems, and you get generic ports that don't look as good as they could on the new hardware. That tends to exacerbate the loss of the "ooo, lookie" factor as well. How many reviews have we seen of XBox 360 games where people say they're WORSE than the previous games? Too many already. The HD/non-HD issue really threatens to mar the system if developers aren't careful.
Combine all of these things, and we wind up with a stagnant market that is heading towards a cliff. I don't think the simple alarmist reasons of the Costikyan's of the world are the whole story, but they're one part of something that's coming. I think of it as Hollywood around 1965. It's not looking good, and things are going to HAVE to change. Microsoft's recent revision that they won't hit their sales figures are the first tremor.
There's one thing needed for widespread mainstream acceptance: standardization. Well, maybe two; you might need a low price point as well.
Standardization is difficult when you've got a five-year cycle and three competing major platforms with no interoperability. A low price point is impossible when the hardware and software are both created entirely for technophiles who demand more features and better performance. If you can get games and game hardware cheaply, on a standardized format that is not monopolized by a single manufacturer, then you'll get mainstream acceptance.
There's a problem with this - most game hardware is sold at a loss. It's possible, however, to make a profit selling Gamecubes at a hundred dollars. If you take an equivalent platform, throw in some permanent storage, some DVD functionality, and intuitive Internet features including an online store for games, sell it at a profit, and market it toward non-traditional gamers and non-gamers with software that appeals to them, you can start to penetrate the market.
Sounds a lot like the Nintendo Revolution, doesn't it?
Once you build up your momentum and media awareness, license access to the online service to any manufacturer that wants it, but keep some exclusive features for yourself. You don't want to drive yourself out of business, after all. The online service would serve as a gateway drug, providing accessible games to get people interested in gaming. They might turn to your hardware after that - you've got the exclusive features, after all - or might turn to another hardware manufacturer. Market share won't matter as much any more, after all, since nobody will have to sell at a loss. Higher-end software can still go for a very high price - certainly not sixty bucks, but not five, either - and, like current game software, it will provide a deep and engaging experience for anyone who's not impressed by the more casual software on the market.
It's the restructuring and standardization that the game industry really needs in order to move outside of its (large) niche market and into the mainstream. It's a bit more complicated than home movies, but it's hardly impossible. Quite the opposite; I'd say it's inevitable.
...but is it art?