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BBC Ponders Another Games Industry Crash
weirdguy writes with a link to a BBC article that poses the same question asked by journalists every couple of years: is the games industry headed for another crash? "Yes, gamers are snapping up the new generation of games consoles — Microsoft's Xbox 360, Nintendo's Wii, and Sony's Playstation 3 [PS3], but at huge cost to the industry. Hardware makers are losing hundreds of dollars on every console sold, and games publishers face an "increasingly difficult environment, as rising development costs and small user bases [mean] that return on investment in next generation games development is unlikely to be achieved before 2008," according to media analysts Screen Digest. More importantly, though, the video games publishers are facing a revolution of their business model."
Nintendo figured out the secret to not losing money. They make money. Crazy I know.
Nintendo doesn't take any loss when someone buys the Wii.
This would be where Nintendo laughs on it's way to the bank.
Under the influence of Post-Cyberpunk Gonzo Journalism
Hardware makers are losing hundreds of dollars on every console sold
Since the Wii allegedly only costs about $158 to make and is sold for $200, I don't find a compelling reason to take the rest of the article seriously.
Microsoft and Sony are losing hundreds of dollars on each system sold, while Nintendo makes a profit on every console. This just seems like a sky-is-falling article that doesn't take into consideration the massive growth of the online and casual markets, as well as the huge growth of portable.
The XBox 360 is apparently slightly better than break even now as well.
The main problem stems from the fact that there is just a constant deludge of first person shooters and racing games. The Xbox 360 is by far the worse offender in this regard. There seems to be little else on the platform worth looking at.
The other issue is that the cost of development is becoming so high now that devs are less willing to take risks on new IPs and gameplay styles. Look at Clover Studios - They made Viewtiful Joe, Okami and God Hand, all great games that did nothing but cause the company to fold.
I wouldn't be surprised if as this console generation moves on developers make more money from the smaller downloadable games on Playstation Network, etc. than from the big box retail ones.
THE HONOUR OF THE KNIGHTS - CC Licensed Sci-Fi Novel
There will be no Video Games Industry Crash. However, we may see a dramatic shift in the industry.
What we are seeing is the end of hardcore dominance of the industry, nothing more or less. The perceived demands of the hardcore are insustainable, driving companies to make consoles that lose them money in order to gain some ill-defined future benefit. Whether it is the companies or the hardcore themselves that are to blame for the previously shrinking industry is uncertain and largely irrelevant.
What we are seeing is the introduction of video games as a true form of mass media. Talk to anyone on the street and you will be hard pressed to find someone in this nation who hasn't read a book, watching a movie, or viewed a painting or photograph. What's more, each of these forms of media has subsections that cater to particular tastes. Video games have not been mass media because they didn't reach everyone, only an elite few who knew what was going on. Now the "casual" gamers and even those who do not game at all have been targeted, and they will be the driving force in the future.
Right we are in transition, and it's confusing people. Depending on the person, some hardcore gamers are afraid that the Wii and DS are the harbingers of the end. Will games like Guilty Gear, Counter-Strike, and Armored Core survive in an industry focused on the majority? Having been catered to for decades, the prospect of losing attention is frightening. However, the fear is unwarranted. Despite the fact that games like the Sims, Bejeweled and all manner of "casual" games have invaded and perhaps dominated the PC, we still see games such as Supreme Commander, Hellgate: London, and the odd MMORPG tax video cards in SLI and quad-core CPUs.
In the future, the majority of games will be like summer blockbuster films. This is not bad, because the volume of games will increase such that we will still see the same number of "hardcore" titles, including AAA ones.
There will be no crash, but there will be a paradigm shift/revolution.
Thunderclone: ONE MAN ENTERS! TWO MEN LEAVE! ONE MAN ENTERS! TWO MEN LEAVE!
I was an avid gamer about 6 months ago, and I have been excited about a few games to come out recently, but I just don't see a reason to buy them anymore. The games I was excited to see come out this quarter I could live with or without now. Am I.. growing up?!? nooOO!
ok.. so heads you lose tails I win. right?
Ah, the perennial "is another game crash around the corner?" article. Always a good bet if you can't think of anything substantive to say.
The answer, of course, is no. The "game crash" of '83 marked the end of the game fad. Electronic games had become a novelty, and virtually anything would sell...and then the novelty wore off. And like the end of any fad, what was once cool became decidedly uncool for a time.
But something is only a fad once. Videogames are now just one more form of entertainment, competing with movies, TV, music, etc. The industry is transforming. Improved technology has driven up the cost of development, so that game production is more and more characterized by the same hit-driven economics that is typical of the entertainment industry as a whole, posing new challenges for the industry.
But at least we don't have to worry that everybody is going to simultaneously lose interest in videogames.
The BBC article seems pretty well thought out, and only mentions the word "crash" once, under a picture of Burnout Revenge. For the most part, it's an article about the alternative revenue sources that have been rising up to defray the additional costs of development, including advergaming, Korean-style online accessory sales, and cell-phone game tie-ins. They even go out of their way to point out that total game sales are expected to rise by 800 million dollars this year, even if the console transition will make it difficult to break even on a next-gen only title.
This isn't the worlds most accurate article about the state of costs and revenue sources in gaming, but it's a good overview of how things probably look from within a large publisher.
The ______ Agenda
Heres something which really caught my eye: Players will be able to create new levels for games and share them online. "Users could create revenue for games," says Mr Barton. "The potential for this is absolutely enormous". Step 1. Community makes maps, mods, skins etc.. for a game.
Step 2. Publisher claims it as there own IP
Step 3. Profit
This really annoys me. They can go **** themselves if they think I'm going to spend 40 hours programming something interesting for a game I enjoy just to have them take it and make money out of it to subsidise the inadequacies of their retarded business model.
This is another succesfull attempt at disinforming the masses.
We all know the reason for next gen consoles, excluding the Wii. They are here to satisfy another agenda.
Microsoft: Monopolise the gaming market. (DX 10, VISTA, Entertainment system)
Sony: Monopolise the DVD format market.
Move along nothing to see here.
There is always a shakeout between game companies at the beginning of each new generation. A few things combine to make this happen every time:
1. Many people stop buying games for the old system since they already have decided to buy the new system... as soon as it falls a bit more in price. This makes a gap in the market until the next generation has moved enough units. Many developers and publishers don't have enough cash to survive this.
2. Timing is hard. When should you stop developing for the old system and start developing for the new? With 18-24 months time-to-market it's hard to know if your new game should be made for the old or new generation. Make the wrong choice and you might find yourself move as much as two years too early or late.
3. Every new generation has so far demanded higher budgets and larger teams. Many companies that are too small will fail to make the switch.
4. It takes time and costs money to learn a new system and you will also need to develop new tools and engines. Either you will have to invest extra heavily in your first title for the new platform or settle for lower quality, which is likely to give you less sales...
I've been working in the industry for almost ten years (not anymore now though) and I'm surprised that everyone seems to be caught off-guard every time it happens....
I've had a Wii for a while now, and while I enjoyed it, my personal opinion, alone, hasn't convinced me, one way or another, what the draw of the console will be. Last night, this question was proven to me, once and for all.
I brought it to a BBQ that another friend of mine was hosting. Half of the people there were gamers, and half of the people there were decidedly NOT gamers (Chinese students, a few hippies, some others). At first, all my gamer friends screamed for some "SMASH!" and that went on for about 45minutes in the other room while everyone else went outside and sat around jawing.
Then I pried the GameCube controllers away from the gamers, and stuck in Wii Sports. The other half of the party suddenly rushed inside and grabbed controllers. They'd obviously never played or seen the games before, since they had no idea what to do, but within 5 minutes, everyone had made their own Miis, and were smacking tennis balls around to their hearts content. We alternated Wii Sports and WarioWare for the next few hours. By the end, many of the non-gamers were coming up to me, asking me how much the Wii cost, and where they could get them. I was pretty shocked, myself. I'd heard stories like this before, but hadn't really witnessed it in person, and was pretty amaized at the degree of involvement everyone had. Also, it was a party... none of us were sitting around, alone, brooding over a scummy screen. We were joking with eachother, making cracks all the time--we were interacting with each other even more than if we'd been doing most other normal party activities. In the end, the host came up to me and thanked me profusely, saying that everyone there had had a blast, and bringing the Wii was exactly the thing we needed.
Just the other night, NBC news ran a piece on how retirement communities were getting into games... although the only games they showed were Wii games, there was no mention of PS3 or 360 titles. It's clear, the Wii is a phonominon, like no other we've seen in videogame history. We are entering a period of unknowns, in gaming... this is the LAST time to be making doomsday prophecies for the game industry.
This guy from the BBC needs to get out more, see what exactly is going on in the world. He sounds as closeted as a 15-year-old gamer in his mother's basement.
Multiplayer Gaming (defined): Sitting around, discussing single-player games with my friends, at the bar.
This gem tucked away at the end of the article: 'As it turns out, software piracy can be good for you. "We have extremely strong brands [in Asia] thanks to the pirates; they have created millions of consumers - not customers,"...' That's why copy protection / prevention has been so weak in Microsoft products for years, and will probably remain so as long as 'free' alternatives exist. Quoting St. Francis Xavier: ''Give me the children until they are seven and anyone may have them afterward'. (Sometimes mis-attributed to Joseph Goebbels, albeit in a deformed way). In other words, get 'em young and they'll be asking for Vista & Outlook instead of Ubuntu & T'bird...
Hole?
They spent roughly 4 billion on creating a console empire.
Biuying a console empire would have cost a lot more than that.
I think for the most part the analysts are lying when they say Microsoft or Sony is losing hundreds of dollars on each console. When you look into all these pricings, they generally including costs that are comparable to retail.
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Not to mention that when you look at this article:
http://www.ps3focus.com/archives/167
It claimed a $100 loss if Sony sold at $500. But the retail is closer to $600 suggesting at worst Sony is breaking even.
But then you look at this article:
http://news.cnet.co.uk/gamesgear/0,39029682,49285
Which suggests at $600 Sony is losing $240.
I say it's all nonsense. I think Sony & Microsoft like this analysis of pricing because people lap it up and think "Oh gee, for $600, I'm getting something worth almost twice as much! What a deal!". It plays on greed.
The only people who know how much the console makes (or doesn't make) aren't saying. Everybody else is talking out of their ass. Everybody.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
Put it out for the PC first or as a flash game on the web.
Once you are making some money from it get an office and then a Wii Developers kit.
Sort like what the creators of Bejeweled did.
The really big question is will Nintendo offer something like the XBox Marketplace for cheap downloadable content?
Once you start producing software for a living the cost of tools is really a pretty small expense. The real savings that the Wii offers over the PS3 and 360 is the cost of artwork and developer time. The Wii is just a super GC so if you have developed for the Gamecube the Wii will seem pretty much like the same old same old. The PS3 is nothing like the PS2 and the 360 is very different from the XBox.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
Urban legend. The first console to ever be sold at a loss was the Sega Saturn (it lost around $100 IIRC). The Playstation was profitable from day 1. The Dreamcast followed the Saturn model in an attempt to recapture market share...even though it was successful it lost a ton of money and drove Sega out of the hardware business. The PS2 was profitable from day 1. The Xbox followed the Sega model (only difference is that Microsoft could afford to write off the loss). The 360 lost money at first (not sure how it's doing now). The PS3 is losing more money per console than any manufacturer has ever done before. The Wii is profitable on hardware. Before the Saturn, the concept of "selling hardware at a loss and making it up on the games" was absolutely unheard of. This rumor got started because when Sony announced the launch price of the PS1 in the US, it was quite a bit cheaper than in Japan at the time (but the launch was still months away and costs dropped in the meantime - they were thinking ahead). Atari accused Sony of "dumping", claiming that the PS1 was going to be sold below cost when it actually wasn't...due to costs dropping significantly before the launch. Sega dropped the price of the Saturn to $299 when the PS1 launched, thus they were the first to start losing money.
So... if nerdy games can penetrate the sorority girl market, when can nerds start penetrating the sorority girls?
I used to carry a bottle of whiskey for snake bite. And two snakes. -Nefarious Wheel
Let's be honest here, Sony's lost 1 engine, and in a tail spin, they're likely going to crater or step out of the industry, they have given us no reason to remain and arn't looking like it in the future, but Microsoft is the young up and comer who's going to follow's sony's example (last generation it was Sony who was pulling a Microsoft, mega sales, great games, nothing could go wrong.)
Nintendo has the key to avoiding another 1983 level crash. They sidestep all the problems and go in a new direction. A direction that lowers development cost (most development cost is to get better graphics or bigger games). Instead of a race to climb the next mountain they are going around the mountain.
Essentially the problem with this generation is everyone wants more content, more game, more graphics, and they want them all to look bigger and better. The problem is this costs money. GTA style games are big bucks now but they are even bigger budgets because you have to make a huge world.
I don't see a 1983 crash happening, however I do see Xbox struggling next generation, Sony being driven to a sink or swim level, but Nintendo's the fuzzy factor, if the industry starts working with the Wii, and developing lower budget but more innovative titles then you can see millions saved just from that move and the market is saved, otherwise you're going to see an epic level crash when we get to the question "what's next" after the 360? Better physics, better graphics? We're just killing ourself with every step we take on that path because the gameplay which has always mattered is ignored yet again.
Personally it's getting to that point. What's the difference between command and conquer 3, Company of heroes and Warcraft 3? Different motif, pretty much same game. What's the difference between Halo 2, Half-life 2, and Doom 3? Most JRPGS? Kotor 1 vs Kotor 2 vs fable vs the next western RPG. Most SRPGS based on disgaea typed engines (not even just nippon ichi titles)?
We are getting the same game over and over with slight changes and slight modifications and people are starting to realize that not every game is a completely unique and new experience, and from the sound of it we are getting pissed.
I find it hard to believe that many game industries like Playstation would produce something like the PS3 knowing that they would loose money on it. What did they hire the team of monkeys from career builder. Maybe blueray dvd in the PS3 was not a great idea after all. At least Capcom is making shit tons of money from their awesome games like dead rising and lost planet.
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You should check out The PC is Not a Typewriter or The Mac is Not a Typewriter for more bad computer habits that make designers cringe.
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