Slashdot Mirror
Financial Issues May Force Changes On Games Industry
krou writes "According to comments made at the Edinburgh Interactive conference, operating costs of making games are spiraling upwards, and there has been 'significant disruption' to the games industry's business model. Games are getting much bigger and taking longer to develop, the console market is fragmented, and the cost of licensing intellectual property has gone up. All of this, says Edward Williams from BMO Capital Markets, means that 'For Western publishers, profitability hasn't grown at all in the past few years and that's before we take 2009 into account.' Recent figures suggest game sales have fallen 29% over the last 12 months. While westerners still relied on putting games on DVDs and selling them through retail channels, 'Chinese developers focused primarily on the PC market and used direct download, rather than retail stores, to get games to consumers,' and the lack of console users 'meant developers there did not have to pay royalties to console makers.' Peter Moore of EA Sports said that significant changes will come in the future, particularly in electronic purchasing of games."
While licensing big properties like that is part of the equation, later comments in the summary lead me to believe that a big part of "Licensing IP" that they reference is simply the fees you pay to publish on a console. If you put out a PS3 game, Sony gets a cut. If you put out a Wii game, Nintendo gets a cut. If you put out a computer game though (be it Windows, Linux, Mac, whatever), you generally don't have to pay royalties to any company just to publish your game.
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Somewhat off topic but think about this. How can District 9 which is such a great movie with some of the best unique effects Ive seen in a recent Sci Fi movie cost 30 Million and yet Transformers 2 cost $228 million, GI Joe Movie $170 million etc. All icing and no cake.
It's called Hollywood accounting. The quoted cost of producing a film that's expected to do well typically actually includes costs of earlier films that didn't do so well when they were released. By doing this, they reduce royalty payouts on the successful movie (as Hollywood typically pays royalties to writers, IP holders, etc. as a percentage of profit rather than percentage of net takings as most other IP-related industries do).
Then stop relying on licensed IPs and start making compelling games that people want to play.
What would Guitar Hero have been without songs that people recognize?