The big change here is Sarbanes Oxley. Post SOX, keeping CFOs at any company is tougher, and I think more so for tech companies whose accounting by nature is less concrete.
This has a huge impact for geeks because it also puts a relatively larger burden on small companies (there's about two mil. a year to be paid regardless of how big you are). So more of us will end up working at supermegasoft and less at smaller, friendlier companies than would have sans SOX.
A lot of concerns/ideas mentioned in this thread are addressed by Steam. The makers of Sin are planning on releasing their game "episodic content" through Steam i.e. you pay twenty bucks for about six hours of single-player game, and then you pony up another twenty in a month or two for the next episode and so on.
This seems pretty close to the free-download-monthly-fee suggestion. Since steam buyers won't be able to trade in their used games, to compete Steam releases will have to drop their prices. If I buy Half Life 2 for $40 and plan on trading it in for $20, to compete Steam will have to change me around $20 for the game in the first place. It also makes piracy more difficult, which should increase total game sales (although the 1-to-1 relationship claimed by RIAA types is ridiculous)
and reduce prices.
Of course Valve can keep doing what they're doing and charge $50 and make enormous profits, for a little while. Then more developers make their own Steam style distribution systems (as EA is considering) and make more games with bigger budgets, and competition gets fierce and games get better.
I think what World of Warcraft has highlighted is that there is a segment of the video game market willing to pay $50 plus $12/mo to play a MMORPG. However, as many of us who have played one can attest to, there are very few willing to pay 50/12 twice.
So, if your WOW, life is gravy. If you are any other game, even the number two game, trying to compete, you lose.
Except for genre preferences (Star Wars Galaxies, City of Heroes) since we're only playing one, it is going to be the best.
There can be only one.
The fact that some people would pay $5 and not $30 does not guarantee the studio will make more or less money by offering downloads.
The studios are facing the monopolists price discrimination problem. They know there is a segment of the market that is willing to pay $30 and a much larger segment willing to pay less. If everyone is lumped together, i.e. they can't price discriminate, then the best price to charge is the price where the added customers due to the new price yield as much profit as is lost by dropping everyone else's price who would have bought anyway.
The whole picture changes when you can somehow segment the market. Imaginge there was a large group of tech saavy buyers who would pay $5 but not $30, and a large group of people who are willing to pay $30, but are not tech saavy, and a small group who are willing to pay $30, but will only pay $5 if that option is available. The monopolist (the studio) can offer $30 and $5. The only revenue lost is on the group willing to pay $30 but now noly pay $5, and the gain is on all the additional customers at $5 that would not have purchased before.
So, depending on the number of people that give up paying $30 to pay $5, this could make or cost the studio money. What complicates the situation is there really would be three options. $30, $5 and $0. The only difference between $5 and $0 is the good feeling you get from being legal and paying $5. Now the studio has to balance revenue lost on tech saavy people willing to pay $30 against revenue gained from people willing to choose $5 over $0. How likely is that to be profitable for the studio?
It is my prediction that as long as option $0 is around, there will be no option $5. PLus, if tech saavy becomes everyone, how many people will choose option $30, or even option $0 at an infelxible time with commercials. When that happends, the studio as we know it will no longer exist. I wonder what kind of production studios would?
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The big change here is Sarbanes Oxley. Post SOX, keeping CFOs at any company is tougher, and I think more so for tech companies whose accounting by nature is less concrete. This has a huge impact for geeks because it also puts a relatively larger burden on small companies (there's about two mil. a year to be paid regardless of how big you are). So more of us will end up working at supermegasoft and less at smaller, friendlier companies than would have sans SOX.
A lot of concerns/ideas mentioned in this thread are addressed by Steam. The makers of Sin are planning on releasing their game "episodic content" through Steam i.e. you pay twenty bucks for about six hours of single-player game, and then you pony up another twenty in a month or two for the next episode and so on. This seems pretty close to the free-download-monthly-fee suggestion. Since steam buyers won't be able to trade in their used games, to compete Steam releases will have to drop their prices. If I buy Half Life 2 for $40 and plan on trading it in for $20, to compete Steam will have to change me around $20 for the game in the first place. It also makes piracy more difficult, which should increase total game sales (although the 1-to-1 relationship claimed by RIAA types is ridiculous) and reduce prices. Of course Valve can keep doing what they're doing and charge $50 and make enormous profits, for a little while. Then more developers make their own Steam style distribution systems (as EA is considering) and make more games with bigger budgets, and competition gets fierce and games get better. I think what World of Warcraft has highlighted is that there is a segment of the video game market willing to pay $50 plus $12/mo to play a MMORPG. However, as many of us who have played one can attest to, there are very few willing to pay 50/12 twice. So, if your WOW, life is gravy. If you are any other game, even the number two game, trying to compete, you lose. Except for genre preferences (Star Wars Galaxies, City of Heroes) since we're only playing one, it is going to be the best. There can be only one.
The fact that some people would pay $5 and not $30 does not guarantee the studio will make more or less money by offering downloads. The studios are facing the monopolists price discrimination problem. They know there is a segment of the market that is willing to pay $30 and a much larger segment willing to pay less. If everyone is lumped together, i.e. they can't price discriminate, then the best price to charge is the price where the added customers due to the new price yield as much profit as is lost by dropping everyone else's price who would have bought anyway. The whole picture changes when you can somehow segment the market. Imaginge there was a large group of tech saavy buyers who would pay $5 but not $30, and a large group of people who are willing to pay $30, but are not tech saavy, and a small group who are willing to pay $30, but will only pay $5 if that option is available. The monopolist (the studio) can offer $30 and $5. The only revenue lost is on the group willing to pay $30 but now noly pay $5, and the gain is on all the additional customers at $5 that would not have purchased before. So, depending on the number of people that give up paying $30 to pay $5, this could make or cost the studio money. What complicates the situation is there really would be three options. $30, $5 and $0. The only difference between $5 and $0 is the good feeling you get from being legal and paying $5. Now the studio has to balance revenue lost on tech saavy people willing to pay $30 against revenue gained from people willing to choose $5 over $0. How likely is that to be profitable for the studio? It is my prediction that as long as option $0 is around, there will be no option $5. PLus, if tech saavy becomes everyone, how many people will choose option $30, or even option $0 at an infelxible time with commercials. When that happends, the studio as we know it will no longer exist. I wonder what kind of production studios would?