Another multi-part post, I know but this is going to take a while, and it’s hard to know where to start, I think we shouild start with the root of the problem, Publishers.
Okay you’re asking what the hell are publishers doing wrong? Well where do I start? Lets break this down, and I’ll start with this one since it’s that time of year again.
Christmas Rush
There really is no need for publishers to release all their major games at Christmas time, this year has seen a massive selection of AAA titles release in a 2 month period, more games than most of us could either afford to buy or find the time to play. Of course not everyone is going to be interested in all the games released, this is natural, but I myself have bought 6 games in the last couple of months, most of which I hardly find the time to play since one game has taken refuge in my 360 DVD Drive (Rock Band 2 to be precise).
But you’re asking what’s the alternative? Simple, stagger the releases throughout the year, take a look at GTA4 it was released in April and has sold 7-8million copies, it didn’t harm the sales of that game, MGS4 launched in June/July and sold well. The simple fact is that these games are being bought by the people who are playing them, not as presents, it therefore doesn’t make sense to try and get them in the shops for Christmas. (I’m willing to bet that >95% of all copies of the major releases these holidays were bough by the person who will be playing the game, not as a present), besides retailers will love them because they know that they can promote a single game and not be left with large remainers of games that they expect to sell that didn’t.
Development Budgets
Another major problem is that development budgets have spiralled out of control, unlike movies where anyone can sit down and watch (and presumably enjoy) a movie, games require rather more commitment, far more than most people are able (or willing) to give, as such the market for a game is smaller than that for a similarly themed movie. Movies also have the advantage of having two markets, the primary being the cinema (theatre for our American chums), the secondary being DVD/Rental. Games have just one market, retail, should they not sell well here there really isn’t anything the publisher can do to make more revenue off of the game.
Okay, so now we know about the differences between movies and games why are development budgets a problem? Well in simple terms it costs anything between $10-20 million dollars to develop a AAA game these days, then you need to add a similar amount in marketing to make sure people know its out there, this leads to the position where a game is costing the publisher between $20-40 million to release, if you concider that a HD game retails for $60 (before taxes) then by the time you take out all the costs, licenses and cuts from retailers and distributers the publisher only sees about $20-25 of that per copy sold, this means that a top HD game has been budgeted on the assumption that it will need to sell 1-1.5 million copies just to break even, this is frankly untenable for most game releases and especial those released around Christmas time.
Now add to this the fact that major games retailers are actively encouraging players to buy used copies and to trade in their old(?) games and we hit another problem, a modern HD game release has a shelf life of a couple of weeks before the market starts flooding with used copies, if it hasn’t sold at least 90% of it’s break-even sales in this time then it will have a very hard time even getting to break-even, let alone making profit for the publisher.
Sequelitis
Okay, so we know that people are reluctant to try new things and that games are costing more and more to develop, and that the market isn’t as large as that for movies, so what’s a publisher to do? Not take risks, new IP is a risk, there’s a risk that no matter how good the game people wont buy it because they don’t know what it is, this leads to a rash of sequels to previous games that did sell well, since it’s assumed most (if not all) of the people who bought the original will buy the sequel, sounds like a sound business strategy. Okay so tell me how many people bought Guitar Hero World Tour, the 4th Guitar Hero game released in a 12 month period by Activision (Guitar Hero III,Guitar Hero: On Tour and Guitar Hero: Aerosmith), well in october all 4 release platforms managed to sell <500K in total in america, less than the total sales of Rock Band 2 on just the XBox 360 upto that point.
This highights the problem, too many sequels and people start to question if they really need another one. Activision’s CEO has been quoted as saying that when they merged with Blizzard that the projects they dropped were dropped because they couldn’t be exploited for sequels, not because they didn’t believe they wouldn’t sell, because a Ghostbusters game sure as hell will sell, but because they couldn’t turn them into yearly franchises that could be run into the ground (like Tony Hawk and to a lesser extent Guitar Hero)
Focus on HD gaming
You’ve all heard the adage, it wont go away if you ignore it, well it seems that all the western publishers believe that if they ignore the Wii it will just go away, unfortunately this isn’t going to happen, it’s probably the fastest selling console in history (citation needed) and yet the support it gets from the major publishers is laughable, just one example. Need For Speed Underground (a title that EA thinks is underperforming) was released on the following platforms: XBox 360, PS3, PS2, PC, DS, PSP. Do you notice a platform missing there, yes, the Wii didn’t get a release of NFSU, one question springs to mind, WHY NOT? The Wii is the largest selling platform of this generation, there are more Wii owners than there are XBox 360 and PS3 combined (yes that’s true) what sort of idiot wouldn’t put there release on the biggest platform? EA, that’s who, infact everything that EA has done with the Wii so far has been laughable, the All-Play series, way to turn the hardcore player who own a Wii off playing your game, the covers look stupid and unprofessional, wether or not you can play these games normally on the Wii doesn’t matter because no one will find out because they’ll take one look at it and think, this is a kiddie game I’m not buying that, I’ll get the PS2 version instead. It’s almost as if EA who used to be a pivotal developer to have on side (Sony paid EA large sums of money for exclusive sports titles on the PS1) still believe that they hold sway over the outcome of the console wars, and that by sabotaging their own Wii titles they’ll magically make the HD consoles win.
It’s true that Nintendo doesn’t need other publishers to survive, Nintendo makes a profit on every Wii (and DS) sold and it’s own Wii Titles (except Wii Music) sell extremely well, however it’s probably even more true that Publishers need Nintendo. HD gaming isn’t taking off as expected, in the US the PS3 is languishing behind the XBox 360 which was overtaken by the Wii earlier this year (after a years head start), in Japan the PS3 is doing worse than the Gamecube last generation, and the Xbox 360 is so insignificant as to be laughable. With the current financial climate the future for HD gaming doesn’t look bright, it’s not that the Xbox 360 is too expensive (it’s cheaper than the Wii now), rather it’s that HD TVs are too expensive and lets face it who is going to replace a perfectly servicable TV at a time like this, this means that all the HD gorgeousness is going to be completely lost of the average family since their TV wont be able to take advantage of it, even worse is that some games are unplayable on SD TVs due to bad UI design that is unreadable on an SD TV (Dead Rising and Lost Planet spring to mind).
So we have a situation where people are buying the Wii in great numbers and yet the publishers are shovelling shit onto it, thinking somehow that casual=thick, and that they’ll buy any crap, simple fact of the matter is that casuals don’t buy much, and guess what about 80% of all PS2 owners are casuals, do you think the woman who buys Singstar for her PS2 is going to play God Of War? Of course not, she’ll likely buy another Singstar disk with songs she likes, and sony has made good money exploiting this fact.However a lot of hardcore gamers bought a Wii when it came out, RE4: Wii has sold over 1million copies, which for a port of a last gen game to it’s 4th platform (Gamecube,PS2,PC) is incredible, RE:Umbrella Chronicals has sold almost the same amount, Mario Galaxy has sold millions of copies, and mario is hardly a casual game, Red Steel, a launch title sold over 1million as well. There is a hardcore market on the Wii, or there was, but the western publishers ignored that and decided that every Wii owner was into mini-game collections and dumbed down sports games (Wii Sports is not dumbed down, it’s just accessable, there’s a major difference, bowling in Wii Sports is probably as difficult as in real life and requires similar co-ordination to do).
The Future for Publishers
The simple fact is that almost the entire hardcore market has bought their HD consoles already, the biggest selling HD games now are likely to be the biggest selling HD games this generation, there’ll be very few new Hardcore XBox 360 and PS3 owners over the next few years, this mean that that market is at saturational already and anyone budgeting for new HD games needs to realise this, most HD games will be lucky to sell 500K world-wide, very few will make it to 1million and even fewer will be multi-million sellers, this is the simple fact of the matter. Publishers can ease this by spreading their releases out throughout the year, allowing titles that would get lost in the Christmas rush some space to find an audience, but the simple fact is that the audience isn’t going to grow much more.
Okay, so what about the Wii, well for a start when Nintendo said they were concerned about the direction development budgets were going and the tenability of the gaming industry, which is why the Wii isn’t much of a step up from last generation, this is exactly the situation they envisioned, the aim with the Wii wasn’t to reduce development budgets, but to keep them at sustainable levels, of course the Western publishers took this to mean that they could produce Wii games cheaper than last generation and promptly went ahead and did just that. I hate to think what the average Wii Development budget is in the west, but I’d hazzard a guess that it’s less than $1million (that’s average, not mean), this is ludicrus, you can’t develop a decent game for a handheld with a budget like that, let alone a current generation game, when I worked on Super Monkey Ball Jr for the GBA the dev budget was about $.5million, and that was an expensive GBA game. Publishers really need to realise that a consoles library requires a variety of games and that not every owner is the same, Guitar Hero III sold the most copies on the Wii, strange that isn’t it, the biggest install base sold the most copies, that’s because apart from DLC, the Wii version was the same as the other versions, same music, and controller and gameplay. I heard a comment on a recent podcast about The Conduit, an FPS for the Wii that basically said that they shouldn’t be doing it on the Wii, this is something well be coming to in part 2, the current state of Games Journalism(?). This is silly, the Wii is the market leader it needs games in all genres, it can support games in all genres, just like the other platforms can, the Wii market may have a higher ratio of casuals to hardcore for this point in it’s life, but that doesn’t mean that it doesn’t have a hardcore audience, and those people need games to play, or they will sell theirs (some already have).
A Prediction
Sometime this generation a fairly major publisher is going to take a major fall and just vanish off the face of the Earth, I know which one my money is on, but I wont say here, I will say that I haven’t mentioned it in my post though, but it’s a name with a long history in the industry, the name may be resurrected, but like Acclaim before (remember them) it will be a shadow (of the shadow) of it’s former self.
Summary
- The hardcore market already owns their HD console and that market isn’t going to grow.
- The current development budgets for games is untenable.
- Wii market being ignored by major publishers for no good reason.
- Christmas is not a good time to release all your games.
- A major publisher will fall.