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Thread: Costikyan on Game-Industry Economics: They're Effed Up

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    Default Costikyan on Game-Industry Economics: They're Effed Up

    The most recent update of game designer Greg Costikyan's bitchin' blog has a link to a PowerPoint presentation in which he compellingly argues that the video game industry is pretty much screwed: http://www.costik.com/digitalgenres.ppt

    -- Z.

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    Hmm...my PC can't access it for some reason
    scooterb: "I once shot a man in Catan, just to watch him die."

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    One sentance summary: "At any time, 80+% of sales generated by top 10 games"

    Im not sure by what he means on this particular slide either:
    Quote Originally Posted by costik on possible solutions
    Revival of shareware
    Broadband makes it feasible
    In its heyday, it wasn’t that impressive: Doom sold 150,000 units as shareware, 1.5m at retail
    Isnt shareware just a fancy name for demo (or slightly extended demo) ? Demos didnt go anywhere..
    Other than that its a great read.

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    Quote Originally Posted by thegreatescape
    Isnt shareware just a fancy name for demo (or slightly extended demo) ? Demos didnt go anywhere..
    Other than that its a great read.
    I believe what he's getting at is bypassing retailers in the distribution process. Shareware companies in the early 90s heyday didn't have proper distribution -- anyone who bought the full product would either download it straight from the company's website (or BBS or whatever since the WWW was in its early stages back then) or get floppies (maybe a CD if they were lucky) shipped straight from the developer.

    So I guess he's saying that with broadband now so freely available, developers could take the shareware route again and distribute their own games through the 'net instead of hooking up with a big-time publisher.

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    Quote Originally Posted by thegreatescape
    Isnt shareware just a fancy name for demo (or slightly extended demo) ? Demos didnt go anywhere..
    Other than that its a great read.
    Now a days that means it, but long, long ago shareware were full fledge games, many of which were what would not be considered 'homebrew' games. I fondly remember walking up and down a computer show a long, looong time ago (before CD-Roms were the norm) and seeing baggies upon baggies of user-end created full games on floppies that you could buy for like $5 or less. All with generic labels or MS Paint like covers.

    No copy protection on them either, so if you thought something was good, you could copy it and pass it on to someone else, and on and on, hence 'shareware'. Granted, the creator loses money, but he/she gets his name and game out there, whihc was a big step into 'getting in' the industry, be it the high end or the low end of it.

    Personally, I think Sega may have struck something wonderful with their $20 sports game era. I *hate* sports games, yet spent the $20 on ESPN for shits and giggles and loved the hell out of it. That's one extra customer they now have who's waiting for the next version.

    If companies started taking chances like that on bigger titles, we might see a jump in game sales (why spend $50 on one game, when I can buy 3 for $60). Now granted, I'm not saying drop Halo 2 or what have you, but it could boost sequels that are defintely losing steam (GTA: SA as an example).

    Working retail and having access to the higher up notes and such, I can tell you that power point was eerily dead on in a lot of cases, especially the '4 week' life span. I've seen *way* too many titles go form $50 to $20 or less in shorter time spans.

    Very interesting read Z, thanks for the link.

    Jason

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    I argued in another thread that the Internet HAS allowed for people and comapnies to pass their games cheaply to people online. It's a new golden age for PC players. I've gotten quite a few great games for $30 or less that way.

    In about 10 years, when broadband becomes standard in every house, we could do the same thing with console games.

    I don't agree with all the points in the article -- the gaming industry is STILL growing in sales and there will always be games available for everyone of all tastes -- but a shakeup of the industry, a small recession and not a crash, could really help. Actually, I think it's impossible for a full fledged crash to happen again like it did 20 years ago.
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    Quote Originally Posted by Dangerboy
    If companies started taking chances like that on bigger titles, we might see a jump in game sales (why spend $50 on one game, when I can buy 3 for $60). Now granted, I'm not saying drop Halo 2 or what have you, but it could boost sequels that are defintely losing steam (GTA: SA as an example).

    Since when is the biggest selling franchise around losing steam? GTA is a money making machine so don't even say that it is losing steam. That is just crazy talk.
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    Since when is the biggest selling franchise around losing steam? GTA is a money making machine so don't even say that it is losing steam. That is just crazy talk.
    It's not when you work retail and all you keep hearing is that the game isn't making presell goals and such. I'm sure it'll pick up on walk in sales, but right now it doesn't have the pre-selling 'steam' it should. Even Madden was *half* the opening day business that it was compared to last year. <Shrug>

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    Oh crap.

    Too bad the industry's profits have to be more like movies (where one hit finances a couple later duds) and less like music (where you just throw some stuff on a CD, and let the label take all the profits). Well, actually, it's not at all like I say...but I don't suppose a crash would be a good thing. o_O

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    I don't have Powerpoint and cannot open the text.

    Just one Q, what is the meaning of this?:

    "At any time, 80+% of sales generated by top 10 games."

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    Quote Originally Posted by lendelin
    "At any time, 80+% of sales generated by top 10 games."
    What it says..?

    You mean to say that you don't believe it? Well, I would wish that it's wrong, but that's very close to the way it is. As for whether he's talking about PC games, console games, or both, that's a good question.

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    Yep... most revenue is generated by only a tiny fraction of the overall games available to purchase. Basically big hitters like Madden, GTA and so on. Most games are lucky to make the money back spent on making them...

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    Has'nt it always been that way?

    Don't tell me that back in the earll 1980's the most popular and advertised games did'nt sell light years ahead of the ones that small companies pumped out just to make a buck.

    Back in the classic days, there were not as many games being made, true, but there was still more then the market of the time could support. In other words, if A is the number of games released each year and B is the number of people who want to buy said games each year (the market), then A is greater then B.

    Right now, we don't seem to have hit that equation again, and I'm not convienced that we will. A small slump, yes. Full scale crash, no.
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    Quote Originally Posted by SoulBlazer
    Has'nt it always been that way?
    Good Q! This is one of many I have about this statement. What are the authors implications and consequences of this statement for the industry?

    If this statement should raise concern about the diversification of developers/publishers or even game quality, it would make more sense to look at marketshares of developers/publishers. Diversification of game offerings WITHIN individual developers/publishers is decisive. One average selling game or even flop doesn't mean much if the developer/publisher has a good selling game the same year.

    Ubisoft had a big (undeserved) flop with Beyond Good and Evil, moved a decent but overall disappointing 800 000 copies of PoP, but is still doing well because the Clancy-games are 'in.'

    ...and there will always be a decent market for niche genres, niche publishers and niche developers of medium size.

    The real probs have the smaller developers. In an expanding market with concentration tendencies of publishers and dramatic increases of development costs, they are in for a tough, tough fight. For lots of them it will be a struggle for survival in the next years.

    How many sales or profits are generated by the top ten doesn't say a lot. Only two percent (!) of all books published in the US hit the magical marker of 100 000 sales, and they live very well with it for decades now.

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    Quote Originally Posted by lendelin
    How many sales or profits are generated by the top ten doesn't say a lot. Only two percent (!) of all books published in the US hit the magical marker of 100 000 sales, and they live very well with it for decades now.
    Books are much less expensive to produce than games, and therefore have a higher profit margin. I don't think you can compare the two.

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    My take on this is that we won't have a "crash," but we're probably in a slump which will go a bit deeper (depending on things...)

    The state of the business is ensuring that there's no such thing as an assured hit anymore, and as a result almost all games will aim to be the best game of the year (or to fit snugly within some other niche, such as LE or budget releases, on two ends of the spectrum). I don't think any "from this point on" statements would make sense since the industry knows all this, but this means developers will be kept on rather tight leashes.

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    If the industry keeps releasing the same old stuff, how can it expect to continue?

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    Quote Originally Posted by Dangerboy
    Since when is the biggest selling franchise around losing steam? GTA is a money making machine so don't even say that it is losing steam. That is just crazy talk.
    It's not when you work retail and all you keep hearing is that the game isn't making presell goals and such. I'm sure it'll pick up on walk in sales, but right now it doesn't have the pre-selling 'steam' it should. Even Madden was *half* the opening day business that it was compared to last year. <Shrug>
    I'll second that. Presells are always hit-or-miss anyway, though. We sell tons of Halo 2 presells partly because there's the "limited" version and partly because there's guaranteed to be shortages, at least in the first couple of weeks. (Hell, it's still hard to keep original Halo in stock!) We also sold tons of Pokemon presells, but mainly because they came with a mini strategy guide -- and because it's Pokemon.

    To date, not one GTA:SA presell has moved out of my store. However, I suspect that's because Vice City just went to Greatest Hits price -- which means that GTA fans and late adopters may be getting their fix adequately at the moment. (Is it true, by the way, that Rockstar is pushing the release date back a week for the "PStwo"?)

    As for the four-week lifespan, that's sadly accurate in a lot of cases. Castlevania for PS2 did just that. So did La Pucelle Tactics. It's also telling when semi-new games -- Driv3r, in this case -- go on an incredible sale price within weeks of release. Kind of like a pre-clearance, actually.

    I don't think a full-scale crash is coming, but the big hardware blitz occurring during the next 24 months (DS, PS3, XB2, new Nintendo console, 64-bit PC hardware, other bit players like ApeXtreme or Tiger's new portable) may just cause a serious reorganization in the industry.
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    Quote Originally Posted by SoulBlazer
    I don't agree with all the points in the article -- the gaming industry is STILL growing in sales and there will always be games available for everyone of all tastes -- but a shakeup of the industry, a small recession and not a crash, could really help. Actually, I think it's impossible for a full fledged crash to happen again like it did 20 years ago.
    Costikyan didn't say that game-industry sales aren't growing. He said that game-industry sales are growing on a linear curve, whereas game-DEVELOPMENT costs are growing on an exponential curve, on pace with Moore's Law. Thus, the average game loses more and more money, since only a handful of games are best-sellers.

    My favorite graf is this one:

    "One reason for the high interest in mobile games (despite scant revenues): low budgets, short dev cycles, don't have to spend three years of your life on a fucking Scooby-Doo game that will probably die at the software store anyway."

    -- Z.

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    I'm not sure if crash would be the right term for it but I do think the industry will have to change some of its curent trends. Sales being one of them. With staff for games sometimes reaching 100 (or more) the cost of the game can become very high. The amount of game sales needed to cover the cost can break companies. Its not that I think companies need to start making more crap games, but that they need to start worrying about the customers they have rather then trying to get new people into it. If you cant please what customers you have, how can you please new ones?

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