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

[Duncan]

"...a fucking Scooby-Doo game that will probably die at the software store anyway."

Yeah, also my favorite line. Licensed stuff is no longer a guaranteed seller either, except perhaps in the case of Game Boy Advance titles. Making a good licensed game has its rewards, of course -- witness Spider-Man 2 -- but it usually takes considerable word-of-mouth for those to become popular. The stigma of "movie game = shitty" seems to catching on with the general public, much to the industry's dismay.

[Sniderman]

It's funny. I'm not real familar with Greg Costikyan's contributions to the videgaming industry. But I know his name really well for the many hours I spent playing his pencil-and-paper RPGs "Paranoia" and "Toon."

[SegaTecToy]

The fact is that sales are growing but game development costs are exploding. I don't see a clear exit for this in sight.
A interactive medium is much more demanding than a non-interactive one. So the game business is in a worse situation than movies, books and other kinds of entertainment.

[Mayhem]

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.'

Right on the first count (brilliant game), wrong on the second. Post Xmas with the $5 deal with Rainbow Six, plus word of mouth has meant PoP has shifted close to 2 million units now worldwide and why Ubisoft have risked going with a sequel.

The big hitters have always occupied a largish slice of the revenue stream. Only problem is that slice has been getting larger year on year for quite a while. And as was pointed succintly out, overall revenue might be rising, but costs are rising quicker. And that's not good...

[YoshiM]

For those who are Powerpoint-less.

http://webpages.charter.net/pmode4/digitalgenres.htm

Excuse any formatting issues, I just published the PP presentation to web pages and didn't optimize.

Pretty interesting read.

[dethink]

thanks yoshi...

i think the biggest hurdle is dev time and the resources it requires...unless this is curbed, i think the industry (as far as console gaming is concerned) will be forced to adapt a massive online scheme, one in where there really only are about a dozen BIG games a year in terms of scope and sales, and that online revenues will help pick up the tab, and downloadable content will ease some of the dev time, by allowing the retail disc to be ready before everything the developer WANTED to implement is complete.

i think the xbox is already becoming the model of this - how many games are stil being played in LARGE numbers, despite not being huge sellers currently? project gotham racing 2 isn't flying off shelves, but is still one of the top 10 games played on live despite being out for quite a while, and bizzare is releasing updated content at $4.99 a pop.

i think the only way to counteract long dev times is to ensure the game itself has a long life. people are still playing halo (and it continues to sell well, and like someone on here said, is hard to keep in stock after 3 years) in droves...imagine if MS released a halo 1.5 disc after live was implemented that merely allowed online play and downloadable content. it would have sold like hotcakes. i have more than gotten my $50 worth out of that game - the cost per hour of entertainment is probably less than tiny fractions of a cent.

back in the NES days, you needed a drawer full of games to keep yourself occupied, no matter how good they were. you'd go batty trying to play duck hunt all day.

this gen, i have 6, and don't have time to play them all to 100% completion. games keep getting bigger and more in-depth, and i think it would behoove publishers to keep people sucked in to a "favorite" much like a MMORPG, and then offer things like downloadable content for a reasonable price. some people balk at having to pay extra for content/live, but for what you get, it really is cheap. PGR2 costs $40 by the time you figure in DLC costs, and there's enough there to keep you occupied for months if you really love the game.

except for this board, i bet a survey of gamers would turn up this: people are buying fewer games and playing them a LOT longer. look how long some titles have lasted in the PC realm due to the mod community. the console makers need to get wise to this, and learn how to profit from it.

any bets halo 2 will be played in large numbers WELL into the X2's lifespan?

[SoulBlazer]

Oh, Zach's quote made me remember something ELSE I was going to comment on -- anyone else notice just how, oh I don't know, BITTER the author sounds?

[zmweasel]

Oh, Zach's quote made me remember something ELSE I was going to comment on -- anyone else notice just how, oh I don't know, BITTER the author sounds? LOL

Yeah, but I like listening to bitter old-school designers. :) Chris Crawford is another bitter dude who makes fantastic points about the game industry past and present. He's pretty much abandoned game design for the nascent field of "interactive storytelling," which he sees as holding much more creative potential than video games.

-- Z.

[Iron Draggon]

Two words:

No Limits

Homebrew coaster sim blows all others before it out of the water, and still rides on top to this day. Online only download, $25. Every coaster nut in the world owns this game now, and yet the industry almost completely ignores it.

Every new coaster sim that comes out gets compared to this game, and usually ends up getting dismissed as pure crap for not measuring up to it. It's become the industry standard against which all others are judged, and yet it was originally developed by just one guy working on it in his spare time after school. He has a small team of other developers helping him now, but at first it was just a one man show. His reason for doing it? He wasn't satisfied with anything that the industry had to offer at the time, so he made it himself.

Cue the imitators:

Scream Machines

Another homebrew coaster sim that has become the only real competition. And once again, the industry still almost completely ignores it. Online only download, $25. Most people who own No Limits eventually end up owning Scream Machines too, but No Limits is still #1, Scream Machines is #2. The only industry produced game that even comes close to these two is called Hyper Rails. A collosal failure that still has yet to fulfill all the promises that the developers assured all the fans would be delivered upon after it's release.

The moral of the story? Watch the independents to see how it's done. Small teams consisting of as little as just one man and no more than 6 people are kicking the industry's ass in this genre, and the industry can't even live up to their own promises, much less meet or exceed the offerings of these indies.

I know that coaster sims are still a niche market at best, but this is just an example. If things like this can be done with great success in a niche market, what do you suppose would happen if they were done by the industry, in a highly successful and well established genre? The potential boggles the mind.

[thegreatescape]

The moral of the story? Watch the independents to see how it's done. Small teams consisting of as little as just one man and no more than 6 people are kicking the industry's ass in this genre, and the industry can't even live up to their own promises, much less meet or exceed the offerings of these indies.

But what happens when they try to compete with the industry at their own game (assuming coaster sims are hardcore and nothing like sim coaster) and make a game with mass appeal (i.e "profitable"). Youll need to sex up the game engine, hire artists, etc which costs money, which leads to increased sale price.

[Iron Draggon]

Dude, most people who play No Limits are so hardcore, they act like it's real coaster designing software, and they're designing real coasters. In fact, it's become so popular among coaster enthusiasts that alot of coaster sites post No Limits recreations of actual rides with their info on the actual rides, and some real coaster manufacturers go so far as to release No Limits versions of their concept rides and/or future installations to test the public's interest.

No Limits (independent sim) is here:

http://www.nolimitscoaster.de/

Scream Machines (independent sim) is here:

http://www.wounded-heart.com/

Hyper Rails (industry sim) is here:

http://www.3dgamearena.com/

See why the independents are winning? If an industry sim attempted what the indies are doing, they'd want way more than just $25 for their efforts!

[zmweasel]

The moral of the story? Watch the independents to see how it's done. Small teams consisting of as little as just one man and no more than 6 people are kicking the industry's ass in this genre, and the industry can't even live up to their own promises, much less meet or exceed the offerings of these indies.

I know that coaster sims are still a niche market at best, but this is just an example. If things like this can be done with great success in a niche market, what do you suppose would happen if they were done by the industry, in a highly successful and well established genre? The potential boggles the mind.

* The coaster-sim genre was firmly established by a commercial product, RollerCoaster Tycoon, in 1999, and built upon by SimThemePark. NoLimits (with no space, according to the game's own website) expands on an existing genre, as opposed to breaking new creative ground, and most developers are concerned that it's all but impossible to attempt the latter in today's corporate environment.

* NoLimits is a simulator, while RollerCoaster Tycoon is a game. The former appeals to coaster junkies, while the latter appeals to mainstream gamers.

* Indy-game publishing for the PC does nothing to address the problems facing the larger and much more profitable console-gaming industry, where the manufacturers necessarily control the publishing process.

* A one-to-six-man garage developer can't produce a sports game or action game or RPG with the audio/visual production values or deep gameplay that gamers have come to expect in those genres--and I certainly don't foresee extremely focused niche products as the salvation of gaming.

-- Z.

[SegaTecToy]

Maybe the good thing that hardcore players should do is stick to the PC market and forget about consoles. Consoles are going to be sequel-plagued, mainstream playing machines and PCs will be used for groundbreaking, innovative games self published by creative people.

After all if PC people have cash to expend a grand on new hardware they have money enough to maintain their own market. And PC players are much more hardcore than any other people. More companies will do as ID or Valve: "Give them the tools and they will build it"

To each his own.

[Iron Draggon]

Actually, the coaster sim genre was firmly established by Disney's Coaster in 1993, so even Roller Coaster Tycoon was building on a previously established concept. And by Chris Sawyer's own admission, all he did was apply the roller coaster idea to one of his previous games, Transport Tycoon. But in reality, what he really did was just blatantly rip off Theme Park, and expand on it's ideas. And wasn't Chris Sawyer pretty much just a one man show when he created Roller Coaster Tycoon? RCT was such a huge success because it was more of a theme park management sim at a time when such an idea was a groundbreaking new concept in an existing genre. (micromanagement sims) The whole franchise is only just now becoming more of a true coaster sim by finally allowing you to ride your rides when RCT 3 debuts on November 2nd.

The history of the true 3D coaster sim is much more interesting though. As I said before, it began with Disney's Coaster in 1993. Then it sat dormant until 2000, when a little $10 budget game called Roller Coaster Factory came out.

RCF became such a huge success that it immediately spawned a whole slew of sequels and imitators. 3D Roller Coaster Designer came out later that same year, and was the spiritual sequel to RCF, produced by the same developers.

The first independent offering worthy of mention arrived next, early in 2001.

Ultra Coaster:

http://www.reactorsoftware.com/

It made some coaster sim history by becoming the first modable coaster sim.

Then came my personal favorite, Disney's Ultimate Ride series late in 2001. A total of 3 games were produced for that series, and all within just one year. Ultimate Ride, Ultimate Ride Coaster Deluxe, Ultimate Ride Disney Coaster. A couple of guys at Disney had seen how RCF basically just blatantly ripped off the original Disney's Coaster, and improved on it by adding a second coaster type. They also noticed how 3D Roller Coaster Designer had broken alot of new ground by introducing theming objects and clever ways of customizing the game's environment to produce new environments, in addition to fog effects and other features. 3D RCD had blown all the theming doors wide open, and Disney expanded on that concept in spades. They even noticed how Ultra Coaster enjoyed quite a following due to it's modability, so they designed their games in a similar manner, to make the ultimate customizable coaster sims. Multiple coaster types, multiple themes, multiple environments, and endless possibilities for keeping it all interesting, with user created mods.

No Limits finally arrived shortly after the original UR, after 2 years of waiting in extreme anticipation for it. Everybody knew that this one was gonna rule.

That's everybody including Pantera Entertainment, the developers of RCF & 3D RCD, who basically blatantly ripped off No Limits and released Hyper Rails.

Next was the first official sequel to RCF, Roller Coaster Factory 2, in 2002. It was quickly followed by a spiritual sequel, Maximum G Force, later that same year. And that game quickly became an official sequel, and was rereleased as Roller Coaster Factory 3 in 2003. Coaster sims had become a very hot genre. After Disney's enormous success, everybody began imitating UR, and adding similar features from it into their own games, including all the independents. The UR series paved alot of new ground on it's own, but it still was obvious that it heavily borrowed from earlier efforts and simply expanded upon them.

Finally, then came Scream Machines, an independent sim that had been in development for so long that it was almost completely redesigned before being released, in order to compete with everything that had come before it, in rapid succession. Basically it's the same thing as No Limits, but with alot more of everything. It also broke alot of new ground for the genre, being the first 3D coaster sim to allow terraforming of the environment, among other things. Yes, this idea was blatantly ripped off from RCT, but no one had ever done it in a 3D coaster sim yet. It also borrowed the theming idea from UR, and it used a method of changing the look of the environments similar to 3D RCD's method. These ideas were such a huge success that No Limits introduced it's own terraformer, and began to incorporate theming as well. And thanks to some inspiration from the UR modding scene, both No Limits and Scream Machines added the ability import your own 3D models.

At last, this brings us now to the upcoming Roller Coaster Tycoon 3, which for all practical purposes might as well be called Ultimate Ride 2. It's blatantly ripping off everything that it can from the UR series, and trying it's best to pretend that it's just expanding on RCT & RCT 2, however anyone who's ever played any of the UR games sees far more similarities to UR than RCT.

So you see, here we have the independents becoming so successful with their efforts that the industry is borrowing from them, as well as each other, and they in turn are beginning to borrow from the industry, and each other too. Whatever someone else does, everyone else has to copy it and expand on it, or the players will gripe about it being inferior and go back to playing all their old favorites. And it may still be mostly a niche market right now, but the coaster sim genre is still a very young and rapidly growing genre, so it's still evolving itself through alot of experimentation among the industry, the independents, and the modders. But the independents and the modders are still the ones doing most of the experimentation, and the industry are still the ones doing most of the copying. So alot of the high polish that you see in the industry's games is only because of all the care and attention to detail that goes into the efforts of the independents and the modders. Honestly, if it weren't for them, we coaster sim fans would still be playing the original Disney's Coaster. The industry's interest in expanding the genre didn't even start until the independents and the modders got fed up with their efforts and began to push the envelope themselves. That's when we finally saw all the highly polished industry efforts arriving, and of course all the inevitable cheap knock-off "me too" titles attempting to cash in on the coaster craze.

So yeah, as far as coaster sims go, garage developers making niche products are very much the salvation of the coaster sim enthusiast, and they're mostly responsible for the industry finally taking notice and developing some games that are more along the lines of what coaster sim enthusiasts wanted to see. So if just a few guys could do that in their spare time for one genre, they could do it for any genre, and they do. Have you heard about GTR yet? It began it's life as an EA F1 series mod, but by the time it's released later this year, it's gonna be the racing sim to end all racing sims, and it looks like it just might accomplish the previously unimaginable feat of defeating the reigning king, Grand Prix Legends, an industry produced sim from over 5 years ago. Consoles are not the be-all end-all of gaming by a long shot. They're just the mainstream, and as such, they are hopelessly mired in apathetic mediocrity. Just like the coaster sim genre was before it's revival by Chris Sawyer & RCT.

I may not know much, but I know my PC coaster sims like an encyclopedia, and I just wrote a book on them in this post, so if you wanna learn a few things about how the entire gaming industry became what it is, see above. Mass marketing has been the death of the industry once before, as seen in the great crash, so I don't necessarily trust the industry to know what's best for gamers. I have alot more respect for the independents and the modders, and the smarter developers who really listen to them and pay attention to what they're up to, not the bean counters who pump out all the knock-offs and "me too" titles just to make a quick buck from an already proven formula.

[zmweasel]

Whew. You sure know your coaster sims. (Although calling a decade-old niche genre "young" is stretching.) But you don't seem to realize that they have very little to do with the big, gloomy picture painted by Costikyan.

And it wasn't "mass marketing" that triggered the early-'80s crash. It was an overabundance of unlicensed crap on store shelves, plugging up retail channels so the good stuff couldn't get into consumers' hands. Nintendo's lockout technology was by far its greatest contribution to the financial health of the console-gaming biz.

-- Z.

[lendelin]

Thanks, Dan (YoshiM), I was really curious to read it. You have a heart for us powerpointless guys.

I just read over it quickly, maybe 5 minutes, there are so many quirks and simplifications, I don't know where to start. I respond later and pick just the two main mistakes and show how simplistic and irrelevant these numbers are for the points made! (they are not irrelevant for other issues, though, but the conclusions drawn are ridiculous)

I was pretty point on in my first post w/o knowing the text, the guy overlooks completely the MICROECONOMICS!! WAKE UP! Don't use aggregate data and come to conclusions about business pressures of individual companies and the future of the industry! Look at profitshares, marketshares at the level of individual companies, and their DIVERSIFICATION of game offerings and their profitshares! You'll get a very different picture.

You know, if I were in the audience of that guy, my first Q would have been a simple common sense Q: how do you explain that the game indusrtry is still alive and well? If cost development is exponential and sales are linear, the industry should be dead by now for over a decade. Oh, I forgot, he gives a hint how to survive in this environment:

"Industry consolidation –The more titles you publish, the better your chance of having a hit to carry the firm."

Wow, what a surprise! Diversification is the answer. (read my first post) Amazing insight, almost all other industry branches know that and do it, and I learned it in my German Economics school when I was 17 years old. But did he apply this diverse game offerings to his gloomy 'Loss per game' statistic over the last 19 years? Of cousre not, this might be a bit too optimistic and realistic. Maybe the same level of profi- and marketshares based on diverse game offerings should be applied for the last ten years with the possibility that nothing changed and the dependency on 'hits' isn't something new at all? Of course not, the results might be not gloomy and the prospects not dim enough to make a little splash.

I'm sorry for the irony, I'm too old not to become ironic when I encounter pseudo-research with a couple of graphs to make the case of questionable assumptions and implications.

...and all the other 'implications' ...god...gimme a break. If a guy finds it surprising and discovers that "perhaps (!) art and business are inseparable in commercial form" I say ask Rembrandt. He discovered that 350 years ago, and every little painter in ancient Egypt discoverd it as well.

God, when I'm typing I'm typing, right? It is some useful and good information, but absolutely nothing new, mostly stereotypes are confirmed with some non-relevant numbers and figures for the cases made; and other implications for the industry are just convenient and questionable stereotypes we discussed already here on a higher level.

I may have been powerpointless, but not as pointless as this powerpoint file.

[Ed Oscuro]

* A one-to-six-man garage developer can't produce a sports game or action game or RPG with the audio/visual production values or deep gameplay that gamers have come to expect in those genres--and I certainly don't foresee extremely focused niche products as the salvation of gaming.

Now wait a second. A/V, I'll agree without reservations. Gameplay though? Lots of folks play NetHack; though that's been worked on for a LONG time and has seen a lot of involvement (to say the least). You're right - six guys don't often do it - but the indies, be they garage bands or game developers, aren't forced to churn out a hit. They can take as long as they please, and that gives them an edge.

Salvation of gaming? I think anybody who's followed Flash pop culture in recent times has had tons of fun with short'n sweet indie productions. Gunbound has seen, well, nearly unbounded popularity. These games aren't going to turn the industry around, and that's not what they're about. As long as it's a fun way to kill an hour, people will continue to spend time with the free, independent projects.

[zmweasel]

Now wait a second. A/V, I'll agree without reservations. Gameplay though? Lots of folks play NetHack; though that's been worked on for a LONG time and has seen a lot of involvement (to say the least). You're right - six guys don't often do it - but the indies, be they garage bands or game developers, aren't forced to churn out a hit. They can take as long as they please, and that gives them an edge.

NetHack is a great example of hive-mind programming, but it's hardly a good example of innovative design, and what I perceived as one of Costikyan's major points is that increasingly effed-up game-industry economics are preventing creativity in commercial products. And in a month where I'm reviewing The Nightmare of Druaga (dungeon hack), Choro Q (super-deformed racer), Samurai Warriors: Xtreme Legends (umpteenth game in the DW franchise), and Technic Beat (rhythm/music), I'm the choir and Costikyan is the preacher.

-- Z.

[Ed Oscuro]

NetHack is a great example of hive-mind programming, but it's hardly a good example of innovative design...

Dat true. I can't stand it. I guess my point doesn't address the overall issue, does it? These projects take a bit of a chunk out of the 'proper' games market, but that's about it.

And in a month where I'm reviewing The Nightmare of Druaga (dungeon hack), Choro Q (super-deformed racer), Samurai Warriors: Xtreme Legends (umpteenth game in the DW franchise), and Technic Beat (rhythm/music), I'm the choir and Costikyan is the preacher.

Dear god. How many Druaga games are there so far? Six? (One to three, that wierd Dragon Warrior-esque Super Famicom title, and?)

Xtreme Legends...there's another winner of a title. Still, someday I'll look back on these games fondly. I love innovation, but not so much that I dislike a good retread now and then...well, judging by what's out there, that would be "all the time."

Innovation. What's left for the current generation, really? Galleon tried...sort of...with that movement system, and look where that landed it. Probably more than three full-page ads in XBN, and it still isn't doing well (for good reason). That Konami voice-recognition game? Fatal Frame? I'm surprised Steel Battallion turned a profit in the U.S. - are things with crazy pack-in peripherals a way for industry giants to keep people interested (Rez included)?

[lendelin]

It's late, and I don't have the energy anymore to go into details of the 'substantial' reasoning of the lecture.

But just ask you this and follow common sense: would it surprise you that the vast majority of games with losses are carried by publishers which also make incredible profit with smash-hits? It wouldn't surprise me. If aggregated cost increase is exponential (I'd like to see also distinctions between costs) and aggregate sales increase is linear (I'd like also to see distinctions of sales), then this spells absolute doom...UNLESS...UNLESS...compensation of the costs come from somewhere!

Loss per games statistics in general say absolutely nothing about the points made. Distinctions are very important, not only for statsitsics, but also for qualitative substantial reasoning. If there is no distinction between big, medium-size and small developers (definitions are pretty easy to do) in the loss per game graph and cost development graphs, you cannot come to conclusions about situations of different developers which this lecture does. In other words: don't avoid distinctions when it comes to identify the problem, and then introduce the distinctions when consequences and implications are discussed for the different kind of developers you don't have data about. You risk drawing conclsusions of a problem you didn't correctly identify in the first place.

Don Quixote fought against windmills, we shouldn't.

Usually the case for this kind of 'analysis' is that it applies only to a small section of the discussed subject matter, I suspect that some points, by no mans all, apply for medium size developers, by no means to the bigger and smaller ones.