Opinion: The next generation risks it all. Bankruptcy: The next generation An unhealthy trend is forming on the horizon; the single failed game bankruptcy. With gamers demanding cinema style graphics and CG, next generation games will cost as much as movies to make. They also take as long to make, sometimes several years. Some titles have seen development extended over three generations without release (Warhawk, now ps3). However, unlike a failed movie,a failed game title cannot be reedited/re-shot/re-released to another market. They cannot be sold as budget titles for the next ten years to slowly break even. They cannot be shown on pay-per-view or pay television and collect royalties. They simply fail. Once customers get that first taste of bad game play, even a successful series like tomb raider can be scarred and made unprofitable. This is the age of the internet. Advanced reviews and bad news spreads fast. Unlike the 16-bit era, this is no longer the age of the uneducated consumer. The days of shovelling bad titles to the shelves is long over. Let us take a look at two companies, Midway and Majesco. Both had expensive titles that sold poorly. Both are now in straits. Majesco was opened to hostile takeover, and midway is now itself much weaker. How long have these companies been in trouble? How many bad games or unpopular games did they release? It is no longer about a series of poorly performing games. In the upcoming age of the 360 and PS3, it can come down to the failure of a single title alone. Enter the next generation: Xbox 360 and PS3. The average cost per game of the current generation systems, not including advertising/publishing/packaging is: Xbox about $2,000,000 per game. PS2 about $1,000,000 per game. Next generation expected costs for a "major" title: XBOX 360: $15,000,000 PS3 $14,000,000 Even if costs are overestimated by half, you are still looking at a cost that is seven fold over the current cost per title. If you add in the build times of 1-3 years, console life and the related start up costs, the possibility of disaster looms. For smaller companies, it is completely possible to go bankrupt on the failure of just one or two titles. If the next crop of titles fails as well, even a company that has established and deep pockets is in for troubled times. The failure of key titles also causes investor problems, a dry up of investor capital, and places a company at risk of hostile takeover. In the end, the risks could make the next generation of games the least experimental, innovative and risky. Companies simply cannot afford the risk associated with new innovation. Are consumers condemned to a generation of safe, movie tie-in, off the shelf game engine based games? The only counter to this trend is the Revolution console from Nintendo. Costs to develop are on the order of hundreds of thousands of dollars, not millions. The ability to create is not so risky, and companies can make many titles at once just in case some fail. However, if the revolution sells as poorly as gamecube, there isn't an opportunity for vast profit. The low costs to develop will have equally low returns. So what does the future hold? Bankruptcies and mergers, unexciting un-risky games? Or will it be a new golden age of creativity thanks to the seemingly unlimited power of the new consoles? Nintendo clearly thinks the future is bleak with their split from the industry. Only the future and the power of your wallet will decide.
so nintendo is sitting pretty, and every next gen game will be published by ea..hmmm... your comments are so true...which brings my point....is this new generation good for the industry?...to me, no.....we will be left with the "big" companies, developers with fiancial backing, we would be left with devs like rockstar, insomiac and some others, but what about the little guys? the little guys that in history past have moved the industry foward with their out of the box creativity.......they will be left in the dust.....' but we must look at the gamer himself, the average gamer is not one of "hardcore" his needs stem only to better graphics and more "shiznick" he doesnt care about innovation, he doesnt care about originality, he wants what every average joe does....better grpahics etc. and it si to the average gamer that we see this next gen launching soo soon, surely the ps2/xbox/gamecube have life left in them...in the end, for this new generation, look for fewer games, more cookie cutter games...less innovation and the big 2 bitching about lost profits, while nintendo sits pretty, with their new fanbase, a fanbase disgusted with the lack of innovation...
Assembler, did you buy that sign too? Uh, sorry couldn't resist. The original video game crash was before my time. As it's been said around here before, it looks as if another is looming. I think you're forgetting the one last bastion of video game creativity, the PC. No matter how many coppies of Halo 3 are sold, solitare will still be the best selling game of all time. How many people have played flash based games over the internet? One only has to look at the alien hominid crossover from the web to the console to see what may become the future of original videogaming. While the big names like EA and Activision pump out sequel after sequel, they will start to find their sales slump, just look at the figures for Madden 06 compared to 05. Even Joe Sixpack will eventually realize that you're just selling the same game to him over and over. When this happens my biggest hope is for the console manufacturers to start lowering the prices of the SDK's, letting smaller dev houses self publish. The other alternative would be for sony and microsoft to start picking up the smaller more inventive dev houses and publish their games. That would be a plus for both the game designers and the console manufacturers. Then again, what do I know. I said no one would buy the PS2 because of the poor build quality and said the Dreamcast would be the leader in this generation.
The new property owned changed the face, I couldn't take it. It was just a laser cut piece of aluminum with a rainbow piece of plastic behind it.. nothing spiffy.
Heh, this post is the general thoguhts of the board for the past few months articulated in a single cohesive post.
...its hard to imagine another crash in this huge industry...and the impact that it would have would be huge, look at sony, like assembler already said, their playstation family is what is keeping them afloat....they will do everything possible not to fail with the ps3, but if the ps3 fails, it will take the industry with it...sony brought the industry to its mainstream success it is, and sony might lead to the demise of it...
nice little thought piece, i find it ironic that sonys system is the most expensive to develop for with little support so far for developers. the complete opposite they did with playstation.
Sadly, I think you have hit the nail square on the head. Anyone who has been following the industry for the past few years can clearly see that innovation is fading. Ryan summed it up pretty well with his take on the average gamer, but I can't agree with him on Nintendo sitting pretty. In order for Revolution to make an impact Nintendo has to court the aforementioned casual gamer. This means two things: 1. Graphics. As already stated average Joe has to have the best looking games on the market regardless of how they play. 2. Image. Nintendo simply has to do something to shake its kiddy image. Whether you agree or disagree with this stereotype is irrelevant. Joe believes it, and without his dollar Nintendo will be in the same boat as Sony and Microsoft, relying on the safe bets to sell big and doing little to push the envelope.
I agree with you Ryan and Radiac. 1. A crash seems impossible because companies are companies. As long as they perceive that there is still a market for video game consoles they'll do anything they can to tap into that market. It looks like things will have to change, but theres too much money in this business for a crash. 2. With the way nintendo has been treated, I just can't see everyone suddenly running back to them, ready to waive their controllers in front of the TV. I do think Nintendo will do much better in this generation, but the bottom line is that the average gamer likes sports and violence--two things that Nintendo hasn't exactly been good at offering. No matter what happens, I'm generally excited to see what's coming. It's been a long time since theres been a shakeup in video games. The coming of the last generation (Xbox, PS2, GC) felt very natural. Just new platforms, with better graphics. In my mind, I'm comparing the situation right now to great political upheavals in world history (yes, I know this is small and petty by comparison). The citizens of Videogame Land are unhappy, and all we need is something to set the change in action.
Kevin is a man who knows what he's talking about. I would add that the games from the last generation that have been breakout hits have been the unique ones, say like Katamari Damacy, etc. In a sea of imitation me-too games, it's the unique break out hits that keep the industry alive.
I personally think that Ninty has ruined it's image with the kiddy look. Even if it's not true, I know many people who have said "I'm not buying a freaking kiddy GC!" Young kids can't afford games, aim for those who can. And innovation on a hardware level can be a blessing and a curse. The best game in the world may be made crap cause a touch screen interface was added just so it can use the innovative new hardware.
Firstly, I have to disagree with the development costs that Assembler quoted. Yes, the new systems will need more assets (sound, video, gfx) but (360 at least) are still bound by DVD capacities so it can't be a ten-fold increase. Programming cost will increase slightly for the first and second gen games but will come down. Marketing costs will remain the same. Fiures I've heard quoted are $5,000,000 budget for current gen (total cost including marketing) and around $7,000,000 for next gen. At the end of the day, the budget for a game is decided first, then the games made to fit that budget. If that means less gfx, outsourcing or some other cost cutting then that is what will happen. As for innovation, that has been stifled for a long time. Even if a small dev team can make a good game, they still have to sell it to a risk averse publisher. The publisher will be unwilling to spend huge marketing budgets on such a game, so sales will be low due to an unawareness of the title. The pubisher will say 'told you so' and complete the self fulfilled prophesy. I think most big companies are aware of the problems that occured with the last itteration of the hardware and are trying to avoid those same mistakes. They won't be so quick to drop the current gen with their huge installed user base for one thing. More efficient use of resources is also something which is happening. Okay, I think we wil see a few companies falling by the wayside, particularly the smaller studios, but I think that's a general trend anyway. Oh, and Assembler. Could you get rid of that photo from the front page. It leaves a bad taste in my mouth .
I am sad to see things going this way. These development cost are way out of hand. Video games are mainstream just like the arcades in the 80s. TV channles, bad award shows. Game stores on every corner. I have never understood how all this is being propped up. Video games are not THAT much fun LOL. The market is saturated and when the mainstream decides to move on they will throw games out and leave the market in shambles. Im really into hondas there is nothing better to me. The same thing has happend here. fast and furious, NAAAWWS, stickers,giant wings, non functional hood pins, seat belts and oversized spinning wheels. It makes me sick and ill be glad when this become old news so i can get back to enjoying it. Same with games. Sorry to rant but it pisses me off to have two of my most beloved things in life being whored out for a buck
Notice I said a "major" title, not some budget job pushed out the door like cabela's dangerous hunts. New equipment assets are going to be a big expense that will deplete your cash reserves, and not pay off for a long time. In the case of PS3, you're talking High Definition renders for the CG. This is not cheap by any means. You're going to need some big ass iron to do it. A render farm. You're going to need more staff as even textures will take longer. You can't throw some low resolution bullshit on the screen anymore. You mention how 360 is dvd, and that will keep costs down. Sure it will, but when the first mod chip hits the streets, and your profits get drained, you'll be cursing that DVD drive. On top of that , you're still going to need to invest in big iron for ps3 cut scenes. At least with Blu-ray you have a chance to not see your game for download a week before release. What I will say is this: even if the costs aren't near seven million, it's still going to be double what it is now, with twice the risk to the company. If you have a bomb, it leaves you with half as much resources to make a comback title (as a new project will cost twice what it did on xbox) and save the fiscal year. You're also going to have a floor of shiny new unpaid for gfx assets, and increased staff. Not to mention increased royalties, esp for PS3, as your're slave to their price per unit on blu-ray. If two bum titles from midway can kill the quarter, then two next gen titles will be a disaster and will have the shareholders at the doors on monday with torches in hand. What photo? Acclaim? It's meant to make a point about going under by making shite.
I'm talking triple AAA non-licensed titles. I think we can ignore licensing costs as they will be pretty similar per sku. Asset costs are a drop ion the ocean compared to staff costs, and with the ways in which assets are accounted for, even less of a consideration. Outsourcing. India is a big growth market for these services, and like it or not, those jobs will be going overseas were labour is cheaper) That's not something developers have control over, we just have to deal with it. Yes, piracy hits the developers but it's not something you can account for. If it does become a big problem then publishers will drop it as a market and go with whatever is more profitable. Yes there are risks, and companies will make mistakes and some may even go under, but I don't think it will be the death of the industry. Yes, 90% of games make a loss, but someome is raking in the billions the industry is making. One bad title can kill a company if they are not secure. Doesn't matter if it's current gen or next gen. My point is that comapnies will have to set sensible budgets for their games. It's no point paying out $10,000,000 to develop a game if you are only forcasting sales of $5,000,000. If thay have any business sense (okay, not all do) they will produce the game to a budget. If that means cutting features, outsourcing or increasing revenue (e.g. from add-ons or advertising) then that is what will happen. Yeah, it's a personal thing though. I don't disagree with you that they made bad business decisions or a good many bad games. It's just that I got burned by them and hate the logo. ;-)
Maybe we shall see the rise of the dojin/amateur projects that are quite popular in Japan. If you have a small group of people who have an idea and have limited finances, you can just put it out on dojin PC and not worry about the costs of consoles. Just look at what happened with melty blood/tsukihime - a financialy strapped team put together games and it spirals out into anime and a full arcade game. The classic genres of fighting, shooting and platform are all very well represented on the Japanese dojin scene at the moment. So it may be a little too soon to mourn the loss of individual creativism. As for high costs, if it destroys some companies like Midway, I would not bat an eyelid. But the real issue is how the gaming climate will feel, ie, pressure on developers. However if we look at the japanese gaming market, trends for movies into games are not echoed as they are in the west (it is similar with anime to games - but those are ultra-low budget). You see, IMO the real innovation has come from Japan of late, I can not name one western made DS game of any quality. Everyone loves old katamari and modern Japanese RPGs are what I spend most of my time doing. If I look at recent trends in gaming in the west there is not one concept that gets me excited. GTA means bugger all to me - I liked the original when I was 15, but didn't take to it for long. I am actually quite excited about the next gen, I hope PS3 can deliver things I never thought I would see in games and I hope the Revolution will allow me to do things I never thought I would do in games. I just remain utterly unexcited about any developments on the western side of things. It is in the west that we see a vast amount of lazy development, that brings forth endless dull, dull games. If the next gen's costs act as a quality control, then that just may be a good thing. Lets just hope that the market for videogames expands in proportion to these costs (and economic inflation) and we will all be OK. For the record I am not trying to say, Japan good, west bad. This is just a matter of opinion and I will vote with my wallet.
Humans have gotten smarter over the years. Back in the 16-Bit era, gamers and developers (maybe some) would never have expected superb graphics in gameplay of future titles such as Halo 2, or Gran Turismo 4. Now that we are in that era, some think that video games end here, when we may be just like in the 16-Bit era. Now, we need a game system *cough* Nintendo *cough* which can take us a step forward in video game play, a giant leap equivalent as the leap from the 16-Bit era to the 64 & higher bits. What if video games don't end here, heck, maybe in 5 or 10 years from now, the XBOX 360 would look to the newer generation like an SMS.
You mean, Im not alone? Wow great! I really cant stand that kinda thing. Everytime I see one of them I wish they would "street race" into a telephone pole. I know one jerk, while racing hit and killed a young woman and got off with community service Now he is still out there street racing. Makes me sick....:-(
Last time: XBOX PS2 GCN I chose the PS2. My cousin chose the XBOX. This time: XBOX 360 PS3 Revolution I'm going with the Revolution, for a change!
