State of the Games Industry

First off, let me just say that this is more of a personal editorial. I just thought I would get my thoughts down on proverbial paper to put out to the readers what I think of the games industry. There has been a major flow of different kinds of games as of late. Specifically free-2-play and indie development on the PC and downloadable market places are going to change the market, for the better. A lot of the time these types of games are looked at as “casual” and “not for the hardcore”. However the games market is changing, and everyone best hold on to their shorts because some changes are just around the corner.

Before I dig into some of these alternative marketplaces I think it is important to look at the games market of the past and present that has been mostly dominated by AAA big name titles. These titles have been popular since the dawn of the Nintendo Entertainment System. Some of the current day games that embody this design philosophy include your yearly million copy selling Madden franchises and the juggernaut that is Call of Duty. These games cost millions to develop yearly, have top of the line graphics and engines and are going to be a big part of the games market. No matter what kind of hate these series develop they still make a significant amount of money in profit. There is no point in changing the formula if profit margins are still doing well.

But that’s not to say that this type of AAA development is not taking a hit. It seems every month we hear horror stories of big names taking a dive because their profit margin, while Call of Duty may be doing well, is not able to justify continuing. A good example of this is what is happening to THQ. The past CEO said they were focusing on games for gamers, which sounds great. The problem is when you spend millions of dollars to just break even, if that, like Darksiders II, the whole process just isn’t feasible.

Another great example of the expensive development cycle failing a competent company is what happened to 38 Studios with Kingdoms of Amalur: Reckoning. The third person action game has everything in it that gamers love; an amazing backstory by a very talented writer, as well as a strong backing staff of game developers with solid game mechanics. Although the game made over a million dollars and sales were perceived as a success, it wasn’t enough to dig the company out of the hole it put itself in with the development cycle. The games market and the industry over the past couple of years has spoken. There is no room or capacity to have AAA like development cycles from all companies.

The question to tackle then, is why? Why is there not room for these B games that used to be so prevalent in older system cycles? What has happened to the $40-$60 game range that has made them not profitable anymore? I propose that it is due to the rise of mobile, free-2-play and indie downloadable games across all platforms. Let’s tackle each one of these categories, one at a time.