A Dirge for the Sinking Ship

Ask certain people in the know, and they will tell you that the current gaming market is unsustainable. It’s pretty rare that I turn my Sauron eye to the forums for support, but this particular comment about Electronic Arts’ recent layoffs is the kind of science I like to see laid on people. It ties together with troubling research I’ve done on my own end, and while I’m not on board with the full conclusion, there does seem to be some strong evidence that the gaming industry is stuck in the Death Star trash compactor and can’t seem to get 3PO on the communicator.

I honestly have a genuine fear about what the next 3 or 4 years might bring in the gaming marketplace. Even if there is not dire writing on the wall some troubling graffiti has turned up portending dark days ahead. The industry has been in a struggle for nearly a decade to monetize their transactions outside of the initial purchase, and instead of making progress the rise of the used market, an unreliable consumer base and the omni-present piracy revenue suck have just made things worse.

So, when Bioware and EA put so many resources into developing a hardcore gamers-game like Dragon Age, and people light pitchforks on fire because of optional DLC, I can’t help but feel intensely frustrated at what I see as thin-skinned entitlement and monumental naivete.

I consider many in the angry mob to be friends, and it does not give me pleasure to stand against them. But, I firmly believe that if you want to keep getting games like Dragon Age, like Fallout 3, like Uncharted 2, like The Beatles: Rock Band then gamers are going to need to get on board with or at least stop openly revolting against things like Day-1 DLC.

I have been watching with trepidation and concern the past 2 years as a conflict of game publishing ideology has erupted between the once mighty Electronic Arts and the laser-focused, unrepentant capitalism of Activision. And, as EA sheds hundreds of jobs, and more importantly dozens of projects, my worst fears are come true. The focus on scatter-shot approaches to new IPs and emphasis on driving quality over quantity is great for warming cockles in hearts, but ejaculating dozens of crappy iterations of go-to franchises has tragically triumphed as the profitable way to go.

The only way to sustain that emphasis on gamer-friendly qualities is by making a profit on the releases that do well to off-set the costs of doing business. Warden’s Keep isn’t about greedily slurping up the ignorance of gamers. It’s about funding the next Mirror’s Edge. It’s about having the resources to take chances on games that gamers love.

Have cake or eat cake. Sorry, kids, you only get to choose one, and I fear now even that choice may have been taken from our hands.

While we were all squabbling in the corner over meaningless skirmishes about DLC and dedicated servers, the war was waged on another front and it’s starting to look like we lost.

I hate to be dire, but I’ve seen 3 years of the Bobby Kotick doctrine, and if that’s what the future for companies like EA and TakeTwo and THQ is going to be then we’re going to sit back in a few years and long for the day when we got to whine about Day-1 DLC in a game like Dragon Age. Let me describe the future I see. Subscription based services married with microtransactions. Hobbled initial releases where the DLC is not just an optional quest, but key game mechanics. One-time required online authentication that prevents multi-player for used games. A virtual death of games like Mirror’s Edge, Dead Space, Ghostbusters, Brutal Legend, Borderlands or Dragon Age.

You're standing on the Titanic, and you're complaining about the color of the deck chairs.

If I sound mad, it’s because I am. It is an unfocussed rage that simmers and burns, because many of the kinds of games I adore are destined for the dust bin. And, the reality is that no one is clean in this fight. Publishers have adopted a model that is proving unsustainable to match the rising cost of development. Retailers who struggle against thin new-release profit margins have compromised the industry as a whole for their own profit. Gamers have waged their own zealot war against a changing marketplace, irresponsibly made unreasonable decisions about their entitlements and bent the rules as they see fit to get what they think they’ve got coming. Nobody comes out of this smelling like a rose.

As our well-informed forum commenter mentions in his post, the acquisition of Playfish along with the cancellation of mid-range games might as well be EA’s white flag waved in the breeze. You recall when Activision let go of Ghostbusters, Brutal Legend and the Chronicles of Riddick remake. These are exactly the kind of games that major publishers can’t afford to make any more if they can’t find a meaningful way to continue profiting beyond initial sales. These are exactly the kind of games that EA just ejected.

Let me put it this way, if having Day-one DLC in a game like Dragon Age means that Bioware gets to make the sequel, and not having it means they don’t, I will happily take the opportunity to make my informed purchasing choice and I will fold my arms and look sternly at those who gripe and complain. Drawing the line in the sand has consequences, and I’m not nearly invested enough in the ideology of consumer activism in the gaming marketplace to throw the baby out with the bathwater.

If you want an industry that can take chances. If you want an industry that can be agile and adaptable to niche demands. If you want publishers that are willing to explore new IPs and put resources behind projects like Dragon Age, then you, my stubborn and well-intentioned comrades, need to turn down the righteous fury.

Comments

PA no one is saying what you are saying.. at least I'm not.

Bullion Cube wrote:

Balance baby balance.

Exactly. I never said only customers should be taken into account. But many businesses are demonstrating these days that customer concerns are secondary when the risk of addressing them means pissing off shareholders. Sometimes shareholders should be pissed off because by and large, they only care about the profit numbers, not any factors that lead to them or could impact them in the future. As long as this quarter is met, nothing else matters. The prominence of that attitude is largely what caused the current economic crisis but that's for another thread. My point was that "it's just business" doesn't justify poor practices (and there are many more extreme examples of where this excuse has been used that go well beyond the games industry) and claiming that somehow the individuals who run businesses and the businesses themselves are wholly different things is just not true. As I said in another thread once, I'm sure Bobby Kotick is a great individual but the decisions he makes and talks about when running Activision are his decisions and that he did them on behalf of the company he runs doesn't give him a pass.

TheGameguru wrote:

PA no one is saying what you are saying.. at least I'm not.

Can you clarify that then? If I'm misinterpreting what you wrote, please let me know how cause I don't want to respond to a point that was different from what you meant. When you say "business is just business", what do you mean?

TheGameguru wrote:

If you run your business solely thinking of the benefit to the "customers" then you will NOT have a successful business.. ever.

ever ever ever.. never ever.. ever.

This is true, and as Bullion said, there's still a lot of middle ground that went undiscussed.

If you had to put two exemplary games on each end, we could consider any Guitar Hero Iteration on the Shareholders End and maybe Valve's TF2 on the Customer's End.

With each DLC these games have had (GH with every new, purchasable song, TF2 with free game content, gameplay and game modes) both companies are aiming for the exact same thing: additional sales.

The only difference, IMO, is that Valve bothered to make a detour through "what does customer want" land, Activision went straight for Stockholder benefits.

But how on earth does a business net profits unless it delivers what a customers want? It's okay for businesses to concentrate on the customers that are interested in giving them money instead of the ones that get mad every time they try to sell them something.

Parallax Abstraction wrote:
Bullion Cube wrote:

Balance baby balance.

As I said in another thread once, I'm sure Bobby Kotick is a great individual

Wow...=). After getting lauded several times in this thread people might start looking at you differently if you say this too often.

The argument can be made about the exteme situations, or it can be made about the grey areas of what's an appropriate way to ask customers to pay for content. Most people can envision a scenario where characters in game hawking products is poorly managed. Something that is in your face, and interupts what you actually want to do. Frankly I think Bioware's execution in marketing the DLC in game was well handled. They will get more people to buy the content by exposing people to it, reminding them of it. This isn't trickery, it's not bait and switch. It's effective marketing done right. Expose people to a product that they'll enjoy.

Most reasonable people feel that Bioware is doing right by their customers. They put out a full game, something that was ready for the PC back in April of 09. They spent some time polishing the console port, and ostensibly also worked on DLC during that time period. They gave most everyone the Stone Prisoner DLC for free, partially as a way to combat piracy as those individuals would not receive this content. The created Mod tools so that people could create and distribute FREE CONTENT on their own. They aren't swindling anyone.

After launch they're goal is to take this world, and find a way to get people to pay them to create more content for the game. They're not setting it up as a subscription based game, they're not automatically charging your credit card. They are tasked with finding creative ways to make sure this project thrives. You can have a visceral, immediate reaction to an in-game salesman. I think everyone was suspicious at first, it's something I for one hadn't seen before. But Bioware did it right.

Now when the brothel opens up in camp, and they start selling off newly developed sex scenes/positions for your characters to partake in, I might revisit this conversation on the other side.

I misread earlier, or I got this argument jumbled with all the other times this discussion has come up recently. Like PA, I'd like some clarification on what "Business is just business" means here. When I see it, it often seems to be in the tenor that a business is either some implacable force of nature, the course of which cannot be changed, or that it's some retarded child who's excesses I need to just politely ignore, and either way I just need to shut the hell up and pay them, otherwise I'm a whiner, and I can't agree with that reading.

For the record, I found the NPC in DA annoying, but liked the rest of the game enough that I got over it. I doubt that'll always be the case.

Jayhawker wrote:

But how on earth does a business net profits unless it delivers what a customers want? It's okay for businesses to concentrate on the customers that are interested in giving them money instead of the ones that get mad every time they try to sell them something.

If what the customer wants is free content (aka. Wardens Keep on release day) then no, giving it away does not net anyone any profits. The Stone Prisoner is substantial content that's an incentive not to pirate the game, and it's free release is justified in a business sense that way. Warden's Keep is gravy. No reason not to charge. And it tastes good!

Bullion Cube wrote:
Parallax Abstraction wrote:
Bullion Cube wrote:

Balance baby balance.

As I said in another thread once, I'm sure Bobby Kotick is a great individual

Wow...=). After getting lauded several times in this thread people might start looking at you differently if you say this too often.

There was an article somewhere a while back (can't remember where) in which some people were being asked to comment on Bobby Kotick and some of his recent corporate antics which can be interpreted as not being in the customer's best interests. These people (largely analysts if I recall) were making the point that Bobby's a really great guy and that he's not this big, evil person that everyone made him out to be. They also made the argument that just because he's done a number of things to piss off gamers through Activision, that he just did that for the company and it shouldn't reflect on him personally. I'm sure that as a person, he's probably a good guy, as are a great many rich CEOs. There's a guy named Terry Matthews who is a local billionaire who has started and run many of Canada's most successful companies. He's also one of the nicest guys you'll ever meet and is personally very generous with his money. So is Bill Gates for that matter. However, Microsoft has rightly taken some stick for their business practices, all of which took place under Gates' leadership. I'm sure many of these CEOs are wonderful people as individuals but when they make a bad statement or decision on behalf of their company, I don't believe it being done for the company excuses the part they as individuals played in that action.

Frankly, while I disagree with what BioWare did with Dragon Age and presenting its DLC, you are right in that it is minor and doesn't make a huge difference. I do present it as a slippery slope argument though because this is very clearly being done as a test and should there be great success from that method, you can be sure it will get more prominent and more invasive in the future. Someone on Blue's News made an interesting point that the reaction for many large publishers these days always seems to be blaming the customers for their failures rather than themselves. If MW2 on PC doesn't sell, Activision's response to that will likely be that there is no interest on PC and that they should abandon that platform for future releases, rather than looking at why people didn't buy it. There's something fundamentally wrong with that mentality in any business.

PA:

I find nothing at all objectionable about your last statement, and agree with most if not all of your points. DLC marketing could be a slippery slope. That said, I am hugely disappointed you didn't pick up on my invitation to discuss the merits of XXX DLC for video games, and how it can bring this industry back from the brink.

I'm going to go play a game now.

Hobbes2099 wrote:

If you had to put two exemplary games on each end, we could consider any Guitar Hero Iteration on the Shareholders End and maybe Valve's TF2 on the Customer's End.

With each DLC these games have had (GH with every new, purchasable song, TF2 with free game content, gameplay and game modes) both companies are aiming for the exact same thing: additional sales.

The only difference, IMO, is that Valve bothered to make a detour through "what does customer want" land, Activision went straight for Stockholder benefits.

The key take away here is that Activision is a public company and Valve is privately held.

When you don't have shareholders screaming at you for higher and higher returns on their investments you don't have to nickel and dime your customers.

IMAGE(http://www.switchbreak.net/images/NeverCompromise.jpg)

I'm so damn tempted to lock the thread after that and let that be the final word.

Did you make that yourself Switch? Some of that seemed to come directly from Elysiums article.

Jayhawker wrote:

As long as you understand that, "They only care about their customers," isn't such a great reason either.

That depends on who you believe their customer is. As consumers and gamers we want to believe that we are the center of their universe but that's simply not the case. A developer can spend years, make an amazing game but lose a fortune doing it. We're happy as clams because we've got a great game and we sing their praises but their shareholders will demand blood and their board will get hammered.

OG_slinger wrote:

The key take away here is that Activision is a public company and Valve is privately held.

That's what always bothered me about "public companies". I'll cry a sad tear and compose "The Day Gaming Died" when Valve goes public or sells out to a public company.

But take a look at Apple (with more than a pinch of salt); they at least have their act together and give the coordinated impression that they're a company that still does what it does best; great products with brilliant business models. Again, that results in higher shareholder yield, but they make it sound less evil... just ignore the 99cents to make a song into ringtone...

pyjamarama wrote:

In my opinion the problem with EA and other big publishers is they lost the ability to budget a game that is meant to turn a profit with a sales of 1 million copies. Every thing as to be bigger and bigger , big development costs with big teams, an even bigger marketing costs so is no surprise that they only want games that sell ate least million copies. But unlike you I'm not concerned if there is a will there is way, other smaller developers with smaller budgets will develop games for mid sized audiences, distribution cost are going down with the digital age so maybe EA and others will not develop those types of games that a big audience, but not big enough, likes others will take there place.

I think you are very correct here. Selling a million units is now considered a poor showing. It used to be the mark of a hit. We would be ignoring the fact that the traditional gaming market is demanding these larger games with more and more and more. Those are the games that do sell the most in that market. A game now has to have multiplayer, coop, coop story mode, story mode, cinematic visuals, epic scope, and DLC to satisfy gamer demands. Few outside the industry have any understanding of how expensive this all is. Just consider Dragon Age: 5 year development time, at least, probably a team of over 100 people on average for the duration (and that's lowballing it). Now put that salary cost alone together and tell me that 1-2 million sales is making them much profit. The only way that they can continue to offer you the kind of game you want is to lengthen the monetization time.

The problem with the current business model does lie with its target audience. Up until now the industry has made all of its money on the "hardcore" the fanboy gamers. That's no longer enough people to support the quality and variety that those gamers want. The hardcore are hurting the market but only because the industry has not grown out of its fanboy phase yet. It is doing that now. I think a good analogy to the state of our industry is the independant film market. No one makes giant budget independant films for a good reason. Not enough seats. The game industry is doing just that: spending big money on games that appeal to a small portion of their potential audience.

If you doubt that then compare the number of people who will play Dragon Age, or even Modern Warfare to the number of people who play Peggle or Bejeweled or scrabulous.

Very interesting article Elysium. Before I start here, I think you already know that I have quite a bit of respect for you both personally and for your insights into the industry. And you have made a lot of valid points in your article which I agree with. There is no doubt that this industry is in major trouble and is going to have to have a paradigm shift or risk melting down. I've been saying since last generation that the industry is heading for another 1984 style crash and was largely laughed at in other places. That said, I really take issue with the attitude you present to customers demanding value for money.

I do not believe supporting day one DLC that is sold to me by in game characters is necessary to fund the next Mirror's Edge. I do not believe having ire towards paying $10 more for a PC version of MW2 that lacks the multiplayer functionality that is integral to the PC experience is an entitlement attitude. I do not believe consumers are to blame for the industry failing because it's the industry that's failing. My company is struggling to find customer growth right now and frankly, is teetering dangerously on the brink. I'm not 100% sure who the fault lies with but it isn't my customers.

I've seen an alarming propagation of the point of view that somehow consumers owe the industry something, almost like we work for them rather than the other way around. No, we are the ones paying them, they are the ones who are supposed to provide the product that we want. If some modern games have unrealistically high budgets that require additional optional content (and I have bought lots of DLC) or a million plus sales to make something profitable, then it wasn't budgeted or planned properly and that's the publisher's fault, not ours. The industry is so caught up in this arms race for technical fidelity that they don't care if they cut off their own limbs to win it. Yes, we as gamers are dazzled by the visuals in Uncharted 2 but are gamers demanding that every game look this good or is the industry demanding that of itself? Outside the gaming press, I never see people complaining that a sequel to a game doesn't look substantially better than a previous installment.

Do you see the "thin-skinned entitlement and monumental naivete" crowd complaining about Torchlight? Sure, some people wish it had multiplayer but most are very happy with it and I haven't heard one podcast or read one post where anyone said they refused to buy it because it lacked multiplayer and that Runic Games owed them that. In the case of MW2, people were mad because IW stripped everything from the game (dedicated servers, lean, banning, mods) that made the previous games so great on the PC. You truly believe the people who supported the previous games don't have a right to be upset about that, especially when being charged a premium for it? Yes, there are people out there who will never be happy and even worse, the people who will steal games because they didn't get what they wanted. But those people exist everywhere and I think it is very unfair of you to throw those of us who feel we have well reasoned and logical arguments in with those people simply because we don't like paying more for less in order to support a failing business model.

I equate this to a far less extreme version of what the RIAA and MPAA are doing. Obviously, this industry isn't going out and suing people for stealing their games. However, the comparison can be made that they are continuing to cling to a business model that isn't working and while some are theoretically trying to evolve it (see EA and Playfish or Ubisoft getting into animation), they are shifting responsibility to consumers to keep their current model sustainable rather than adapt and change. As a consumer, your only responsibility it to demand value for money and to support the products and services you believe in. That's subjective of course and if you believe in buying stuff like Warden's Keep or MW2 on PC, you absolutely should. But it's pretty snarky to fault me for not doing so and saying why. I take issue with being lumped in as someone with an entitlement attitude because I'm being asked to either pay more for less or pay and then pay again because the industry is spending itself into a death spiral and refuses to break out of it because they're terrified of change. It isn't our job to solve the industry's problems, people like Riccitiello and Kotick get paid millions of dollars a year to figure this out. If they can't, then they should be replaced.

I can tell you right now, if the industry ever ends up in the place you theorize, that will be the time I stop playing games.

P.S. Despite being almost broke, I have bought Brutal Legend, Borderlands, Ratchet & Clank Future: A Crack In Time, Uncharted 2, Torchlight, Dragon Age, Ballad of Gay Tony (DLC), Forza 3, DiRT 2, have pre-ordered Assassin's Creed 2 and once I can sell a couple of games I want to shed, will probably buy Modern Warfare 2 on 360. This is just since September and isn't counting the tons of other games I've rented in recent months. I bought these titles because I believed in them and I wanted to support the developers. I've done my part and then some.

Switchbreak,
That is the greatest post I've seen on gamers with jobs in my 3 years here. I would congratulate you, but you don't need it, as your sense of pride on that should be well enough.

Bravo Switchbreak, bravo.

Although I haven't bought DA, I've heard much about it due to this whole thing. Really, the fact that they have an NPC in there specifically scripted to sell the DLC just goes to show that they had it ready before the game was finalized. They planned this whole thing, which doesn't really make it kosher with me. They had enough time to put it in the game, so it's definitely a money grab strategy. DLC should be regulated to content that they make after the launch, not stuff they obviously have time to include into the game.

*Do note that I'm a trained level designer. I'm aware of how the industry works, and yes, I'm positive they had this whole thing planned out in advance.

ruinate wrote:

The problem with the current business model does lie with its target audience. Up until now the industry has made all of its money on the "hardcore" the fanboy gamers. That's no longer enough people to support the quality and variety that those gamers want. The hardcore are hurting the market but only because the industry has not grown out of its fanboy phase yet. It is doing that now. I think a good analogy to the state of our industry is the independant film market. No one makes giant budget independant films for a good reason. Not enough seats. The game industry is doing just that: spending big money on games that appeal to a small portion of their potential audience.

If you doubt that then compare the number of people who will play Dragon Age, or even Modern Warfare to the number of people who play Peggle or Bejeweled or scrabulous.

I'd actually argue that what's happened is that while making the games they've always made, game companies are trying/wanting to treat the mass-market audience like they came to expect the hardcore (core?) audience. They appear to budget these games on the presumption that the market purchasing likelihood is something like:

(Copies sold) = (Size of the market)x(Fraction of the market that is interested in the genre*)

*This is where genre history and copying "hits" comes into play.

But in actual fact that hugely simplified equation only works for the core market. What we see for the expanded market is more similar to:

(Copies sold) = (Fraction of the market that is interested in the genre)x(Size of Hardcore market) + (Size of marketing budget)x(Fraction of mass market interested in the genre)x(Fraction of the genre-interested that is willing to make another purchase)

It's already been shown many times that the mass market consumer is more limited in their spending scope compared to hardcore consumers (across all markets, e.g. music etc) and these consumers who are buying less than 10 games per year vastly outnumber the people who will buy 10+ games per year - but still own a console (40-50% of all 360s are offline for example). This mistake would explain the budget problems we're currently seeing and the "expected sales" miscalculations we see all the time where games companies expect 1.5 million games sold but actually they only sell 750,000.

I think there was also the impression that entertainment media were "recession proof" but of course games are not impulse buys (on the whole) compared with other entertainment media so i never knew how this idea set in and i wonder if this also affected how games companies decided to continue funding on different projects that we've seen released in the last year and into next year.

Basically i don't believe there's any problem with making the games the industry has always made but they need to not expect the same profit if they're targeting the whole market (install base) at £45 or whatever price point. Moving all their business (or the majority) to target the fickle (and i believe that they are more fickle as opposed to the hardcore market - we complain but still buy... that's not in the definition of "fickle") mass market with smaller, cheaper games is probably not going to work out in the long run. You'll get results like Friendsreunited>Myspace>Facebook>Twitter etc.... Something will be a hit for a while but then quickly become redundant or used by only a small hardcore part of that original market size.

I'm way late to the party, but I was out Thursday night, and I didn't want to jump into the thread without reading all of it, so it took me a while. Great thread, with plenty of worthwhile arguments.

Publishers are really damned if they do, damned if they don't here. If they were in any other industry, they could raise prices on new games, but the core gaming community would revolt, in mass. Even the $10 increase that the current generation brought had people up in arms, and that wasn't even a real price increase, when measured against inflation. Games today are bigger, better, prettier, more immersion and CHEAPER than they have ever been. Baldur's Gate launched in 1998. In today's dollars, you paid $66.25 for that game. Eleven years later, Dragon Age launches at $50 on the PC, yet Bioware's costs went up 32 percent, even assuming the development costs were the same. If we were buying a car, a college education, or a television, we would be blowing kisses at Bioware for giving us such a good, cheap product.

Instead, a vocal minority chooses to complain about extra content designed to make Bioware more money, which makes a sequel more likely, and will make them more likely to try to launch a new franchise in the future. Is it a slippery slope? Maybe, but the slippery slope rarely comes to pass. It was a slippery slope argument that got us into Vietnam.

Do the publishers and developers need to change their business model? Sure. However, many of us here still want games like Dragon Age. I want games like Dragon Age, and I'd be prepared to put my money where my mouth is. What publishers are really faced with is a group of customers who demand a product, but only so long as they get it at their price, and no more. There's nothing wrong with that attitude, but if you aren't prepared to pay for something, you shouldn't be demanding it.

Let's not also forget that there are customers that you make money on, and customers you lose money on. They may even give you the same amount of money, but if one is calling tech support and sending nasty emails, it doesn't take much for that "good customer" to put you in bankruptcy. Then they'll go on an internet forum and bash you to oblivion.

Parallax Abstraction wrote:
TheGameguru wrote:

PA no one is saying what you are saying.. at least I'm not.

Can you clarify that then? If I'm misinterpreting what you wrote, please let me know how cause I don't want to respond to a point that was different from what you meant. When you say "business is just business", what do you mean?

It's really simple and it directly to the comment about Valve. You can't hold a company made up of many individuals to any higher morality or business practice than any other.. Its all perception from outside the veil. No company is "good" or "evil" just successful and not so successful.

Individuals in companies have done really wicked things.... and in many cases were instrumental in an entire companies downfall.. but thats another issue.

Thus.. business is just business.

The key take away here is that Activision is a public company and Valve is privately held.

When you don't have shareholders screaming at you for higher and higher returns on their investments you don't have to nickel and dime your customers.

That's a narrow way of looking at it.. since many "private" companies have "creditors" that can scream just as loudly. We do it all the time to our investments... and in many cases we have alot more power over a company than shareholders have over a public company.

Making copies of a friend's game or buying pirated games (or stealing cable, electricity, gas, you name it) reminds me of *spoiler alert* the guys in Paint Your Wagon mining the gold dust under the town - after awhile, the whole town just collapsed into the tunnels.

I think the days of one-time purchasing of games are gone (or on the way out). Now that most everyone who has a game has broadband - and the 'fact' that there are about 11 meeelion WoW subscribers - has proven that it is not only feasible, but profitable, the only way for game studios to go is to subscription-based business.

TheCounselor wrote:

Publishers are really damned if they do, damned if they don't here. If they were in any other industry, they could raise prices on new games, but the core gaming community would revolt, in mass. Even the $10 increase that the current generation brought had people up in arms, and that wasn't even a real price increase, when measured against inflation. Games today are bigger, better, prettier, more immersion and CHEAPER than they have ever been. Baldur's Gate launched in 1998. In today's dollars, you paid $66.25 for that game. Eleven years later, Dragon Age launches at $50 on the PC, yet Bioware's costs went up 32 percent, even assuming the development costs were the same. If we were buying a car, a college education, or a television, we would be blowing kisses at Bioware for giving us such a good, cheap product

You're missing the whole economy of scale argument which balances this out. When a car (or any product) is first introduced (whether that's the original motor vehicle, electric, hybrid or whatever) it's very expensive and yet it's relatively far cheaper to buy many years later when not only is the production streamlined but also the market size is larger and so its easier to lower the "price of admission" for larger overall profit by enticing the largest number of consumers to buy the product.

You're missing the whole economy of scale argument which balances this out. When a car (or any product) is first introduced (whether that's the original motor vehicle, electric, hybrid or whatever) it's very expensive and yet it's relatively far cheaper to buy many years later when not only is the production streamlined but also the market size is larger and so its easier to lower the "price of admission" for larger overall profit by enticing the largest number of consumers to buy the product.

I cringe when people try to use economy of scale argument with products that can largely be automated by machines (cars) versus software which despite the dramatic improvements in middleware still largely depended on highly laborious and time consuming human tasks.

TheGameguru wrote:
You're missing the whole economy of scale argument which balances this out. When a car (or any product) is first introduced (whether that's the original motor vehicle, electric, hybrid or whatever) it's very expensive and yet it's relatively far cheaper to buy many years later when not only is the production streamlined but also the market size is larger and so its easier to lower the "price of admission" for larger overall profit by enticing the largest number of consumers to buy the product.

I cringe when people try to use economy of scale argument with products that can largely be automated by machines (cars) versus software which despite the dramatic improvements in middleware still largely depended on highly laborious and time consuming human tasks.

So you're saying that we don't have the situation where making a game that took $5 million to make in 1998 and sold 2 million copies for $50 would take $50 million to make today but might sell 7 million copies at $50 a piece?

Sure, i'm not taking it in depth (because, honestly, who can?) but the effect is definitely there. Maybe i shouldn't be using the term "economy of scale" but i don't know how else you define being able to sell to a larger audience and thus be able to make more profit without raising the cost of your product whilst your operational costs increase.......

Duoae wrote:

So you're saying that we don't have the situation where making a game that took $5 million to make in 1998 and sold 2 million copies for $50 would take $50 million to make today but might sell 7 million copies at $50 a piece?

No, we don't have that situation, and that is the crux of the reasoning of why EA has made the change it just did by canceling 12 traditional projects while buying an online casual games company. A tiny, tiny handful of games with extremely high budgets are able to be profitable, but a growing number of companies in the middle aren't improving. Sales are growing, but only for a select few titles. If your game has Call of Duty or Halo in it, then yes, the extra expense is justifying the cost by selling extraordinary amounts more. But most games are selling almost the same amount of copies as they did a decade ago, despite their increase in costs.

Or to put it more frankly, the best case scenario for Dragon Age would be if it sold equally as well as Baldur's Gate II, console versions included. You're overcompensating how much of the game industry's growth over the past decade has been with traditional games.

Kuddles - bear in mind that a 2 million seller in 1998 would be equivalent to a 7 million seller in 2009 (i.e. a rarity). Certainly the number of consumers the games industry is serving has grown by a huge amount and the potential is there to sell to them. However, as i tried to point out in the first of my posts on this page, the way games seem to be budgeted is based on a false assumption of how the consumers will react to a game being offered to them. (i.e. if they buy it or not)

There's no need for a game's budget to run up to $50 million... i mean, who pushes that? Certainly not the mass market gaming population. It's the graphics nerds/whores who demand increased fidelity all the time but even those hardcore vocalists still buy the latest games. If games were still being released with PS2-level graphics, they'd still sell..... oh wait, i forgot - they are. But really... why has the industry put itself in this position when it could have taken longer to get here and thus have a larger market - a larger pool of consumers to potentially buy their game - and thus make more profit.

Or to put it more frankly, the best case scenario for Dragon Age would be if it sold equally as well as Baldur's Gate II, console versions included. You're overcompensating how much of the game industry's growth over the past decade has been with traditional games.

I'd like to note that DA sold 450,000 copies in its first week on the PS3 and 360 combined. One can only imagine the first month's sales on those platforms, let alone combined with retail PC and digital distribution..... DA will easily exceed Baldur's Gate's 2 million copies sold unless there's some massive cut-off in sales and no one buys it over the next few years.

10 years ago there would have just been the small pool of enthusiast PC gamers buying this game and you'd have never seen first-week sales like that.

Whether or not the aggregate sales of a software product have scaled to larger numbers over time is not relevant to the question of whether there are "economies of scale" in software production.

Anyone who has done it on any scale approaching that of a large game will tell you that the *production* aspect is much the same as it was. A lot of manual labor, a lot of time, a lot of cost. Comparing this to the mass production of cars or consumer electronics is a bit disingenuous.