When the NPD Group announces their retail video game sales estimates for the U.S. tomorrow, it's almost guaranteed that December and the full year figures will show – again – a contraction. We already know the UK video game industry results, based on GfK/Chart-Track results reported through retail trade publication MCV UK: total revenue from 2012 physical software sales were down 26.4 percent over the 2011 total.
I'll break down the U.S. figures in detail next week, but I want to point to a few things in the UK sales figures that I think give a good indication of just what's going on underneath the surface. This is important, I think, because the headline titles in the traditional video game industry are hiding just how sick that market really is.
Before I go too far, I want you to look at these two figures for the UK market. I know they're painful, but just look quickly and then I'll show you what's hidden inside them. First up, the total retail software revenue figures from 2008 to 2012.
Now, here's the corresponding figure for total video game unit sales at retail over the same period.
They tell a brutal tale: a market that got cut in half from 2008 to 2012. Actually, that's a bit too crude of a description. While revenue decreased by almost exactly 50 percent, the total units were down a bit more, around 54 percent.
To get a handle on what's going on behind the scenes, we can look at the average selling price for software in each of these years. That is, divide each revenue figure in the first graph by its corresponding units figures in the second graph.
That gives you a picture like this one.
And there it is: all the time that software revenues have been decreasing and the total unit sales have been decreasing there has been a rise in average prices each year since 2008. The total rise over the period here is right at 10 percent.
To put this in U.S. terms, the average price of video game software (excluding the PC) in the U.S. was about $40-$41 in 2008. If the same thing that's happening in the UK had been happening in the U.S., we'd be seeing average software prices of around $44-$45. Instead the average price this year will likely be under $39.
So just what is going on in the UK to drive up prices at the same time that the market is shrinking in value? It's similar to the death of the middle-market that I talked about last year, but worse. I'd refine that thesis now and say that the middle-market and down is falling out, leaving what are largely the big games at the top propping up the entire system.
That is, you have companies like Electronic Arts, Activision, and Ubisoft sinking immense resources into games like Battlefield 3, Mass Effect 3, Call of Duty: Black Ops II, Skylanders, and Assassin's Creed III and chasing the high-margin consumers. These are the consumers willing to buy two or three new releases in a relatively short period, not the ones who, I suspect, were previously buying Just Dance or Brain Training.
Just looking at Wii and Nintendo DS software since 2008 in the UK, both platforms have seen their unit sales cut more than in half, mirroring what you see in those two graphs I showed above. The UK PC software market has also been cut more than in half, in terms of units at retail, but I think that's largely explained by migration to online markets like Steam.
And when those consumers are gone, the ones willing to pay for cheap software, what's left is just that fat top of the market. That's precisely how one could get average prices to rise while the whole market itself appears to be tumbling into oblivion.
Let me add one more data point to this, not from the UK market but from the U.S. In a recent note to investors, Michael J. Olson and his colleagues at Piper Jaffray and Co. compared console software sales data from October and November of 2011 to the same months for 2012. Their results showed that revenue from the top five titles across that two month period grew approximately 1 percent from 2011 to 2012. The top 10 titles had a revenue total that was down a mere 1 percent while the top 15 showed revenue down only 3 percent.
Now compare that to the overall console software market during that two month period: down 16 percent, year over year.
Moreover, these top 15 titles now represent 71 percent of the entire software market's revenue, up from 63 percent a year earlier. And, although I suspect you've guessed already, it's also true that the average price across these titles also increased.
Olson and his colleagues wrote about this that “these data points suggest well-capitalized publishers with a focus on proven, cross-platform franchise titles are able to outperform the rest of the video game industry despite an aging console cycle.”
What they've said is true, but in terms of the larger market I think there is something more fundamental going on.
Prices on the best-selling products are rising, as the publishers require more margin to pay for their ever larger bets to grab more of the shrinking market. As they abandon the low end consumers, they cede the market to insurgent players who play by different rules in terms of margin and distribution and consumer expectations.
That is, I think that collectively these data points describe a traditional video game market that is well past what one would call ripe for disruption, in the sense that I've seen Clayton Christensen use the term. Instead, it appears to me that disruption is well underway, and the consequences for the incumbents may be unavoidable.
If this process continues, the weaker players will succumb (THQ) and the remaining players will move upmarket to higher-margin sales. Those higher margins are currently taking the form of DLC and online passes, and that process can continue for a while yet. Perhaps another year, perhaps more.
But we know that the big players are trapped by their existing cost structures, all built to address a market that has built-in overhead to pay the way from development of the software to its eventual delivery as a physical product in a retail store. It's not their fault, but rather just how they were shaped by the market they were born into.
Their real competition now are the developers and publishers who address completely virtual markets with far less overhead. They were born into markets that companies like Electronic Arts and Activision simply weren't bred to address.
These new developers and publishers can make a living, even thrive, selling games at $1 or $2 per unit on platforms like iOS and Android. They are inheriting those consumers who no longer buy traditional game systems and physical game software, reeling them in with inexpensive or even free-to-play software with in-app purchases. These games simply cannot deliver the experience that Call of Duty can on a console, but they don't have to. They just have to be good enough and priced low enough for consumers to buy them.
That's the paradox of the current market: it is precisely the low prices of the insurgents that are driving up the average prices in the traditional market.
And where will it leave the incumbents? If the process continues as it has in other industries, the old guard will move up-market to an ever smaller pool of higher-margin consumers and continue to cede the lower market to the insurgents. Sure, they may have great margins, but ultimately they may run out of higher-end market to target.
And this result isn't doom for the industry. Not at all. Instead we will have a video game industry far different from the one we have today, one that provides its games to consumers in different and hopefully better ways than it does today.
[Parts of this column grew out of long, productive discussions with my colleague, Marshall Vale.]
Actually I disagree with that statement (unless it was facetious). This article and many others seem to indicate the exact opposite. For some time we've had game development activity in low mid and high-end markets. They are now stratifying into low and high.
Where your balkanization comment might make sense is that while the high end market will become extremely concentrated with the top publishers (think movie industry with top studios), the low end is dominated by a large number of small players.
The question at this point seems to be whether either side of the market can survive changes in the future. We have already seen margins for big publishers dropping and they are struggling to make up the revenue, at the same time I doubt the free-to-play and freemium models can withstand market forces either. Everyone is copying the popularized Zynga model of monetization. That model seems likely to crack at some point.
"[U]ltimately they may run out of higher-end market to target... [W]e will have a video game industry far different from the one we have today, one that provides its games to consumers in different and hopefully better ways than it does today."
Just to be clear, are you proposing that a disappearance of console-style games (whatever that means) and their replacement by games that are "[just] good enough and priced low enough for consumers to buy them" is a good thing? Or do are you intimating that we will eventually have similar games, only that they will be distributed differently and use different business models (and probably be made by different publishers)?
Your data doesn't seem to correct for the global recession and the levels of unemployment during 2008-2011. How you would correct for such a thing, I am uncertain. I do think a certain amount of fall off in retail numbers was bound to occur, but how much?
Also, what sort of corrections have been done for inflation have been done while examining the rise in the average cost in units? How are other factors, beyond digital sales, controlled for before examining the proportional rate of change between cost and units sold?
" Your data doesn't seem to correct for the global recession and the levels of unemployment during 2008-2011. How you would correct for such a thing, I am uncertain. I do think a certain amount of fall off in retail numbers was bound to occur, but how much? "
Just compare the numbers to other parts of the entertainment industry:
UK Box Office 2008 949.5 million pound
UK Box Office 2011 1.129 billion pound
(numbers for 2012 don't seem to be out yet)
If you look at books, the situation isn't like in games either:
Revenues of books sold in UK 2008 2.341 billion pound
Revenues of books sold in UK 2010 2.183 billion pound
Numbers are down here, but not nearly as down, as in games, so explaining the crash with the recession and the high levels of unemployment doesn't work, because other sectors have to be hit by the recession just as bad.
Christian: Recessions hit consumer spending in disparate amounts- not as a universal function. Games as a physical consumable in the same sense as a book may be comparable, while movie tickets may not be (due to rising ticket prices, or being a later item at which a consumer stops purchasing). Do your numbers on books include ebooks?
I don't think, that movie tickets and games aren't comparable, just because one is physical and the other not. This seems like an irrelevant distinction to me. Both are part of the entertainment industry, an industry, where people spend a certain ammount of their income in. An economic downturn leads to a lower income and to lesser expenses in entertainment. If people decide to invest the same ammount of money in one part of the entertainment industry (movies) and cut down expenses in another part of the industry (games), it's the games industry to blame, not the recession.
With books you also need to realize that it is educational books that make up a huge portion of the sales. Those kind of books are less likely to be affected by a recession than entertainment books. If you just looked at entertainment I imagine you would get a more equal comparison with video games, as the vast majority of video game sales are for entertainment products not educational.
People have always gone to the movies no matter the economic situation. They are relatively cheap, and are more social. By nature people are more likely to stop buying game or books first, and replace them with cheaper movies when economic times are rough.
In agreeing with Laura Stewart about unemployment figures and the global recession playing a role - an additional thought also comes to mind as to why the figures might be what they are when compared to other parts of the entertainment industry - particularly the retail figures. I think it would be interesting to see how the gender of the consumers might play a role in the figures.
That's to say the consumer base for video games (for a long time) has been mostly a male customer base when compared to say books and movies- especially in retail. Correlate this to unemployment figures and it could be a 'double hit' of an overall recession combined with having a more finite target market than other parts of the entertainment industry.
Possible solution: diversify the target market?
edit: also importantly the age bracket in market is different between games and the other forms of entertainment. All in all- it's the target market.
@ Joy
Interesting idea, didn't thought of it, but I don't think this explains the problems, at least not when it comes to europe, as unemployment rates amongst males aren't significantly higher in europe, then amongst females.
Quote from the Eurostat Page:
"Historically, women have been more affected by unemployment than men. In 2000, the unemployment rate for women in the EU-27 was around 10 %, while the rate for men was around 8 %. By the end of 2002, this gender gap had narrowed to around 1.3 percentage points and between 2002 and early 2007 this gap remained more or less constant. In recent years, most markedly since the first quarter of 2008, male and female unemployment rates in the EU-27 have converged and by the second quarter of 2009 the male unemployment rate was higher. The annual average unemployment rates for 2009 and 2010 were consequently slightly higher for men (9.1 % and 9.7% respectively) than for women (9.0 % and 9.6 %); in 2011 however, unemployment for males slightly declined in the EU-27, while that of women continued to increase such that the rate for males was again lower at 9.6 % than that for females (9.8 %). "
Source:
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Un employment_sta tistics#Male_and_female_unemployment_trends
On a side note, I agree with you, that the very finite target market for games is a problem. :)
Christian: Lots of things affect the degree to which nonessential items in an economy can be compared.
Consumers will expect more value and extended durability from an item that is not immediately consumed. People will reject paying $25 for a item they might use 100 times (.25 per useage) while holding a $4.25 latte in their hand. So $18.75 to see the Hobbit in 3-D IMAX is entertainment for an evening, but is FarCry 3 at $70 some dollars going to provide more value than 3-4-5 movie tickets? You can't really see how many hours you'll play a game or how much you'll like the game, and then compare $/hours.
The window of opportunity to consume the item also has to be considered. If someone wants to see Movie X in theaters, there is a certain time limit to do that. If a store is selling Item Y and will be selling Item Y a year from now, maybe cheaper? Then you have two items where the calculation to purchase will be different. So movie tickets, Starbucks, suishi are one kind of luxury item. Games are like high heels.
I'm not sure there is Clayton Christiansen defined disruption here.
What we're seeing is poor quality software at the low end that no one would pay money up front for (F2P), while software at the "high end" of the market is fairly sterile and uninteresting to the mass market.
Relatively lower priced games are an advantage in the market, but the quality across the board for the most part is, quite frankly, terrible.
Wait a minute. Wouldn't F2P represent a textbook example of disruption as described by Christensen? A big portion of the gaming market realizes that it's gaming needs are met by games they don't need to pay a single penny for? And as a result, no longer pay retail prices for?
I think you are right Jay, and I wonder the end result of that situation is.
I tend to think there are much larger ramifications coming to the wider industry. I expect the landscape of mobile developers as well as our general perspectives will change dramatically over the next 1-2 years.
Okay, let's try to apply his theory. The innovations of microtransactions and digital distribution enables a product with new desirable attributes (low price), shedding old attributes (physical media), and finding new customers (gamers unwilling to pay for entertainment). But I suppose it might not be a textbook example because the 80% of non-paying customers are not paying money, but rather, "paying" via the work they do to help establish a community and help bring in their friends as new users and their eyeballs.
@Russell Carroll
Yes, it seems like whenever some foundational change happens to the industry, things change in ways that nobody realized. Everybody knew digital distribution was coming, but who knew that it would probably end up making games free? Everybody knew solutions for piracy were coming, but who knew it would mean paying money for hats and costumes?
It will be fun to see how far the rabbit hole keeps going.
"But I suppose it might not be a textbook example because the 80% of non-paying customers are not paying money"
I think you could still get away with calling it textbook since in many, if not a majority of cases, non-paying players are still being monetized through such things as in-game advertising.
I don't think Free 2 Play or app games fit the disruptive model. Disruptive innovations are quite profitable for the new business.
The Wii however DID fit the disruptive model until they abandoned their strategy these last couple of years. The Wii was cheaper, more convenient and hugely profitable. I think what happened to consoles is that the Wii stole a good portion of the market initially, and quite a few mid-sized companies went out of business making games for the PS3 and XBox360. Now fewer games are coming out on these platforms and consequently revenue is down. At the same time Nintendo abandoned it's formerly mega-profitable model, so revenue is down for Nintendo as well.
Couldn't this be explained by more people buying physical games from online stores (Amazon, etc.) and buying more digital versions (via Steam/PSN/XBL) instead of brick-and-mortar stores?
It is probably a combination of the increase in digital sales, mobile gaming attracting away casual gamers, the recession, people expecting new consoles soon, and generally less excitement around new games as the majority of them are the third or fourth sequel in this generation.
I think this is a huge gap in a lot of data. There's a very singificant and growing mystery number that's being totally excluded from a lot of studies. I've bought probably 15 games this last year, only 3 of them would be included in these numbers if they were for my region.
That said, we're at the end of a console cycle in a recession. I don't think it's that alarming that people would be turning towards other platforms with now-comparable specs that aren't included. Tablets are nearing the performance of current gen consoles, and PCs are well above both. I'd imagine core gamers are slowly shifting to PCs and casual are slowly shifting to tablets; both of them have primarily digital distribution.
Yeah. And just the fact the Wii and DS have dropped off by the wayside.
And those systems aren't seeing their replacements take up the slack.
The 3ds a victim of iOS it seems like at least in the West.
The Wii just being a fad that captured everybody's imagination for 3 years of record sales. And its successor being something different that just launched and probably won't achieve that same climb into the stratosphere.
Many games, for many players do not worth the money even used and at a low price. So they keep their money. New are expensive, they do not have many games to sell, so the fox bites its tail and they buy the game only once they think it worth the money. Do not underestimate the impact of the quality of a game on the market, that brought us here and used games gave us the possibility to sell games to people who normally do not have the middle.
For this article to be of any use, we need the data for digital distribution as well as in-app purchases in F2P games.
You can't make a valid comparison when only looking at one distribution method, unless you're just having a discussion about how retail stores themselves are doing.
for me personally a lot of interest has waned with the lack of innovation currently in the industry,
I see less and less new franchises or things I havent seen before, both graphically and gameplay technically.
hopefully a new generation will spawn a lot of new IP's with new previously unimaginable gameplay and possibly raphics and or other forms of depth, I would not be surprised if a lot of people are waiting for this.
Is it also possible that we've reached a saturation point for games? Sometimes I have to make a choice of buying an old SNES game that I'm curious about versus buying a shiny new title that will drastically drop in price in two years. Given that I already have a library of excellent games reaching back decades, wouldn't it make more sense to wait for a sale? Since our primary audience is now in their mid 20s to mid 30s now, doesn't it make sense that these folks would have huge shelves of games to fall back on?
Due to steam & gog.com sales, I've got 350+ titles I own. I could (should?) skip buying more games for a year, play what I've got fulltime (though job & family wouldn't like that) and barely make a dent in my collection.
The amount of consumer entertainment you can get per dollar is *very* different from the mid-80s, which is what the commercial games retail industry seems to desire. Compare mid-80s cable TV with a few dozen channels to now, where cable/satellite give hundreds of channels for about the same (or fewer) dollars. In inflation-adjusted dollars, it's even cheaper. DVDs/Blurays are way cheaper (unadjusted dollars) than 1980s VHS tapes, and Redbox is way cheaper than 1980s Blockbuster. Then, add in Netflix (especially 2010 netflix, before they attempted to tell customers to pay more and like it), Pandora/Spotify, and you've got enough entertainment to saturate all your free time for not much.
Commercial retail (console) games seem to be stuck in the Netflix "pay more and receive less and like it" mistake mode. Yes, comparing inflation-adjusted SNES cart costs to modern AAA games, modern titles might be cheaper. But, when everything else competing for your time has gotten cheaper, not more expensive, raising the required MSRP for games is a mistake. Sure, the top-10 sellers like Call of Duty/Halo/Skyrim might be able to sustain $60, maybe even $70. But, for anything not trying to be in that world-class group, they should be able to release at $40, new.
The average game player is 30 years old and has been playing games for 12 years.
The average age of the most frequent game purchaser is 35 years old.
Almost half of gamers now are women.
http://www.theesa.com/facts/index.asp
If anything the audience is growing with each generation. Ive been playing games since there have been games, and I still have many years to go, so the demographics for potential sales grows each generation.
The fault IMHO opinion is global recession, and lack of new inspiring game play and ideas. Playing it safe leads to mediocre products.
That certainly describes me. I have a huge backlog and I now rarely buy anything at its original price. I just bought Far Cry 2 and LA Noire for $10 each, for example, and Mass Effect 3 for about $25. Brand new from Amazon. I just feel like, unless I'm trying to make a statement or the game is truly exceptional, there is no reason to ever pay full price.
IF you talk about AAA games on consoles then half of gamers aren't going to be women.
And the average age will be younger than 30.
In my experience gaming habits drop off as people age. More responsibilities. Less time.
Hell look no further than all these older gaming developers who hardly play any console games. All the more well known ones usually admit to not playing any games in interviews. It is usually like well I play Mario with my kid or I play some iOS time waster. They don't have time.
And you think the audience has grown? I think that is exaggerated. People have been playing Hearts and Minesweeper on Windows for a long time now. They played all these online games on Yahoo and MSN and AoL back in the day. That was a very mainstream audience there. After that we had flash games. And Popcap games. Before all of these we had Pacman in the arcades (and in every bar or convenience store etc) which was very mainstream.
@Bob, its called math. Yes averages and mean , and median, need to be taken into context, but it cannot and should not be dismissed however. These people have taken the time to do the research and collect data.
and of course the audience has grown IMHO. Each generation that comes up is now a gaming generation,its part of its culture. The generations we are currently losing are not as they came up before computers and games were a cultural norm.
Finally I not sure why you are focused just on consoles, retail software revenue's are larger than just consoles as is this discussion. The real elephant in the room is digital sales, until we get a handle on them, we are all just doing a lot of guesswork.
But in any event, thank you for the discussion it was fun, Have a nice weekend.
Yeah just questioning the usefulness of such data since various games, genres and platforms have widely varying audiences. And because we have had very mainstream gaming around for a long time since the days of Pong. Also it doesn't account for how much time is devoted to gaming.
Yeah what is this article saying? It seems mixed up. Is it just flame bait?
It seems to imply that consoles are going kaput without saying it.
Otherwise it seems to be saying cheap iOS games are making console games more expensive which is completely absurd.
The DS and Wii have been dying out leaving the 360/PS3. And average game prices rose very naturally because of this since the 360/PS3 always had higher priced software. Doh!
Aso the middle of the market on down is moving to Xbox Live Arcade etc.
And since when do we have an identifiable group of consumers who no longer buy traditional consoles? That was an absurd line too.
I do agree with a few things mentioned in the article. Some of the big players will have a hard time adjusting. I don't think it is because the world now wants $1 games.
But that the cost for doing business the way they always did is becoming less feasible. It has little to nothing do with iOS. They just can't do what they always did and make money as easily as before. The cost to wow us through graphics is outstripping the size of the audience. Remember game prices rose to $60 from $50 at the beginning of this generation back in late 2005. This was 2 1/2 years pre-app store.
This is resulting in fewer $60 titles. But folks still want to play those. The big ones still make money. And we have digital distribution for everything else. Even DD should help decrease the cost of making AAA games if they release them via DD only.
I think the sweet spot for a next gen console is $300-$400. I think most gamers would be disappointed with the capabilities of an OUYA.
I really don't see any disruption here except the chance for someone to go all DD in the console arena and use that economic advantage to win next generation. I don't think that alone is enough. i mean releasing a really cheap console with a traditional game controller that has less processing power than a 360 doesn't seem too exciting. Thus I think the console will have to more powerful or do something else innovative as well.
Why do you think $300-$400 for the next XBOX is the sweet spot? That's a fairly high price hurdle to get over, for someone working retail, for someone who just bought a smartphone, for the parent out Xmas shopping.
I think if either console releases more than $50 higher than the other, and more than the highest price model currently available, you'll see things settled right then.
@ Laura, I actually think the sweet spot for the next console is 99 bucks with a 2 year subscription to cable/internet provider ( ie Comcast, Fios, etc)
I think the consoles need to look to team up with the providers and use the cell phone model of sales. In that way, the console becomes a mainstay in every home as it is the cable box/game console that sits in everyones house.
I mean right now we all have the hd boxes which are just glorified clocks, why shouldnt they play games as well.
That's what it will take to make a new console with a good enough power increase to make next-gen games next-gen games.
There's no way around it. They can't magically make a $250 console that is so much more powerful than the current consoles.
edit: I didn't mean to imply that was the sweet spot for the mainstream. I am just saying that is what a decent next-gen console will cost. More than that and you scare people like the $600 PS3 did. Less than that and ...I think it won't be even more powerful than the current 360 or PS3. And won't get consumers too excited.
They always ask themselves that. It is a big risk. MS and Sony subsidize their boxes at retail. And have to spend the money up front to design and manufacture them.
Lets get back to reality Bob. This fantasy low cost subscription box for high end expensive gaming has no chance of happening. This is not a race to the magical number that determines some winner in the mind of the core gamer for street cred. Its a dollar and cents business. Those that build revenue in the business they are in, stay in the business they are in.
"Lets get back to reality Bob. This fantasy low cost subscription box for high end expensive gaming has no chance of happening."
I don't think I said anything like that although MS could very well further subsidize their next Xbox with a 2 yr Live subscription as they are doing that now with the 360. Maybe you were replying to TC who said something about ISPs subsidizing consoles.
Recently, Netflix tried to say "we know better than our customers" and tried to raise rates and/or reduce features and charge more for them. Guess what? Customers told them to go pound sand. The number of customers went way down -- i.e. sales tanked. They had to relent on several of the moves, but the damage has been done.
The commercial retail games industry has done the exact same playbook as Netflix -- raise prices every generation, reduce features and/or charge extra for them (DLC). And customers have revolted. This has played out in much slower speed than Netflix's debacle, and there's been very little relenting to appease customers. Instead, the commercial retail games industry has doubled down on the mistakes ($70 MSRP rumored for next-gen games) without really having any realization why things are going sour.
Don't just look at the past 4 years of commercial retail games industry's fail and complain about digital not being included, as if that'll make things show growth. It'll only make things less bad, rather than flipping from negative to positive. Look at Netflix and learn. Raising prices and telling customers to like it doesn't work. Really.
Except Netflix sales didn't tank. It has more customers than ever.
I don't think customers are revolting from consoles either. The consoles that offer the most DLC have faired better than the Wii/DS the past few years. And the Wii/DS are responsible for most of the decrease in retail videogame sales numbers.
Games actually cost less than they did 15 or 20 or more years ago.
And there is no denying that the cost to make a AAA game has increased substantially the past decade.
The problem with physical media seems to be more about the old mentality of the big companies than the actual "cost" of producing it, or consumer interest. They charge $60 for a game and expect people to flock towards them, they can't even contemplate making smaller games and profiting in quantity/quality, not big prices.
Every investor know you can't invest in only one thing, you have a portfolio of reasonably well thought options.
I don't know. EA makes some of the top selling iOS games. I think they are quite aware.
I do think they are a bloated company though. Overall I don't believe they have a made a profit if you add up the past 7 years even though they have some biggest franchise names and release many of them annually for $60/per.
Middlemen/Retailers are finding themselves less relevant with digital distribution, places like Amazon, Ebay, Netflix. Instead of adapting to these new trends they are mired in the old mentality. That will cost them the market.
As I say often. Adapt or die. The only rule of business that matters.
Well yeah but b&m; retailers can't exactly adapt to the digital age.
Retailing isn't dead. But selling boxed games at retail is. They could do their own digital stores, but don't have a ton of leverage in the long run when the platform holders can do their own stores and build those stores into their platforms.
Retailers will use all the leverage they can in the meantime. The fact that hardware can't be sold as a digital good is some leverage. The fact that customers don't all have fast internet connections is more leverage. And stores are a place to physically go check out new product with your own 2 hands.
But ultimately I don't think they have much power. They can sell gift cards for those stores, but that's about it.
Platform holders like the console makers are somewhat scared to make the shift to digital distribution outright. They all know DD is the future, but are afraid to make the jump too early and scare off a large segment of customers who aren't ready. And there are some technical hurdles for larger games which will only get larger next-gen. Some games are pushing 20 gigs or so lately.
Yet it seems like an opportunity for the console maker who does go all digital. There is a significant savings there from the elimination of the b&m; retailers and the packaged good at least that's my impression from what I've read.
How do you think companies like Nintendo revived the Game Industry after Atari destroyed it? You don't need to adapt every five seconds to survive. But there's a moment in business when it's a requirement.
Market shifts happen because people lose one of their greatest asests... assests... Google brb... assets! Creativity. When you give into this conversation, "It's too late, it's impossible, things have always been this way." You have closed off the future.
You lost me or I lost you. I thought you were talking about retailers not adapting. Maybe I read that wrong. I think retailers know what is happening and are ultimately powerless to do anything about digital media save start their own hardware platform.
And actually I guess that isn't too far fetched if these generic Android boxes take off.
But, I know that the joy of going to the game store is gone.
Nothing is on display except for the very top selling stuff. If you're a pc gamer, going to a store for anything but Blizzard stuff is futile.
My data point means nothing, and I'm sure this doesn't account for all of the effect, but where I once bought maybe 20 hard copies a year (PC), I now rarely buy more than 3. First because most of the new pc releases aren't worth playing (to me and this excludes indy digital), and second, because of digital and my discovery that I can buy much better games that came out in the last 15 years off of Amazon for a fraction of the price.
I can't FIND the same number of games that are worth buying anymore. I'm begging the industry to create things that I want to go to the store and buy, but its not happening. Maybe I'm just an isolated weirdo. But, talking to my immediate circle of friends, I'm not so sure.
The past console generation has seen (aside from the Wii) mostly recycled material from the PS2 generation. There were some games that tested new ground. Heavy Rain comes to mind. But, overall, it's the same oldl, same old. CC1, cc2, cc3, etc. For people like you and me, I'm afraid it might be time to quit gaming. All of this rehash is for the new generation of gamers. To those who didn't grow up with Atari, it's all new to them.
That said, the indie seen IS a source of new material. I downgraded my computer from an Alienware to a dual-core pc that just does Internet because I didn't find all of these games pushing some x amount of polygon all that engaging. Chess is still a good game though. Helps you think and fun at the same time. I'll see you on Yahoo chess.
I'm totally with you Matt. I don't get excited going to the game store either. If I get excited about games it's checking out games I haven't tried yet at gog.com or Nintendo's Virtual Console or some other old game.
The past few years the game consoles have come out with very little that is interesting, and the smartphone/tablets don't have games I find compelling either. The only place I find good games is the past.
Mr. Yoeung, Heavy Rain is a carbon copy of Indigo Prophesy in terms of gameplay. Which was heavily inspired by Shenmue. Technically, cover based shooters are just complex looking versions of Space Invaders. Just because something draws ideas from another doesn't mean it can't use the same idea to deliver new enjoyment.
And also, sequels are always more likely to sell better than the original. Mrs PacMan, Super Mario 3, Megaman 2, Halo 2, Shadow of the Colossus, Mario Kart 64, Final Fantasy X, and Modern Warfare 2 are some good examples off the top of my head. Even games that are wholly unique like Pikmin are heavily outsold by sequels critically panned for being the same as previous games realsed for the same console at around the same time Mario Party 5 (I think that's the one released the same year as Pikmin), that paeticular example MP outsold Pikmin by nearly double by my estimates.
Gamers never seem consistent on this issue. They claim to want new worlds, gameplay and characters, but when it comes time to pay up they buy familiar titles. It's the same reason people tend to stick to Hollywood blockbusters, even though the quality of those has been dropping for 20 years, because it requires more effort to find these unique and innovative experiences and the familiar is always waiting to be sold on the same shelf.
Part of the reason gamers tend to go for the familiar is that they know it's going to work: that it's playable, that it's entertaining, that it's worth the 60 benjamins you drop for it. Having worked at Gamestop at one time, I know that once software is opened and used, it cannot be returned. If you're stuck with a pile of steaming poo, there goes the 60 hard earned dollars. Do you think that's fair? If it isn't, then is it any wonder that piracy is such a big problem? People I talk to will pay good money for good products. They tell me they pirate to see if it's any good. Sure, some of them are outright thieves who don't care for right and wrong. But, as the saying goes, the good of the many outweighs the evil of a few. Of course, this is opinion and not fact. But, read about what one Ann Frank said about the Nazis from first hand experience. Society cannot exist without some level of trust. Go to a burger shop or any restaurant you want for that matter and what is the minimal expectation? For me, it's that the cook is not going to cough in my food and poison me with some bug. Trust in the goodness of the many is the policy to go by.
I never denied that sequels sell and someitmes better than original. And I understand that business is the bottomline. All am saying is that there is a point where all of this comes to a halt and people get sick of it. I recently played through the Half-Life 2 series to the end. (Yeah, it took me 10 years to sit down to find out what the fuss was about.) Frankly, it wasn't that much better than Max Payne, which I classified on Steam under my Junk folder. Here's a summation of Max Payne: shoot this bad guy, next scene; next, repeat what you just did except with different background. The only reason I playedd to the end was to find out how the story ended. Through the game, though, it felt like work than play. For some reason, I tend to get motion sickness playing FPS. So, on top of having to work to the end, I felt like vomiting too. I don't know if I am special case, but all of these FPS are space invaders in 3d.
You are probably right about Heavy Rain. I nevered played Indigo Prophecy. I was speaking from that standpoint. To me, it was new. I was going to mention that other one by Media Molecule, but couldn't remember the name. I don't think there was precedent for that game, was it?
More is not necessarily better. I heard people talk about how the fingers are more bandwidth and that that is why motion games won't pan. When you talk about bandwidth in terms of network connectivity, sure more is better. But, in terms of interactvity, in terms of gameplay, it is not necsessarily so. Duck Hunt was a fun game, but all you do is point and shoot. Pac-man is just up, down, left, right. I think where the confusion comes in, has to do with a new generation of gamers being the market at this point in time. I doubt many "old timers" like myself go for Black Ops II when it's clearly the same as I.
As far as disruption of the market goes, there is such a thing a power laws. Basically, the rich get richer, the poor get poorer. It's just like the stratification of our society into 1% owining most of the wealth. It seems to be an intrinsic thing with capitalism.
The December numbers may be down but look at the half full side. MS still sold 1.3 million units of a 7 yr old piece of hardware.
Nintendo despite its bad last year or two still sold nearly 3 million pieces of hardware between the Wii, DS, 3DS and Wii U. Sony still sold 3/4's of a million PS3s (and 500 PS2s. ;) )
But when you read the headlines you would think everyone is closing shop by summer.
Well the only remnants of the golden age of gaming are indy efforts like journey,fez or pixeljunk because back on nes/snes/genesis days games were made about anything radioactive waste turning pet frogs into mutants ,playing through the pages of a comic or fusing action and sim in actraser.
Games were more primitive graphiclly but were more concerned with fun than cranking out the yearly update.
If budgets go up 25% for next gen than a basic game might cost $79+89 base and the selection will become more inbred leaving gamers with fewer choices ,higher prices and while i hope we don't need our crash helmets how much longer can f.p.s's or other well worn genere keep people coming back when the expierence is lessened and the price is higher?!!
Outside of my issue coming off n64 and having been able to play EVERYTHING up until dualshock/twinstick games i have always loved creative engrosing games over AAA same old same old but i doubt jrpg's are returning anytime soon and team ico's last guardian might be switched from ps3-ps 4 launch game.
The low vs console end will end up canabolizing each other because while ioshas cheap games they can't hold a candle to zelda and if prices go up and expierences get stale then i'd rather have fez,journey,flower,pac man ce dx because that would be considered fresh air vs cod,ac,madden or any other yearly expierence there should be a bioshock /mass effect size break between games not rush rush rush ea even kills online on recent sports games so why bother.
With new consoles comes new promise for fresh gameplay and games but when sony designed the perfect dualshock now standard i was expecting a renisonce in game controler options-never happened and by ps3/360 we should've had a master control profile so when needed we could play because if i can't play it what's the point and with no point why would i buy the game?!! Remember without my modded controlers i couldn't play 98% of modern gaming though at least i have thrustmaster 3rd party ps3 gamepads without which again 98% unplayable so i hope FINALLY i can file n forget my custom scheme and enjoy fresh new concepts that aren't simply this years model.....
A lot of this has to do with the fact that Publishers “The Suits” have no real long term vision. They take no risks and pump out the same stuff over and over and over again. People stop buying after a while. Sells decline. Then the blame game goes everywhere but to the fact that “the Suits” have no long term vision and are physical incapable of imagination. They want as much money now as quickly as possible. Because they have no imagination and won’t listen to those who do, everyone ends up losing in the long run. And there cash cow ends up dying. This is the biggest reason the game industry is on the decline. Once they pull their heads out of their butts, recognize, and acknowledge that they ARE the problem. Maybe the industry will start progressing again.
Remember music games......neither do modern gamers who missed the craze which burned itself out and soon no one will remember them because that's how quickly a craze dies.
Sure dedicated fiction that is outside the game will extend life for halo/gears but if enough gun violence happens in a short time it might be insensitive to keep pushing shooters without extentions like hero's leveling up,gear/weapon mods or a cartoon look like borderlands to make it abstract and sensitive to tragity rather than a hated scapegoat.
Saturn,dreamcast,gb and ds lines all playable but vita only has stardust as fully customizable so while i want many more vita games i can't play them also seems to go for wii u as well both have big screens breaking apart the tight ds form destroying southpaw well sticks only mine functions fine if i could only use it i could play so many more games.
Nano assault neo requires i play the game on the gamepad and hold the gamepad upside down to get southpaw..not a great start for wii u's twin stick game or the next gen.
Good luck to the industry and remember while we couldn't have mass effect before overall days were better on nes/snes/genesis and even saturn/dreamcast /n64/ps one and ps 2 than they are today...games were finished when shipped,originalality reined supreme and blacklisted content didn't exist i'm looking at ea and capcom here...100k is an unlock code and the content is on the game very bad + everyone hates day 1 patches,dlc and online passes which are so bad only friend codes are worse.
I think it's due to the price of the games. Downloading and copying has become easier and the prices of games become more expensive. I've bought about 5 or 6 new retail packaged PS3 games this month, their prices range from £2.86 for Blood Drive to £16.85 for Sleeping Dogs & I'm always buying games from the PSN. I hardly ever buy a game if it's over £30, I can't justify that price tag. I'll wait until it's reduced or buy it second hand.
I think the prices of games has to fall because people simply cannot justify buying a game (normally for one person in the house) vs buying a book, a film & a film for the kids or a family night out at the cinema.
I know what some of you are going to say, that it's not viable to charge less for the games as the price of making the game is so high. Then less money needs to be spent on making the games. It shouldn't cost as much as a blockbuster movie to make a game, the market isn't the same, less people play games than watch movies and therefore potential sales are lower.
I remember when Super Street Fighter 2 Turbo Hyper Fighting *takes a deep breath* & Mortal Kombat on the SNES were £64.99 when they came out. I hope prices don't get that high again.
What's weird is sony's day 1 digital psn price isn't that much less than a bd disc and sony claims retail's to blame because they have shelf space dedicated to product and if they sold a $59 for $39 day 1 who's going to trudge to the store when you can simply pre-order stuff and get it digitally.
The current problem for ps 3 is unlike wii u where i can simply attach a powered 3TB HDD for content even with a 640GB HDD in my ps 3 all the patches,dlc and psn digital games have whittled it from 598 gb useable to 80gb or less so if i could put even a 1 TB EXTERNAL hdd on my ps 3 for all the fully digital games,day 1 digital and just have installs,patches and dlc on my internal drive i'm sure i'd have over 300 gb back.
There's also no defrag the hdd which would also recover space and speed up seek time as data wouldn't be spread all over the hdd.
Where your balkanization comment might make sense is that while the high end market will become extremely concentrated with the top publishers (think movie industry with top studios), the low end is dominated by a large number of small players.
The question at this point seems to be whether either side of the market can survive changes in the future. We have already seen margins for big publishers dropping and they are struggling to make up the revenue, at the same time I doubt the free-to-play and freemium models can withstand market forces either. Everyone is copying the popularized Zynga model of monetization. That model seems likely to crack at some point.
Yes! It was not meant to be facetious and it was meant to reflect the low end being dominated by a large number of small players.
Just to be clear, are you proposing that a disappearance of console-style games (whatever that means) and their replacement by games that are "[just] good enough and priced low enough for consumers to buy them" is a good thing? Or do are you intimating that we will eventually have similar games, only that they will be distributed differently and use different business models (and probably be made by different publishers)?
Also, what sort of corrections have been done for inflation have been done while examining the rise in the average cost in units? How are other factors, beyond digital sales, controlled for before examining the proportional rate of change between cost and units sold?
Just compare the numbers to other parts of the entertainment industry:
UK Box Office 2008 949.5 million pound
UK Box Office 2011 1.129 billion pound
(numbers for 2012 don't seem to be out yet)
If you look at books, the situation isn't like in games either:
Revenues of books sold in UK 2008 2.341 billion pound
Revenues of books sold in UK 2010 2.183 billion pound
Numbers are down here, but not nearly as down, as in games, so explaining the crash with the recession and the high levels of unemployment doesn't work, because other sectors have to be hit by the recession just as bad.
Source:
http://industry.bfi.org.uk/media/pdf/k/r/UK_box_office_report_2008 _22_1_09.pdf
http://www.screendaily.com/news/box-office/uk-box-office-up-45-in- 2011-warner-br
os-leads-the-way/5036243.article
http://publishingperspectives.com/2011/03/uk-print-book-sales-fall ing-ebooks-clo
se-gap/
Nope they are retail numbers.
I don't think, that movie tickets and games aren't comparable, just because one is physical and the other not. This seems like an irrelevant distinction to me. Both are part of the entertainment industry, an industry, where people spend a certain ammount of their income in. An economic downturn leads to a lower income and to lesser expenses in entertainment. If people decide to invest the same ammount of money in one part of the entertainment industry (movies) and cut down expenses in another part of the industry (games), it's the games industry to blame, not the recession.
People have always gone to the movies no matter the economic situation. They are relatively cheap, and are more social. By nature people are more likely to stop buying game or books first, and replace them with cheaper movies when economic times are rough.
In agreeing with Laura Stewart about unemployment figures and the global recession playing a role - an additional thought also comes to mind as to why the figures might be what they are when compared to other parts of the entertainment industry - particularly the retail figures. I think it would be interesting to see how the gender of the consumers might play a role in the figures.
That's to say the consumer base for video games (for a long time) has been mostly a male customer base when compared to say books and movies- especially in retail. Correlate this to unemployment figures and it could be a 'double hit' of an overall recession combined with having a more finite target market than other parts of the entertainment industry.
Possible solution: diversify the target market?
edit: also importantly the age bracket in market is different between games and the other forms of entertainment. All in all- it's the target market.
Interesting idea, didn't thought of it, but I don't think this explains the problems, at least not when it comes to europe, as unemployment rates amongst males aren't significantly higher in europe, then amongst females.
Quote from the Eurostat Page:
"Historically, women have been more affected by unemployment than men. In 2000, the unemployment rate for women in the EU-27 was around 10 %, while the rate for men was around 8 %. By the end of 2002, this gender gap had narrowed to around 1.3 percentage points and between 2002 and early 2007 this gap remained more or less constant. In recent years, most markedly since the first quarter of 2008, male and female unemployment rates in the EU-27 have converged and by the second quarter of 2009 the male unemployment rate was higher. The annual average unemployment rates for 2009 and 2010 were consequently slightly higher for men (9.1 % and 9.7% respectively) than for women (9.0 % and 9.6 %); in 2011 however, unemployment for males slightly declined in the EU-27, while that of women continued to increase such that the rate for males was again lower at 9.6 % than that for females (9.8 %). "
Source:
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Un employment_sta
tistics#Male_and_female_unemployment_trends
On a side note, I agree with you, that the very finite target market for games is a problem. :)
As a gamer I feel like there are a lot less titles available the last couple of years, perhaps that is just my perception though?
With less titles out there, I buy less games.
Consumers will expect more value and extended durability from an item that is not immediately consumed. People will reject paying $25 for a item they might use 100 times (.25 per useage) while holding a $4.25 latte in their hand. So $18.75 to see the Hobbit in 3-D IMAX is entertainment for an evening, but is FarCry 3 at $70 some dollars going to provide more value than 3-4-5 movie tickets? You can't really see how many hours you'll play a game or how much you'll like the game, and then compare $/hours.
The window of opportunity to consume the item also has to be considered. If someone wants to see Movie X in theaters, there is a certain time limit to do that. If a store is selling Item Y and will be selling Item Y a year from now, maybe cheaper? Then you have two items where the calculation to purchase will be different. So movie tickets, Starbucks, suishi are one kind of luxury item. Games are like high heels.
What we're seeing is poor quality software at the low end that no one would pay money up front for (F2P), while software at the "high end" of the market is fairly sterile and uninteresting to the mass market.
Relatively lower priced games are an advantage in the market, but the quality across the board for the most part is, quite frankly, terrible.
I tend to think there are much larger ramifications coming to the wider industry. I expect the landscape of mobile developers as well as our general perspectives will change dramatically over the next 1-2 years.
In fact, if you do the exact job or jobs the customer needs done, they are even prepared to pay you a premium for the product.
Literally not paying someone a single penny does not help them keep the lights on, but we both know that's not how F2P works.
Yes, it seems like whenever some foundational change happens to the industry, things change in ways that nobody realized. Everybody knew digital distribution was coming, but who knew that it would probably end up making games free? Everybody knew solutions for piracy were coming, but who knew it would mean paying money for hats and costumes?
It will be fun to see how far the rabbit hole keeps going.
"But I suppose it might not be a textbook example because the 80% of non-paying customers are not paying money"
I think you could still get away with calling it textbook since in many, if not a majority of cases, non-paying players are still being monetized through such things as in-game advertising.
The Wii however DID fit the disruptive model until they abandoned their strategy these last couple of years. The Wii was cheaper, more convenient and hugely profitable. I think what happened to consoles is that the Wii stole a good portion of the market initially, and quite a few mid-sized companies went out of business making games for the PS3 and XBox360. Now fewer games are coming out on these platforms and consequently revenue is down. At the same time Nintendo abandoned it's formerly mega-profitable model, so revenue is down for Nintendo as well.
That said, we're at the end of a console cycle in a recession. I don't think it's that alarming that people would be turning towards other platforms with now-comparable specs that aren't included. Tablets are nearing the performance of current gen consoles, and PCs are well above both. I'd imagine core gamers are slowly shifting to PCs and casual are slowly shifting to tablets; both of them have primarily digital distribution.
And those systems aren't seeing their replacements take up the slack.
The 3ds a victim of iOS it seems like at least in the West.
The Wii just being a fad that captured everybody's imagination for 3 years of record sales. And its successor being something different that just launched and probably won't achieve that same climb into the stratosphere.
We will see with the next GTA...
You can't make a valid comparison when only looking at one distribution method, unless you're just having a discussion about how retail stores themselves are doing.
I see less and less new franchises or things I havent seen before, both graphically and gameplay technically.
hopefully a new generation will spawn a lot of new IP's with new previously unimaginable gameplay and possibly raphics and or other forms of depth, I would not be surprised if a lot of people are waiting for this.
The amount of consumer entertainment you can get per dollar is *very* different from the mid-80s, which is what the commercial games retail industry seems to desire. Compare mid-80s cable TV with a few dozen channels to now, where cable/satellite give hundreds of channels for about the same (or fewer) dollars. In inflation-adjusted dollars, it's even cheaper. DVDs/Blurays are way cheaper (unadjusted dollars) than 1980s VHS tapes, and Redbox is way cheaper than 1980s Blockbuster. Then, add in Netflix (especially 2010 netflix, before they attempted to tell customers to pay more and like it), Pandora/Spotify, and you've got enough entertainment to saturate all your free time for not much.
Commercial retail (console) games seem to be stuck in the Netflix "pay more and receive less and like it" mistake mode. Yes, comparing inflation-adjusted SNES cart costs to modern AAA games, modern titles might be cheaper. But, when everything else competing for your time has gotten cheaper, not more expensive, raising the required MSRP for games is a mistake. Sure, the top-10 sellers like Call of Duty/Halo/Skyrim might be able to sustain $60, maybe even $70. But, for anything not trying to be in that world-class group, they should be able to release at $40, new.
The average age of the most frequent game purchaser is 35 years old.
Almost half of gamers now are women.
http://www.theesa.com/facts/index.asp
If anything the audience is growing with each generation. Ive been playing games since there have been games, and I still have many years to go, so the demographics for potential sales grows each generation.
The fault IMHO opinion is global recession, and lack of new inspiring game play and ideas. Playing it safe leads to mediocre products.
Those stats are misleading. They are averages.
IF you talk about AAA games on consoles then half of gamers aren't going to be women.
And the average age will be younger than 30.
In my experience gaming habits drop off as people age. More responsibilities. Less time.
Hell look no further than all these older gaming developers who hardly play any console games. All the more well known ones usually admit to not playing any games in interviews. It is usually like well I play Mario with my kid or I play some iOS time waster. They don't have time.
And you think the audience has grown? I think that is exaggerated. People have been playing Hearts and Minesweeper on Windows for a long time now. They played all these online games on Yahoo and MSN and AoL back in the day. That was a very mainstream audience there. After that we had flash games. And Popcap games. Before all of these we had Pacman in the arcades (and in every bar or convenience store etc) which was very mainstream.
and of course the audience has grown IMHO. Each generation that comes up is now a gaming generation,its part of its culture. The generations we are currently losing are not as they came up before computers and games were a cultural norm.
Finally I not sure why you are focused just on consoles, retail software revenue's are larger than just consoles as is this discussion. The real elephant in the room is digital sales, until we get a handle on them, we are all just doing a lot of guesswork.
But in any event, thank you for the discussion it was fun, Have a nice weekend.
Yeah just questioning the usefulness of such data since various games, genres and platforms have widely varying audiences. And because we have had very mainstream gaming around for a long time since the days of Pong. Also it doesn't account for how much time is devoted to gaming.
It seems to imply that consoles are going kaput without saying it.
Otherwise it seems to be saying cheap iOS games are making console games more expensive which is completely absurd.
The DS and Wii have been dying out leaving the 360/PS3. And average game prices rose very naturally because of this since the 360/PS3 always had higher priced software. Doh!
Aso the middle of the market on down is moving to Xbox Live Arcade etc.
And since when do we have an identifiable group of consumers who no longer buy traditional consoles? That was an absurd line too.
I do agree with a few things mentioned in the article. Some of the big players will have a hard time adjusting. I don't think it is because the world now wants $1 games.
But that the cost for doing business the way they always did is becoming less feasible. It has little to nothing do with iOS. They just can't do what they always did and make money as easily as before. The cost to wow us through graphics is outstripping the size of the audience. Remember game prices rose to $60 from $50 at the beginning of this generation back in late 2005. This was 2 1/2 years pre-app store.
This is resulting in fewer $60 titles. But folks still want to play those. The big ones still make money. And we have digital distribution for everything else. Even DD should help decrease the cost of making AAA games if they release them via DD only.
I think the sweet spot for a next gen console is $300-$400. I think most gamers would be disappointed with the capabilities of an OUYA.
I really don't see any disruption here except the chance for someone to go all DD in the console arena and use that economic advantage to win next generation. I don't think that alone is enough. i mean releasing a really cheap console with a traditional game controller that has less processing power than a 360 doesn't seem too exciting. Thus I think the console will have to more powerful or do something else innovative as well.
I think if either console releases more than $50 higher than the other, and more than the highest price model currently available, you'll see things settled right then.
I think the consoles need to look to team up with the providers and use the cell phone model of sales. In that way, the console becomes a mainstay in every home as it is the cable box/game console that sits in everyones house.
I mean right now we all have the hd boxes which are just glorified clocks, why shouldnt they play games as well.
That's what it will take to make a new console with a good enough power increase to make next-gen games next-gen games.
There's no way around it. They can't magically make a $250 console that is so much more powerful than the current consoles.
edit: I didn't mean to imply that was the sweet spot for the mainstream. I am just saying that is what a decent next-gen console will cost. More than that and you scare people like the $600 PS3 did. Less than that and ...I think it won't be even more powerful than the current 360 or PS3. And won't get consumers too excited.
Then they should ask themself if making a new console is such a smart idea.
They always ask themselves that. It is a big risk. MS and Sony subsidize their boxes at retail. And have to spend the money up front to design and manufacture them.
"Lets get back to reality Bob. This fantasy low cost subscription box for high end expensive gaming has no chance of happening."
I don't think I said anything like that although MS could very well further subsidize their next Xbox with a 2 yr Live subscription as they are doing that now with the 360. Maybe you were replying to TC who said something about ISPs subsidizing consoles.
The commercial retail games industry has done the exact same playbook as Netflix -- raise prices every generation, reduce features and/or charge extra for them (DLC). And customers have revolted. This has played out in much slower speed than Netflix's debacle, and there's been very little relenting to appease customers. Instead, the commercial retail games industry has doubled down on the mistakes ($70 MSRP rumored for next-gen games) without really having any realization why things are going sour.
Don't just look at the past 4 years of commercial retail games industry's fail and complain about digital not being included, as if that'll make things show growth. It'll only make things less bad, rather than flipping from negative to positive. Look at Netflix and learn. Raising prices and telling customers to like it doesn't work. Really.
I don't think customers are revolting from consoles either. The consoles that offer the most DLC have faired better than the Wii/DS the past few years. And the Wii/DS are responsible for most of the decrease in retail videogame sales numbers.
Games actually cost less than they did 15 or 20 or more years ago.
And there is no denying that the cost to make a AAA game has increased substantially the past decade.
http://finance.yahoo.com/news/numbers-netflix-subscribers-20562624 8--finance.htm
l
Actually slowing growth doesn't equal sales tanking and the number of customers going way down.
Every investor know you can't invest in only one thing, you have a portfolio of reasonably well thought options.
I do think they are a bloated company though. Overall I don't believe they have a made a profit if you add up the past 7 years even though they have some biggest franchise names and release many of them annually for $60/per.
As I say often. Adapt or die. The only rule of business that matters.
Retailing isn't dead. But selling boxed games at retail is. They could do their own digital stores, but don't have a ton of leverage in the long run when the platform holders can do their own stores and build those stores into their platforms.
Retailers will use all the leverage they can in the meantime. The fact that hardware can't be sold as a digital good is some leverage. The fact that customers don't all have fast internet connections is more leverage. And stores are a place to physically go check out new product with your own 2 hands.
But ultimately I don't think they have much power. They can sell gift cards for those stores, but that's about it.
Platform holders like the console makers are somewhat scared to make the shift to digital distribution outright. They all know DD is the future, but are afraid to make the jump too early and scare off a large segment of customers who aren't ready. And there are some technical hurdles for larger games which will only get larger next-gen. Some games are pushing 20 gigs or so lately.
Yet it seems like an opportunity for the console maker who does go all digital. There is a significant savings there from the elimination of the b&m; retailers and the packaged good at least that's my impression from what I've read.
Market shifts happen because people lose one of their greatest asests... assests... Google brb... assets! Creativity. When you give into this conversation, "It's too late, it's impossible, things have always been this way." You have closed off the future.
And actually I guess that isn't too far fetched if these generic Android boxes take off.
But, I know that the joy of going to the game store is gone.
Nothing is on display except for the very top selling stuff. If you're a pc gamer, going to a store for anything but Blizzard stuff is futile.
My data point means nothing, and I'm sure this doesn't account for all of the effect, but where I once bought maybe 20 hard copies a year (PC), I now rarely buy more than 3. First because most of the new pc releases aren't worth playing (to me and this excludes indy digital), and second, because of digital and my discovery that I can buy much better games that came out in the last 15 years off of Amazon for a fraction of the price.
I can't FIND the same number of games that are worth buying anymore. I'm begging the industry to create things that I want to go to the store and buy, but its not happening. Maybe I'm just an isolated weirdo. But, talking to my immediate circle of friends, I'm not so sure.
That said, the indie seen IS a source of new material. I downgraded my computer from an Alienware to a dual-core pc that just does Internet because I didn't find all of these games pushing some x amount of polygon all that engaging. Chess is still a good game though. Helps you think and fun at the same time. I'll see you on Yahoo chess.
The past few years the game consoles have come out with very little that is interesting, and the smartphone/tablets don't have games I find compelling either. The only place I find good games is the past.
And also, sequels are always more likely to sell better than the original. Mrs PacMan, Super Mario 3, Megaman 2, Halo 2, Shadow of the Colossus, Mario Kart 64, Final Fantasy X, and Modern Warfare 2 are some good examples off the top of my head. Even games that are wholly unique like Pikmin are heavily outsold by sequels critically panned for being the same as previous games realsed for the same console at around the same time Mario Party 5 (I think that's the one released the same year as Pikmin), that paeticular example MP outsold Pikmin by nearly double by my estimates.
Gamers never seem consistent on this issue. They claim to want new worlds, gameplay and characters, but when it comes time to pay up they buy familiar titles. It's the same reason people tend to stick to Hollywood blockbusters, even though the quality of those has been dropping for 20 years, because it requires more effort to find these unique and innovative experiences and the familiar is always waiting to be sold on the same shelf.
Part of the reason gamers tend to go for the familiar is that they know it's going to work: that it's playable, that it's entertaining, that it's worth the 60 benjamins you drop for it. Having worked at Gamestop at one time, I know that once software is opened and used, it cannot be returned. If you're stuck with a pile of steaming poo, there goes the 60 hard earned dollars. Do you think that's fair? If it isn't, then is it any wonder that piracy is such a big problem? People I talk to will pay good money for good products. They tell me they pirate to see if it's any good. Sure, some of them are outright thieves who don't care for right and wrong. But, as the saying goes, the good of the many outweighs the evil of a few. Of course, this is opinion and not fact. But, read about what one Ann Frank said about the Nazis from first hand experience. Society cannot exist without some level of trust. Go to a burger shop or any restaurant you want for that matter and what is the minimal expectation? For me, it's that the cook is not going to cough in my food and poison me with some bug. Trust in the goodness of the many is the policy to go by.
I never denied that sequels sell and someitmes better than original. And I understand that business is the bottomline. All am saying is that there is a point where all of this comes to a halt and people get sick of it. I recently played through the Half-Life 2 series to the end. (Yeah, it took me 10 years to sit down to find out what the fuss was about.) Frankly, it wasn't that much better than Max Payne, which I classified on Steam under my Junk folder. Here's a summation of Max Payne: shoot this bad guy, next scene; next, repeat what you just did except with different background. The only reason I playedd to the end was to find out how the story ended. Through the game, though, it felt like work than play. For some reason, I tend to get motion sickness playing FPS. So, on top of having to work to the end, I felt like vomiting too. I don't know if I am special case, but all of these FPS are space invaders in 3d.
You are probably right about Heavy Rain. I nevered played Indigo Prophecy. I was speaking from that standpoint. To me, it was new. I was going to mention that other one by Media Molecule, but couldn't remember the name. I don't think there was precedent for that game, was it?
More is not necessarily better. I heard people talk about how the fingers are more bandwidth and that that is why motion games won't pan. When you talk about bandwidth in terms of network connectivity, sure more is better. But, in terms of interactvity, in terms of gameplay, it is not necsessarily so. Duck Hunt was a fun game, but all you do is point and shoot. Pac-man is just up, down, left, right. I think where the confusion comes in, has to do with a new generation of gamers being the market at this point in time. I doubt many "old timers" like myself go for Black Ops II when it's clearly the same as I.
As far as disruption of the market goes, there is such a thing a power laws. Basically, the rich get richer, the poor get poorer. It's just like the stratification of our society into 1% owining most of the wealth. It seems to be an intrinsic thing with capitalism.
Nintendo despite its bad last year or two still sold nearly 3 million pieces of hardware between the Wii, DS, 3DS and Wii U. Sony still sold 3/4's of a million PS3s (and 500 PS2s. ;) )
But when you read the headlines you would think everyone is closing shop by summer.
Games were more primitive graphiclly but were more concerned with fun than cranking out the yearly update.
If budgets go up 25% for next gen than a basic game might cost $79+89 base and the selection will become more inbred leaving gamers with fewer choices ,higher prices and while i hope we don't need our crash helmets how much longer can f.p.s's or other well worn genere keep people coming back when the expierence is lessened and the price is higher?!!
Outside of my issue coming off n64 and having been able to play EVERYTHING up until dualshock/twinstick games i have always loved creative engrosing games over AAA same old same old but i doubt jrpg's are returning anytime soon and team ico's last guardian might be switched from ps3-ps 4 launch game.
The low vs console end will end up canabolizing each other because while ioshas cheap games they can't hold a candle to zelda and if prices go up and expierences get stale then i'd rather have fez,journey,flower,pac man ce dx because that would be considered fresh air vs cod,ac,madden or any other yearly expierence there should be a bioshock /mass effect size break between games not rush rush rush ea even kills online on recent sports games so why bother.
With new consoles comes new promise for fresh gameplay and games but when sony designed the perfect dualshock now standard i was expecting a renisonce in game controler options-never happened and by ps3/360 we should've had a master control profile so when needed we could play because if i can't play it what's the point and with no point why would i buy the game?!! Remember without my modded controlers i couldn't play 98% of modern gaming though at least i have thrustmaster 3rd party ps3 gamepads without which again 98% unplayable so i hope FINALLY i can file n forget my custom scheme and enjoy fresh new concepts that aren't simply this years model.....
Sure dedicated fiction that is outside the game will extend life for halo/gears but if enough gun violence happens in a short time it might be insensitive to keep pushing shooters without extentions like hero's leveling up,gear/weapon mods or a cartoon look like borderlands to make it abstract and sensitive to tragity rather than a hated scapegoat.
Saturn,dreamcast,gb and ds lines all playable but vita only has stardust as fully customizable so while i want many more vita games i can't play them also seems to go for wii u as well both have big screens breaking apart the tight ds form destroying southpaw well sticks only mine functions fine if i could only use it i could play so many more games.
Nano assault neo requires i play the game on the gamepad and hold the gamepad upside down to get southpaw..not a great start for wii u's twin stick game or the next gen.
Good luck to the industry and remember while we couldn't have mass effect before overall days were better on nes/snes/genesis and even saturn/dreamcast /n64/ps one and ps 2 than they are today...games were finished when shipped,originalality reined supreme and blacklisted content didn't exist i'm looking at ea and capcom here...100k is an unlock code and the content is on the game very bad + everyone hates day 1 patches,dlc and online passes which are so bad only friend codes are worse.
I think the prices of games has to fall because people simply cannot justify buying a game (normally for one person in the house) vs buying a book, a film & a film for the kids or a family night out at the cinema.
I know what some of you are going to say, that it's not viable to charge less for the games as the price of making the game is so high. Then less money needs to be spent on making the games. It shouldn't cost as much as a blockbuster movie to make a game, the market isn't the same, less people play games than watch movies and therefore potential sales are lower.
I remember when Super Street Fighter 2 Turbo Hyper Fighting *takes a deep breath* & Mortal Kombat on the SNES were £64.99 when they came out. I hope prices don't get that high again.
The current problem for ps 3 is unlike wii u where i can simply attach a powered 3TB HDD for content even with a 640GB HDD in my ps 3 all the patches,dlc and psn digital games have whittled it from 598 gb useable to 80gb or less so if i could put even a 1 TB EXTERNAL hdd on my ps 3 for all the fully digital games,day 1 digital and just have installs,patches and dlc on my internal drive i'm sure i'd have over 300 gb back.
There's also no defrag the hdd which would also recover space and speed up seek time as data wouldn't be spread all over the hdd.