Friday, November 18, 2005

Eighty is the Loneliest Number That You Ever Knew

Brian Pilnick sent me a link to an interesting article over at Next Generation about the economics of game publishing. It's interesting both for what it says and what it doesn't say.

Here's the link:

This study was conducted by Screen Digest, and it's caused quite a stir. Everyone seems to be marginally freaking out about this:
A new report on the risks involved in game publishing and development has been released suggesting that, in the next generation, as few as 80 games a year will turn a profit.

They go from that assumption to argue that increasing development costs (according to them, from $3-$6 million to $6-$10 million) will rise faster than game sales.

That certainly sounds serious, and it's not dissimilar to topics I've written about before concerning the brutal competition in the game industry, but in this case, it's much less than it appears. For one, this is essentially a press release masquerading as a news story. It both summarizes the report and makes it sound terribly important at the same time. Oh, and if you wanted to purchase that report, it's going to cost you a whopping $3,160. It's as close to a free advertisement as anyone could possibly get.

Next Generation did contact the author of the study for a quote to wrap everything up. Here it is:
The author of the report, Marc de Gentile-Williams, said, "At 30 years of age, the games industry still suffers from an endemic lack of professional management compared to less mature industries such as the mobile telephony and the internet industries. The high number of bankruptcies - despite favorable market conditions - is testament to this fact. Games companies must complement their formidable creative and technological achievements with strong business planning and analysis in order to reap the benefits of the next phase of console market growth."

Hmm. "strong business planning" and "analysis." I wonder what kind of fee-based professional services Screen Digest offers? Well, according to their website, they offer (among others)
--"New technology impact assessment"
--"New market pre-entry studies"
--"Corporate strategy work"

Damn, those sound like they could all fit into the category "business planning and analysis." How convenient is that?

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