Tuesday, February 15, 2011

The New Day

Chris Kohler wrote a terrific piece at Game|Life titled As Mobile Games Rise, Studios Fear For Blockbusters' Future. The lead:
Blockbuster videogame heroes have tamed the Wild West, repelled alien invasions and driven the Nazis from Normandy. But can they fight off Angry Birds?

It's an excellent article and thoughtful article, but allow me to take it one step further: it's not just blockbusters.

I've been thinking about this for the last few months--in particular, since game prices for the Nintendo 3DS were announced (between $39.99 and $49.95).

How is that going to work, exactly?

Even with a wonderful, beautiful 3D world in front of us, how many games will sell at those prices when there are a kajillion iPhone and Android games for $4.99 and less? Nintendo games will, but I suspect almost everyone else is out of luck.

From the top-down, the middle tier has been killed by big software companies all pursuing nearly identical, "AAA only strategies." From the bottom up, the middle tier has been killed by both under $5 mobile games market and indie developers smart enough to price their brilliant, innovative games at $15 or less.

MMO games? WOW can charge a subscription. Everything else better be "freemium" if it wants to have a chance to survive.

Look, this is a sea change in the gaming market, and people aren't talking about it nearly enough. One or (at most) two companies are going to succeed with the AAA strategy, where every game costs a fortune to develop and market and has to sell several million copies to break even.

Everyone else pursuing that strategy will fail.

One of my closest friends works for a premier gaming company, and he is a smart, smart fellow. Last year, we had a long talk and he said, "We have to go to a different model, and there are no models that work."


Now, it's time for a ridiculous metaphor.

These huge gaming companies are like giant, predatory dinosaurs in a world where all the prey that can sustain them has become endangered. They're not nearly fast or agile enough to catch what remains, because smaller predators will easily outhunt them in the new ecosystem.

It's not that all their large prey are extinct--there are still a few big, tasty creatures wandering around--but there aren't nearly enough left to sustain the giants.

What's going to happen, then?

They're going to die.

Here's the irony. As some of these huge companies near death, they'll be bought--by other huge companies. I mean, it's a meal, right? So they'll acquire the one or two big franchises to add to their stable, thus furthering the same approach that guarantees their demise.

As an example, let's look at one of the few companies still making money with this strategy: Activision. In February of last year, they announced their release schedule for the rest of 2010. Take a look:
* New Bakugan
* Blur
* How to Train Your Dragon
* New Call of Duty
* DJ Hero 2
* New Guitar Hero
* New James Bond
* Shrek Forever After
* Singularity
* New Spider-Man
* StarCraft II
* Tony Hawk: RIDE Sequel
* Transformers: War For Cybertron
* True Crime
* World of Warcraft: Cataclysm

Holy shit, look at that list. Guitar Hero--dead. DJ Hero--dead. Tony Hawk--dead. True Crime--dead. Blur--dead. Singularity--dead. The only functioning limbs left on Activision are Blizzard and Call Of Duty. Activision is in danger of becoming a singularity. And they're the most successful company using the "AAA only" strategy.

It's funny, but the brilliant indie developers like Tarn Adams, Vic Davis, and Chris Park (and Notch, obviously) are incredibly well-positioned here. Their games don't cost much to make, they don't have to sell three million copies, and the cost control allows them to take chances. These guys can afford to fail, and they'll still survive (yes, Arcen almost tanked after Tidalis, but they didn't).

[an aside: yes, Vic might have to adjust his pricing structure, but he's much smarter than almost all of us, and I'm sure he'll find a way that works.]

Maybe it's not even just the brilliant developers. Anyone who can make a reasonably entertaining, non-buggy game for $10 or less has entered their golden era.

Is that a good thing for us? Hell, yes. What's going to be more interesting, a bunch of retread AAA franchises in their fifth (of fiftieth) iteration or thousands of games under $10 to choose from? This new model almost entirely democratizes game development and production, and that is a very, very good thing.

If thousands and thousands of people are making games, then it's entirely unimportant if 99% of them are absolute garbage. That top 1% will still consist of plenty of games for us to play, and they'll be great.

Onward, into the new day.

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