Game Industry 'On a Bad Spiral,' says Lou Castle

There's been a good deal of talk of late about the traditional console gaming business model being broken, whether from analysts or developers like Chris Taylor and Lorne Lanning. It's a hot topic, so we decided to get the perspective of 25-year industry veteran Lou Castle during our recent in-depth talk. The new CEO of InstantAction doesn't want to go as far as saying the business is "broken," but he does agree that things need to improve and that costs are clearly out of control.

"I don't believe the system is 'broken,' but what I do believe is that the monetizing or the ability to make great entertainment products that appeal to all these different people in broad ways is challenged by the current models on consoles," he began. "To give you a finer point, right now if you want to create a great console game and be competitive in the triple-A space it's tens of millions of dollars. What you're really creating is content that's extraordinarily expensive and it's a very bad mapping of dollars to minutes of entertainment, especially when you consider that so many of your consumers will never get to the end of the content you provide." 

He continued, "Part of the reason for that is the opinion leaders that drive console sales or even high-end PC sales are oftentimes very core opinion drivers that want a 60, 80 or even 90-hour experience of incredibly rich content. And frankly, if you make a game that doesn't deliver that you're relegated to the 'not as important' [category]. Nevermind the fact that 80% of your people are not going to get past 10% of your game. What that means is you're spending 80% of your money, or maybe more when you consider all the costs of assets, on an ever decreasingly small part of your market that happens to be the opinion leaders. And so the inefficiency of dollars spent toward entertainment minutes delivered is really painful, and I think everybody kind of recognizes that. Will Wright did when he was building things like Spore. It's also why games that use a lot of user content are so much more intelligent when it comes to the dollars to entertainment minutes conversion. And that's what I like about the platforms we're working with on InstantAction; here's this great platform where we can deliver content in a way that's digestible and we can monetize against the actual consumption of the content, and we can build according to that consumption and not have to worry about building massive experiences."

It'll probably take some time for the industry to make the transition to a better business model, but the seeds of change have clearly already been planted. Castle hopes he's planting one of those seeds.

"What I hope happens, and what I'm hoping to help make happen, is the ability to get to more consumers and deliver that same quality in a way that allows a better economic fit of dollars to play. Without getting into gory details about how I plan to do that, I do think what you're saying is right.  As an industry we're on a bad spiral, but because of the pressures we're under right now and the way it's going, I think you're going to find some really innovative solutions to those problems," he said. "And frankly, it's not just about all the things we just discussed; it's also about the rental [and used] markets. When retailers are taking the lion's share of the cash because the game gets sold 5 or 6 times, that might seem like an advantage to the consumer, but what they're really doing is driving up the price of the games or driving away the opportunity to have those kinds of experiences. Because once it becomes economically unfeasible, the well will dry, there's no doubt."