Following part 1 of the new show Game Theory, which looked at the reinvention of the games business, Scott Steinberg has released part 2, which continues the theme but takes a closer look at whether big fish like EA, Activision and Ubisoft can truly survive the upheaval the industry is currently undergoing.
Of course, a big part of the change in the industry comes from the continuing shift to digital. David Perry, who's preparing to launch his cloud-based gaming service Gaikai, believes that major retailers' used games push is simply driving consumers more and more in the direction of digital, which in turn will lead to the demise of these retailers.
“Overall, the industry is on the same general path. We are still today in a world of retail. That’s the way it will be for the short-term. Long-term, this industry is going digital, and it’s going digital very quickly. To some extent, as the retailers come up with policies like used games, they’re actually putting their foot on the gas pedal to oblivion. And that ultimately is going to make the game industry digital about as fast as it could possibly be," Perry said.
Trip Hawkins, founder of social/mobile company Digital Chocolate, sees games becoming more and more service oriented as they transition online. “For much of the history of the industry, it was a winner take all, single platform model – clearly it’s never going to be that way again. In the future, any kind of game company they have to have a technology approach that gives them the agility to cross platform boundaries. That’s where gaming really needs to go – is to become like software as a service. It’s going to be about simplicity and convenience and making that model work," he said.
It's not necessarily about having the most money; it's about being able to create compelling IP and good experiences for the player. Hawkins continued, “In the old days, when you had brick and mortar distribution, it was easier for the companies that had a lot of financial muscle to dominate. Now, you’ve got all these free games on the Web, iPhone and Facebook and brands aren’t as important. It’s much more important now for game companies to be intellectual property companies and invent something meaningful or new.”
The rapid changes in the industry may be detrimental to some, but it's ultimately a very good thing for the industry. It's a sort of death, birth and renewal cycle, argues Sims creator Will Wright. “I think we’re in the Cambrian explosion of games, where all these weird new life forms are popping out for the very first time and filling these niches that are appearing dramatically. And of course a lot of the old, established things are going to be dying off pretty rapidly, even the major life forms. But more than anything else, I see this being the healthiest thing that could happen in the industry,” he said.
Here are some other pertinent quotes from Episode 2:
“When times get harder and big changes happen, the bigger, more established companies are the ones that have a harder time turning the ship. Fundamentally, even John Riccitiello is a game developer, whether he thinks of himself as that or not, and he needs to be as agile, dynamic and responsive to the reality of his consumers as any designer. It’s a hard thing… the game system of EA is about a thousand orders of magnitude more complicated than the game system of Skate.” – Clint Hocking
“We have to change. And I think that what will happen in the next few years is that we will make those changes, become profitable again, and there will be yet another heyday. The stimulus for that change will be a distribution change in going digital.” – Naughty Dog founder Jason Rubin
“There’s a fear at retail that the shift to online is now, and I don’t think that’s true at all. We’re going to get more and more stuff online, but not full game downloads, because you have to train the consumer that the way he’s going to enjoy games in the future is that he’s not going to have a disc, he can’t take it to his friend’s house to play, and he’s going to have some account in the cloud. And I don’t think people are really comfortable with that yet.” – Wedbush Morgan analyst Michael Pachter
“Don’t just cut your costs – cut ‘em right down to the bone and keep them there. You’ve got to have the smartest people, you’ve got to make the smartest decisions – this is where the clever people win.” – Gas Powered Games' Chris Taylor
“With so much free and freemium being offered, it’s harming a lot of the deeper quality experiences that are finding fewer places to get an outlet. But at the same time, it’s opening up a new way of thinking. And I think the most important thing that’s being revealed in the social network space is that it’s recruiting tens of millions of new users annually that are becoming gamers. Therein lies the question, though: How are the nets being thrown to capture them? And it’s serious, radical shakeup time.” – Oddworld founder Lorne Lanning
“People don’t understand that we’re not really seeing a migration from packaged goods at the consumer level to social and mobile games. We’re seeing an expansion. I don’t think that the Halo player is suddenly playing FarmVille.” – Michael Pachter
“Do I think it’s the end of the industry? No. Is everything fine? No, it’s not fine. If it were fine, we wouldn’t see losses at big publishers, we wouldn’t see these size layoffs.” – Jason Rubin
3 Comments
August 10, 2010
This new trend saddens me the most, because I don't want my good games to disappear in the long term for some lack of judgment. I don't want to pay full price for data files I have no further control or ownership on either. And I want my video game stores to still be there in the landscape. Am I old school? Or is it just a one-sided conversation?
I think publishers are the ones putting foot on gas pedal to oblivion should they decide to go digital all the way, even if it's only in a few years.
And the "industry" would immediately change name, right before dying.
Besides the definition of what an industry is supposed to be in general, when it comes to video games Progress is what truly drove the industry over the years, in a win-win situation that always involves the final customer.
Take him out of the equation, and not only does the sense of progess vanishes away, but he's also very keen on stopping to buy your products. Even music and films are still present in retail stores. People just want to see their games when they go to the mall. As simple as that. They want to have their video game spaces and shops, it's part of the hobby, and least of all, they don't want to be neglected.
A true movie fan wants to collect movies, trade them, share them with friends, expose them in the living room. And of course I'm only talking about blockbusters here. It's just common sense not to blind oneself over this.
Instead of retailers "pushing the pedal to the metal" or something, maybe Dave Perry should remind himself and/or consider the "killing the goose that laid the golden eggs" proverb.
Once you get passed the "winge, we're losing money and it's not the crisis" scapalooza, focus on quality, have games made their collectible real item status confirmed, and you'll be singing all your way to the bank (again or not). That is all.
August 10, 2010
For some reason, I suspect that the game publishers are more concerned with killing off the rental business than they are with killing off second-hand sales. At least the existence of second-hand sales implies that somebody paid full retail for a new copy. With rentals, you have GameFly buying a hundred copies, renting them out to a few hundred or a few thousand people before the disc needs to be replaced, and making a profit at the publishers' expense.
Of course, as a gamer my sympathies are with the developers and with GameFly, and not with the publishers. Most games are not worth full retail. Most games aren't even worth buying used. Most games are only worth playing once, and are therefore ideal rentals. And while the developers deserve some blame for this state, most of the blame rests on the publishers' shoulders. They're the ones more concerned with turning a profit than they are with making good games.
August 10, 2010
Where do I start..
Okay, I had no problem with buying/downloading little games at $10 and I even got 1 or 2 at $15-$20 but after a while they add up and you'll actually come across some games you'll really like and what happens when my system dies? I lose all of them and have to rely on Sony, Microsoft, or this GaiKai thing to re-download them? No Thanks.
I would rather have a physical copy of my games. This turn games into a "Service" idea sounds like nothing more than a way for the industry to keep charging for a game you already bought. Their constant revenue stream. A way to takeaway your ownership. Relying on some companies network to hold every game I buy is not a transition i'm willing to make. With Sony stealing Other Operating System off of 60gb PS3 purchasers machines and that "so called" internal clock error that rendered all download games useless combine that with unfair eula/tos agreements; I do not trust the industry, at all. They seem to do what's in their best interest only and not the consumer.
As it applies to movies and music I buy music because the files are relatively small and amazon sells drm free mp3's. I don't have to worry (as far as I know) about some ridiculous license on my system. Which brings me to the movies. As I got tired of piles of vhs, dvd's and now blu-rays I was going to get Terabyte drives and buy average movies online and what happened? I bought like 20 movies and my pc has errors so I copy everything to a different drive and restore my c drive to factory settings and now my movies won't play due to some license non-sense and with no re-download option I learned my lesson. (I know there's some software to make your videos drm free but i've yet to try it.)
This is where I think patcher is speaking some truth and where envious developers are misconstruing whatever data they're seeing. They think there's some growing mass of potential customers on the level they're used to but I also think it's just an expansion of casual gamers who are playing cheap and free games.Unless you're all going to make cooking kitchen cafe mama (or whatever that game is called my sister plays on facebook) then I doubt you'll see the success you think you can achieve.