The Industry is Changing whether you Like it Or Not
I think we can all agree that in another ten years the videogame industry will be all but unrecognizable compared to today. Join me as I take a look at some of the biggest changes that have hit the industry over the past few years and how these changes will likely affect the industry moving forward.
A few months ago Double Fine made history with their first Kickstarter project. Originally asking for $400,000, the developer eventually managed to secure over $3.3 million in financing for an old-school point and click adventure game. From there other developers jumped on the bandwagon. We’re now getting a sequel to Wasteland, an HD remake of the original Leisure Suit Larry, a new Shadowrun, an incredible looking SRPG called The Banner Saga, and a really unique iOS game called Republique. This is just the tip of the iceberg though. Since Double Fine proved Kickstarter a successful means of getting financing for publishing and developing videogames that major publishers deem too niche, the entire industry has been flipped on its head.
More and more developers are turning to Kickstarter to create games based on genres long thought forgotten. Virtually all of these games are PC and Mac-bound, which also leads into the recent resurgence of PC gaming. Ever since Facebook introduced videogames like Farmville, Bejeweled and the like, more and more casual gamers have flocked to the PC. Just in my immediate family, every single person up to and including my parents now play videogames, most being on Facebook. Sure these aren’t traditional games as those seen on consoles, but the amount of revenue these games are bringing in is outstanding. One need only look at the major success Nintendo had with the Wii to see that sometimes thinking outside the box is the best move to take.
Speaking of forward thinking, last week Crytek CEO Cevat Yerli said that all their new projects moving forward would be free-to-play. This move is seen as the next huge leap for the videogame industry. Imagine having access to something like Skyrim for free! The way these games work is they limit you in one way or another. Either you have to pay once you reach a certain level, or you use real-world money to acquire special skills, items, etc. Whatever the case may be, you’re going to see more and more free-to-play games pop up in the next five years, and eventually I wouldn’t be surprised to see 90% of videogames in the PC market be FtP.
The console space already feels archaic to some. Constant revenue streams just aren’t there. A developer makes a really sweet game, a publisher than gets it on consoles, but the shelf life is exceedingly short. If a game doesn’t make its money back within a few months after release, it’s considered a flop or at least doomed for the bargain bin. The PC market has shown an uncanny ability to extend shelf life considerably. Steam is the perfect example of this, by ditching the traditional brick and mortar stores entirely. With three to six million active members online at any given moment, older games (sometimes years old) will frequently be in the top ten sellers list, and the way Valve does this is by reducing prices astronomically. It’s not uncommon to see a six to eight month old game discounted by 75%. It’s not just the crap games that get reduced frequently either, but huge AAA blockbusters that typically retail for $40 on consoles, after many months post-release, will be available on Steam for as little as $10. That sure gets people interested, and keeps them that way. It also encourages people to try new games. While some say this is a bad business strategy as it encourages people to wait for deals, I say it’s brilliant as it allows those with less money to experience the games far sooner than they would on consoles. How often do you see Xbox Live Marketplace or PlayStation Network reduce prices by 75% on full Xbox 360 or PS3 releases?
There’s also a seismic shift taking place right now is in the mobile market. Justin and I discuss this frequently, and he’s now got a new podcast up on the site called COE Mobility. iOS and Android command the lion’s share of revenue, and are making huge inroads into the gaming industry. Apple’s App Store now generates around $2 billion in revenue every three months! The entire videogame industry brought in approximately $27 billion last year. Do the math and it becomes obvious that before too long the mobile scene will make up the bulk’s worth of the game industry. Please note that the $2 billion from the App Store includes all apps, which is why it’ll still take some time before Apple’s App Store and Google’s marketplace both combine to make a real dent. It’s going to happen though, especially if the rate of new users continues to climb as fast as it has these past three years.
Today Epic Games CEO Tim Sweeney let it be known that their most successful title they’ve ever released in terms of pure man-hours invested to profit is Infinity Blade. Sweeney now says that it’s evident to him that all future games will be free-to-play and global products. It’s the only way to recoup the sometimes $30 million dollar investment needed to make a AAA high caliber videogame in today’s market.
When you add all of these things together it becomes easy to see just how different this industry is becoming. The days of packaged media being sold for $59.99 is quickly coming to an end. Even traditional consoles are expected to have perhaps another five to ten years left in them before they too become obsolete in favor or more mobile-friendly devices and PC-based interactive smart TVs. Smaller projects are becoming fan-financed, free-to-play is quickly becoming the industry’s next poster child for success, and before too long I can see all of us at COE looking back and saying wow I remember actually have to pay for a physical copy and plunking it into a box we connected to our TVs. Boy, those were the days.
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