XSOLLA Blog published a very interesting press release, saying that video games have been reduced in selling price, while costing studios more to develop. According to XSOLLA, the rise of mobile gaming, the free-to-play (F2P) market, Steam sales and ease of game development have all impacted the video game industry in a negative way. AAA developers seem to bear the brunt of the changes in the industry and this could lead to more studios closing down. "But if things don't stabilize soon, it will become increasingly
difficult to justify working on lengthy development cycles as one
critical failure could mean the end for a studio, AAA or otherwise." XSOLLA could be right on the money with their assessment as we've seen AAA studios closing down more than ever before in the past few years.
The game market is always in a state of flux as we are seeing
massive changes from the Indie sector and the AAA market. However one
thing that is remaining consistent is a steady devaluing of video games.
While this is great for consumers, it is forcing game makers to do more
work and evaluate what games to work on.Understanding
what is going on with the greater market is critical for any game
designer regardless of where they work as it is a major market trend.
The Current State of the Industry:
the last three decades, we have seen video games come down in value.
From the days where SNES titles were $80 to 99 cent mobile games. A few
years ago, AAA developers and publishers talked about raising the
current MSRP of AAA titles due to the increasing cost of game
development. However, that didn't happen but games as a whole have
dropped in price.
To understand why, we can point to several major trends that have shaped things for better and worse.
sales have really come into their own and have changed the way games
are being sold. It all started with the Steam Summer Sale and since then
we've had seasonal, weekly and even daily sales on a number of store
fronts. This has conditioned a lot of people to wait for sales instead
of buying a game at full price and we are seeing more frequent sales of
games these days.
Outside of the major developers like EA, Nintendo and Blizzard,
most games don't retain their value for more than a few months. And we
are either seeing full on price drops or the game being a part of some
sale.Sales have become major business opportunities for store and developer alike.
are a byproduct of the move to digital distribution as it allows both
developers and store fronts to quickly and effortlessly change prices
and create marketing buzz easily.
Ease of Development:
ability to create and distribute video games has never been easier than
it is right now. In the past, you needed an entire team and the
technical knowhow to work on very specific platforms to create a game
and even then that wasn't enough. Due to limited store shelves,
retailers controlled what games were being seen by the public and both
developer and publisher had to conform to the store's wishes.
Today things are far different. Game engines like Unity
provide a lot of power and in the right hands can be used to make any
number of games. With both digital distribution in the form of store
fronts and developer sites, you don't need to worry about Wal-Mart or
GameStop anymore for your game to be a hit.
This means that the
barrier of entry to game development has decreased dramatically and we
now have dozens of games being released weekly instead of only having a
handful a month. With all these games out there vying for consumer
attention, means that there is more competition without an increase in
the money coming in which we'll talk about next.
Mobile and Social:
mobile and social markets have created an entirely new market of casual
gamers who wouldn't think about buying a console or playing PC games.
This lucrative market has turned companies like King and Zynga into
giants and created the social game boom from a few years back. Mobile games have created a new market of consumers who aren't necessary savvy with the game market. However
we are seeing things bust as social gamers aren't buying and playing
multiple games like the core and hardcore markets do. And as more games
came out, many social developers found themselves without a dedicated
fan base to sustain them. Now for the AAA and Indie developers reading
this, you may be thinking "who cares?" but the devaluing of games is a
big deal that affects all corners of the Industry.
Why it Matters:
these days are being conditioned not only to wait for sales but to
spend less money on individual games and this is not good. The AAA
market is already risk adverse as it is, but with consumers waiting on
sales and not spending full price on games, this makes lengthy
development cycles very risky.
Even if you release an amazing game
with dozens of hours of content and think that it's worth a $50 price
tag, the market may not agree with you. Many developers don't have the
savings to wait for profit over a course of years due to sales.
developers are also feeling the burn as they also have to compete with
99 cent titles and the influx of games. There are people out there who
feel that even spending $20 on one game is considered pricey and it's
becoming harder to convince people of the value of a game.
problem in a nutshell is that every game is being compared to each
other: Whether you are making an 80 hour RPG, five hour experimental
game or a 99 cent app, the general market views all games with the same
lens. And as store fronts continue to cash in with sales, developers may
find themselves without knowing it, pricing themselves out of their
What can be done?
There really isn't
an easy answer to this as consumers continue to throw their money at
sales and support the model. Developers will need to find a way to
convince people of the value that their games have. And with more F2P
games coming out and the increase focus on mobile and social games, this
is not going to be easy.
There needs to be standards of pricing:
What different types of games can and should cost. Something to say that
X game has Y value due to its content, so that someone can't compare it
to another game that is priced cheaper. It's important to mention that
this isn't a call to end game sales as sales have been critical for
helping a lot of developers and to explain why would take another post.
market has been in a downturn for the last few years which has been
great for the consumers who get to play more games for less. But if
things don't stabilize soon, it will become increasingly difficult to
justify working on lengthy development cycles as one critical failure
could mean the end for a studio, AAA or otherwise.
Do you share XSOLLA's concern, or do you think that the way the video game industry is changing is beneficial to gamers?
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