Budgets and the Video Game Industry

[Erik_Twice]

I thought this would be an interesting topic to discuss so I took it here:

The industry seems to have been going through some growing pains the past uh... entire generation.

Yes, development costs have risen, but I can't help but feel that games shouldn't cost as much to make as they do. Sure, new tech and higher fidelity means new challenges, but that's offset by new tools that make development easier and less costly.

Personally, I blame the huge blockbuster success of companies like Activision and Ubisoft, who've got enough money and profits to hire dev teams of thousands, celebirty voiceovers, expensive marketing pushes, etc etc. Unfortunately, other publishers seem to be under the mistaken impression that this is what gamers consider to be the new standard, and anything that doesn't meet those standards are doomed to failure.

Clearly that's not the case, as it's pretty easy to point to games with a far more modest development scope and expected audience that have nonetheless seem to have been profitable. Dark/Demon's Souls seems like a good example there.

I mean you have Square saying the Tomb Raider reboot's sales were lacking despite it hitting something like 200 million units. You have big companies chasing the AAA train left and right and being utterly confused when things fall apart, and yet on the other end you have all these no budget indie titles carving a niche and making a name for themselves.

Why are there so few games in the middle ground? You can't tell me there's not room in the industry right now for games that have a modest scope with reasonable expectations for sales that can be successful.

I mean, I may be off base here, because I really don't know shit, but that's how it looks to me.

[BogusMeatFactory]

I feel that there is a reason as to why. Marketing. Marketing is what honestly determines the success or failure of a title and, depending on how well it was marketed also determines how much money was put into that part of the game.

You can have brilliant games, but if we don't see commercials on TV, on Youtube, intense coverage by big name game websites, it will not be successful. Make a mediocre game and market it well and it will be received well.

You can't have a middle ground and reach a surmountable level of success. It has to be super-indie or big-budget. That is what a lot of people want for some strange reason.

[SpoonyBard]

You can have brilliant games, but if we don't see commercials on TV, on Youtube, intense coverage by big name game websites, it will not be successful.

I'd have to agree that you're probably not going to sell as many units if you don't throw a ton of advertising out there, but that doesn't necessarily mean it's going to be more profitable.

The Tomb Raider/Demon's Souls comparison is a great one. Tomb Raider pushed out nearly 3 million copies, yet was considered a failure. Demon's Souls sold less than 2 million, but managed to be profitable. I felt that Tomb Raider was a great game, and in selling 3 million copies, you would think that the developer would be estatic. But the budget was so overblown for that game with all the marketing they did in trying to chase after CoD numbers, that they couldn't make a profit even on those kinds of sales numbers. Yet Demon's Souls was significantly more successful despite selling around half as many copies.

Advertising is important, and arguably moreso now that the places people get their information is much more diversified than it was in the era of game magazines, but I think so many companies just overblow the advertising budget, hoping to get a larger install base, when a lot of the time they could do minimal advertising and then stand on the merits of their product, wait for people to start talking about it and get their sales that way.

[noiseredux]

Demon's Souls sold less than 2 million, but managed to be profitable.

Wouldn't a company like Atlus be a great example of this middle-ground, though? I mean titles like Catherine, various Shin Megami Tensei/Persona games, KOF13, and so on... there definitely seem to be quite a few titles that Atlus has published that I would not call "AAA" but have at least turned a profit (I'm guessing - I don't have numbers here).

[AppleQueso]

Advertising is important, and arguably moreso now that the places people get their information is much more diversified than it was in the era of game magazines, but I think so many companies just overblow the advertising budget, hoping to get a larger install base, when a lot of the time they could do minimal advertising and then stand on the merits of their product, wait for people to start talking about it and get their sales that way.

I think it's more of a case of actually knowing who to market to. Atlus has been good at marketing to exactly the kind of audience that they know will buy their product.

AFAIK, Index Holding's issues aside, Atlus themselves have done pretty well, and more companies should strive to be like them.

[Erik_Twice]

It seems to me that the video game industry is in a bubble of sorts. The market is expanding at an incredible rate and the involved hobbyist are becoming an unprofitable minority compared to the huge, easy-to-market-towards new audience.

And companies are going crazy in an attempt to capture their part of the pie. Who wouldn't? This thing is more profitable than movies, release a new Need for Speed or Call of Duty and you are assured some crazy bucks every single year at a much lesser risk.

Of course, most companies who want a part of that pie are ill-fitted to take it and there are too many of them to actually achieve success. Medium-sized publishers are sacrificing all they have in an attempt to move upwards not dissimilar to any other commercial bubble.

The actual result is that they make it for a couple of years and then die because they can't deal with a flop. The same happened with the movie industry once the small budgets of the studio system went away. Studies put all their eggs on the same basket and sooner or later died.

Consider that the financial backing of all these companies comes from a new wave of investors trying to capitalize on the bubble, not from investors looking for stable companies that can slowly grow.




When it comes to budgets beyond kitchen-sink level, the issue is that very few big companies are interested in medium-sized games and smaller companies don't have the money for it.

Activision, Ubisoft, EA, Sony and Microsoft aren't interested in anything but blockbusters. They won't fund games like this.

Square, Konami and Capcom are abandoning most of their in-house development teams and taking the same approach as the big players.

Nintendo is extremely conservative and while they are courting Indie developers now, it will take them ages to fund any medium-size game that isn't called Zelda, Mario or Metroid.



Sega has published dozens of interesting medium-sized games but many of them have been flops. Valkyria Chronicles was a flop. Yakuza was a flop. Madworld was a flop. They are certainly trying but they are still trying to reorganize and it takes time.

Atlus is the single best example of this middle ground but since they have just been bought by Sega it will take some time until we feel their effects again.

Namco is a big company without delusions of grandeur. They can be a strong force in this market but they aren't as international as Sega are.

[ZeroAX]

As Norris said, people with enough money to invest in a medium range games catalogue, prefer to risk it all (in their eyes it's a smaller risk, but those eyes belong to morons imo) by developing big games based on whatever is popular (sandbox games, military shooters, ect.) regardless if the market has room for it.

It's a bubble, and the sooner it bursts the better. Will people lose their jobs? Yes, but then they can start their own software studios making smaller more profitable games. Look at the mobile revolution. Now that SteamOS and android and stuff are coming to smart TVs, you can be sure there will be a huge market for small budget "couch based" video games in the future.

I'm not worried one bit. I'm just warming up the pop-corn to see all the investors crying when this market implodes.

Sega has published dozens of interesting medium-sized games but many of them have been flops. Valkyria Chronicles was a flop. Yakuza was a flop. Madworld was a flop. They are certainly trying but they are still trying to reorganize and it takes time.

This paragraph just makes me sad . BUT, I bought all those games (well technically someone else bought the first 2 Yakuza games for me, but it still counts), AND Vanquish, so I did support their efforts (though in the end I only liked Valkyria Chronicles, and ending up selling the other 2 from Platinum)

[Violent By Design]

What makes something a medium sized game? I would argue that a lot of indie games are "medium" sized.

[Erik_Twice]

What makes something a medium sized game? I would argue that a lot of indie games are "medium" sized.

We are thinking of games like Catherine or Katamary Damacy. Nothing you can do in your kitchen, but certainly not expensive games to make.

[isiolia]

What makes something a medium sized game? I would argue that a lot of indie games are "medium" sized.

We are thinking of games like Catherine or Katamary Damacy. Nothing you can do in your kitchen, but certainly not expensive games to make.

Aren't there plenty of those coming out though? Including ones with backing from major studios/etc? Main catch being that most of them are digital releases.