Wednesday, April 9, 2008

Recession - the best thing for the games industry?

OK, time to get into some controversy. Is a recession the best thing for the games industry at the moment? We've seen the stats that show that industry sales are going against the traditional recessional downturns for luxuries, but will this last once things actually do get really tight?

I'll put this out straight away - I haven't had any formal training in economics for a few years and even then, I really haven't specialised in it to any great extent. But then again, it seems that having zero ability to understand economics is a prerequisite for world leaders nowadays, so it's not like I'd be talking out of turn.

The conventional thinking has always been that as money becomes tighter for people they would shrink away from spending on luxuries, something that seems to be defied by the recent stats. But I ask the question - how conventional are the people who are spending the most money? I know that my gaming budget is quite high - I try and budget to get at least one game a fortnight, usually at full price. Many others will also partake in such buying habits. In fact, I would wager that a goodly proportion of the income of gaming industry comes from those of us who work full time, probably don't have children and may or may not have a spouse/partner. In other words - those with plenty of disposable income. We are the ones who are more likely to purchase a game at full price in a launch window. Sure, there are the nagging kids who use their pocket money - but they will certainly be more immediately effected by the tightening family budget. And even then - a parent in that tightening budget scenario is likely to encourage trade-ins, purchasing of second hand games and rentals above purchasing a brand new copy.

Thus I would put forward that those who have the greatest real purchasing power in the games economy are the ones who are least likely to really feel the pinch of a recessional economy. But this isn't really my point.

I am certain that if things continue going the way which they have been trending we will see a definite change in the overall turnover in the games industry. The hardware sales will likely be the first to take a hit given the significant costs involved in purchasing the hardware (and just as often the HDTV to go with it), and consequently we will likely see a plateauing in software sales as there will no longer be the rapidly expanding market to sell into. Should these trends continue, it would rapidly reach a point where the potential market for a game is going to be small enough that break-evens are no longer certain. So what would this mean for the industry, and why would it be a good thing?

My hope would be, given this situation, that we'd see a change away from the Hollywood "one blockbuster covers our losses on all the other crap" model which the games industry is moving towards. Instead, my hope would be that we'd see a lot of the filth dredged out of the bottom of the meme pool. How would shovelware cope with a recessional market? With the declining sales base, and consumers likely to become increasingly selective in the application of their hard-earned, shovelware may face a dark future. It is likely that reviews of games would become critical (possibly leading to the creation of that mythical "new games journalism" which those "respectable" writers at places like Rolling Stone always crap on about), for the outlay for a fullpriced game would become such a significant financial event that people would want to be damned sure of the quality of their purchase. The downside of this is we would likely see many repeats of the Gamespot/Eidos debacle and the Ziff Davis/Ubisoft tantrum where negative press is greeted with indignance and infantile outbursts.

But the main change which I would anticipate in the move away from the blockbuster model is towards sustainable development costs for all titles. What if you were to be buying a new game for your 360 or PS3 at a pricepoint significantly below the current full price? And I'll use Bully as a demonstration here - what if it was an excellent game, but with graphical standards well below the current gen? Would you accept that - a sacrifice of graphical fidelity on the altar of affordability? Where else could fat be trimmed from the development process - would people accept "speech bubbles" instead of voice acting? How about relying on user-soundtracks instead of licensed/original music for the most part? All of these things could help trim those development costs to allow games to be made for less and, in theory, retail for less. After all - not every game has to be GTAIV with tens of hours of content, amazing graphics, sound and writing with a price tag to match.

I think that the key here is developing an understanding with the publishers and probably moreover with the game buying public that not every game needs to be a full-priced Michael Bay inspired masterpiece. People are willing to get less when they pay less and perhaps that "mid range" is what they should aim for to keep themselves in the black in the face of the "R-word".

I must say that EA and some other publishing houses are very prescient in this respect with the move towards free-to-play with pay-for-bonus games coming in on the horizon with an additional ad supported model incorporated. Hopefully things like Battlefield: Heroes and the proposed re-model of Company of Heroes into a free-to-play game will lead the charge here. If Sony and Microsoft were prepared to investigate new methods of dealing with these concepts through their stores and online services it could be a way for them to guarantee themselves a massive revenue stream and player base through the darker economic times. Just imagine something like Battlefield: Heroes on 360 or PS3 as a free game. The pay-for-bonus system can be worked in through Marketplace or PS Store, but having a free game like that to appeal to the player base would give either console a great boost.

In relation to Marketplace and PS Store, I would definitely envision that DLC would reprice itslef into oblivion. After all, in a recessional economy people who are paying full price for a game are going to be less than pleased that they would have to pay to get what should have been in there to start with in some cases. Perhaps we may even see something remarkable happen with sequels becoming available for download via these venues for released games. Look at Tomb Raider Legend and the DLC packs for Anniversary. Look at how Vegas 2 could well have been a big update pack for Vegas 1. This kind of electronically distributed expansion pack is the first step towards the creation of an on disc engine and resource pack for DLC games. That kind of future is pretty out there, but it is something that I think we are moving towards, especially as the budgetary belt is pulled tighter and tighter.

The essence of my ramble here has been to point out a number of ways in which I think a recession could really help the game industry pull itself back into shape. Whether its a remodel of the distribution and sales models, or a fundamental shift in the approach to development - if even some of my hopes (masquerading as predictions) come through then we will likely come out the other side with a much better model. After all, look at what the thirties did for Hollywood.

1 comment:

ValeYard13 said...

Nice optimistic look on the effects of the recession! You're right, often crises galvanize more creativity than prosperous times.

By the way, I was one of your friends at Gamespot and have sent you an invite over live (gamertag ValeYard13). It would be great 2 see ya on live!