11 ms·

Here's how fucked the games business is: Tomb Raider sold 3.5 million units in 4 weeks, and yet failed to meet sales expectations. Hitman sold the same, and Sle

by octo_t 14y ago

Here's how fucked the games business is: Tomb Raider sold 3.5 million units in 4 weeks, and yet failed to meet sales expectations. Hitman sold the same, and Sleeping Dogs sold 1.75 million and they both failed to meet expectations. Square Enix lost over $150m last year, despite those three critically and commercially (by any reasonable metric) games coming out. Despite selling millions of copies they aren't profitable because game budgets are too high. EA thinks that next gen budgets will be "only"10% higher than this gen. That means that gmaes need to sell at least 10% more units than current games are doing, and eren that will only guarantee the losses of tens of millions we're seeing now. To be profitable they'll need to sell far far more. On consoles that, because they are new, will have a limited user base anyway. Either that or raise the price to make up the shortfall. In the middle of the longest recession in a century. The industry is fucked The only way to make money from games is what Disney have done, license the IP to other companies and get them to pay for it.

ebbv 14y ago
The AAA side of the industry is fucked up much like the big money side of movies and other stuff is often fucked up; because it not only has to pay all the creative folks but it has to pay for a slew of empty suits and massive, massive marketing campaigns. I think that's why we're seeing such a rise of indie developers. People credit Kickstarter but I think Kickstarter's popularity and success is a result of the move to indie development rather than a cause of it (or maybe a little of both.) There will always be talented people who want to make games and they will find a way to do it. Look at the old days that Commander Keen, Wolf3D, DOOM and many other shareware games came from. A bunch of independent BBSes where the shareware games where passed around and talked about purely through word of mouth. Rampant piracy, far worse than today, and yet those games made money for their creators. You may be right, the EAs, the Activisions and other bloated monstrosities may be fucked. And to them I say good riddance. I love, love, love Bioshock Infinite, but if the $100 million dollar budget games are a dinosaur on its way out, I won't mourn it too much.
- AJ007 14y ago
  Add to it the impact mobile has had on consumers who are increasingly used to getting games for somewhere between free and 99 cents. There is a mad rush to free to play right now in order to capture that audience. Although the market is much bigger, I fully expect the attempt to squeeze as much money possible out of the players will results in more and more painfully annoying games (most free to play already fit in that category.)
  - hatchoo 14y ago
    On the upside, free to play allows you to try out the game before fully investing on it. On the downside, if it's good enough, you will probably be milked more than the typical $60 retail in DLCs and in game items. I personally don't buy games at launch anymore. I just wait for it to go on sale on Steam.
- justinhj 14y ago
  Been a video game programmer since 93 and I totally agree with your comparison with the movie industry. If you're going to make a AAA game you need a huge budget both for development and for marketing, which means that only the 'sure thing' will get the green light. That means the same games over and over with greater graphical fidelity, just like the big budget action movies don't stray too far from the accepted formula.
  - talmand 14y ago
    Interesting that the groups that get to define what makes an "AAA" game are the groups that can afford making such games as defined. Gamers need to get away from the AAA quality labeling as it means next to nothing these days. For instance, what's an A or AA game? Seems to me these days the number of A's only suggests the retail price but not the quality of the game. Personally, I would put Super Meatboy or Mark of the Ninja up against any of these so-called AAA blockbuster games any time.
    - samspot 14y ago
kmfrk 14y ago
Worth adding to the story that the CEO of Square Enix also resigned over the sales figures.
- ijk 14y ago
  And the CEO of Electronic Arts.
Lewisham 14y ago
Tomb Raider sold 3.5 million units in 4 weeks, and yet failed to meet sales expectations. This is because Square Enix is using Eidos to prop up its Japanese arm, which has been floundering wildly. They then shift all the hopes onto the Eidos studios to keep the shareholders happy. Tomb Raider did gangbusters by all metrics apart from what Square Enix needed it to do to keep investors happy.
- caycep 14y ago
  does that mean potential spinoff in future?
  - Lewisham 14y ago
    My guess is that either the company as a whole exists or it doesn't. They won't let Eidos go because they need the revenue, and breaking up Square and Enix seems infeasible at this point. My guess is it'll go the same way as Sega and LucasArts if things go very south; release the third-party development studios from their contracts, shut down internal development, and move to licensing and hope you survive.
rhizome 14y ago
Where are the "expectations" coming from? Could it be that only they are out of line, with the rest of the industry held captive to whatever figures emerge from the woodwork?
hkmurakami 14y ago
Square-Enix is an absolute shitshow that should be a lesson against having a guy who doesn't understand games at all as CEO. I think their fate was sealed when Wada fired a huge fraction of their experienced workforce resulting in a talent deficit which in turn lead to poor quality games (FFXIV...) which then snowballed into a lack of trust for Wada and the company as a whole. At this point all they do is make remakes of 20 year old games. edit: that being said if they come out with FFVI for Android I'll probably buy it X_X
deleted 14y ago
[deleted]
nolok 14y ago
The industry is fine, trying to make 30/40/50 Millions AAA games by the truckload is a doomed strategy, but that's not a surprise. Lots of developer are doing a whole lot of money. I cannot find brad wardell's blog from his galactic civlizations 2 dev time (from Stardock), he had a really good quote which perfectly applies; I don't remember it word for word but what he was saying is: it is stupid to make a really expensive game and then hoping to get your money back on it just because another game did, you have to find your market and make a game targeting it. If you sell 3.5 million units and you consider that a loss, then you fucked up, it's not a market problem. There is a reason why indie games are exploding, and it's not a lack of liquidity, editors are pouring money into franchises trying to get the next call of duty, and it's not working the same way every action/sci-fi movie cannot have a James Cameron budget and get its money back.
rdtsc 14y ago
Does this open the space for indie developers? HumbleBundles have been doing ok lately. What if they had slightly more budget, can they do fairly close to these games.
- jiggy2011 14y ago
  Humblebundles seem to be mainly made up of games that have already been a commercial success to some degree. By the time games hit the humble bundles they have often already been available for $1 on Steam. If I was an indie game dev I would use the bundles to get my old game into as many hands as possible to build a customer base for the next game.
  - rdtsc 14y ago
    I see thanks for clarifying it, I wasn't familiar with the process too much. Just remember the sales numbers. Would you say that marketing is a biggest issue? How about art generation?
  - Impossible 14y ago
    There have been quite a few games in the Humble Bundle that are commercial failures, having sold thousands of copies on Steam, etc. instead of millions. In those cases the Humble Bundle is often the biggest revenue source for those developers, enough to fund the creation of new games.
    - lifeformed 14y ago
      Thousands of copies is not necessarily a commercial failure. We sold "just" 45k copies on Steam, which was enough for our 4 man team, before we went to Humble Bundle. When it comes to indie development, commercial success just means making enough to make the next game, which can be a surprisingly low amount if the costs of living are low.
      - Impossible 14y ago
        I'd consider 45K a success in your case. By thousands I meant single digit thousands (in the 1K-5K range), not tens or hundreds of thousands. For some teams or individual creators with very low costs of living that's enough to sustain development, but at that point we're talking about living on less than minimum wage...
jiggy2011 14y ago
Is the industry fucked or is it just the case that it is a winner take-all situation? I assume that the big games like COD , Halo etc are still making plenty of cash. Maybe rather than seeking a profit on each game you just try to keep the lights on with the bonus of a lottery ticket that the game might make it huge. For every big AAA developer going bust there are probably 100 indie devs who fail to gain traction and just slide into obscurity.
- steveklabnik 14y ago
  > Is the industry fucked or is it just the case that it is a winner take-all situation? You say that like 'winner-take-all' isn't fucked.
  - jiggy2011 14y ago
    Well, entertainment industries are always a bit like that. Same with startups in general. It's just that you hear more about the losers when they are multi-billion dollar publicly trader companies.
mkeung 14y ago
"The only way to make money from games is what Disney have done, license the IP to other companies and get them to pay for it." Not completely true, Disney has their own dev team and they licensed Temple Run to make their own versions. Still though, it's not a risky bet as it's licensing something successful already. Edit: also not in the AAA part of the industry
teej 14y ago
> The only way to make money from games is what Disney have done, license the IP to other companies and get them to pay for it. I think it's worth noting that Disney Interactive has posted a loss every single year of it's 18 years in existence.
- chii 14y ago
  i wonder if those numbers they post as loss are actually real loss or creative accounting loss. 18 years is a long time to keep losing money...
talmand 14y ago
You're only speaking of the big boys of the industry that have been on this downward trend for years. The smaller guys that are getting more creative in how to approach their market and how they develop their games are most likely doing just fine.
cptxester 14y ago
If you think that's the only way to make money from games then you must not have heard of this thing called Minecraft.
dsugarman 14y ago
I don't think the AAA industry has to be fucked. I think if you cut out the publishers and all content is downloadable, you can provide higher margins the to studios who actually create the content. Right now the distributors(publishers) are the ones who come out like bandits..
ttrreeww 14y ago
The Fed chairman should open the liquidity window so the game company can trade securitized expected game sales notes to the Fed/taxpayer for hard cold cash!
otikik 14y ago
Minecraft. I win.
- cptxester 14y ago
  Nope, you lose. I mentioned it here first. Sorry!
elorant 14y ago
The industry is fucked because they charge $40 for a game that lasts on average less than 30 hours. This is a rip-off. Even RPG games don't last long these days. With an economy on the ropes you have to wonder in what kind of parallel universe are those guys living? Give me a game at $10-$15 and I'd definitely buy it. Otherwise, well there are other ways to get them. Not to mention that they went on and destroyed entire genres, like the much loved adventure games. Now we have a bunch of blockbuster FPS games that have started to look the same. As an ex hardcore gamer I miss the thrill of the 90s when games were original and funny. Now it's all point and shoot some villain. After a while it becomes boring.
- eropple 14y ago
  > With an economy on the ropes you have to wonder in what kind of parallel universe are those guys living? One where length-of-play matters to a minority of gamers. I'll give you a hint, though: it's not a parallel one. > Give me a game at $10-$15 and I'd definitely buy it. Otherwise, well there are other ways to get them. "Give me a game for under a buck an hour, or fuck you, I'll just take it." Fortunately, you are something of an outlier.
- jussij 14y ago
  Just curious, what other form of entertainment can you get for $1.50 per hour?
  - Crake 14y ago
    Just a passerby here, but the majority of my entertainment comes from my $50/month internet connection, and I spend waaaaay more than 30 hrs/month on it.
    - NoPiece 14y ago
      You are being down voted, but I think it is a valid point. Games compete for your time as well as your dollars, and the internet is a big and easy distraction. I spend as much time reading about games as playing them. Look how many views game playthroughs are getting now.
bane 14y ago
Even worse, I find very few modern games that I even want to play. As a result I spend more time playing emulators, old retroconsoles and old computer games than anything new. For the price of a new game you can probably grab an entire SNES and a few hundred hours of really good games. Notice how many of these relatively cheap indy games are setup to recreate this gaming experience. This back catalog (including recent additions) has got to be taking a chunk out of the sales numbers.
lawnchair_larry 14y ago
I think Notch personally pocketed about as much as Square Enix lost in the same period, so the math must be in there somewhere.
jaimebuelta 14y ago
So called AAA games are reaching a point of saturation, probably. They are spending simply too much money for what thy can get back. This is similar to movie studios. There is a limited number of "Dark Knight rises" movies you can do, because you need a HUGE number of viewers to just not loose money. Of course, a good franchise is the best way to secure players (CoD, for example) But the industry is not just those games. Right now there are tools to make a fantastic game with a rather limited number of people and reasonable budget. I am not only referring to very small indie games, but I think there is a market for middle-of-the-road games in terms of budget. Right now everything feels like either Tomb Raider or Fez. The tools are there to ease the development and create a healthy group of companies generating great games that are not state-of-the-art, but are fun. There is also the issue that game companies has been traditionally quite chaotic, with crazy plans, insane management and giving any excuse to just crash. I think the industry is learning what are the problematic points, what makes sense in term of a project. Video games industry is still relatively new, and it has been quite shaky. Hopefully they'll get better at all that...

by octo_t 14y ago

ebbv 14y ago

The AAA side of the industry is fucked up much like the big money side of movies and other stuff is often fucked up; because it not only has to pay all the creative folks but it has to pay for a slew of empty suits and massive, massive marketing campaigns. I think that's why we're seeing such a rise of indie developers. People credit Kickstarter but I think Kickstarter's popularity and success is a result of the move to indie development rather than a cause of it (or maybe a little of both.) There will always be talented people who want to make games and they will find a way to do it. Look at the old days that Commander Keen, Wolf3D, DOOM and many other shareware games came from. A bunch of independent BBSes where the shareware games where passed around and talked about purely through word of mouth. Rampant piracy, far worse than today, and yet those games made money for their creators. You may be right, the EAs, the Activisions and other bloated monstrosities may be fucked. And to them I say good riddance. I love, love, love Bioshock Infinite, but if the $100 million dollar budget games are a dinosaur on its way out, I won't mourn it too much.

AJ007 14y ago
Add to it the impact mobile has had on consumers who are increasingly used to getting games for somewhere between free and 99 cents. There is a mad rush to free to play right now in order to capture that audience. Although the market is much bigger, I fully expect the attempt to squeeze as much money possible out of the players will results in more and more painfully annoying games (most free to play already fit in that category.)
- hatchoo 14y ago
  On the upside, free to play allows you to try out the game before fully investing on it. On the downside, if it's good enough, you will probably be milked more than the typical $60 retail in DLCs and in game items. I personally don't buy games at launch anymore. I just wait for it to go on sale on Steam.
justinhj 14y ago
Been a video game programmer since 93 and I totally agree with your comparison with the movie industry. If you're going to make a AAA game you need a huge budget both for development and for marketing, which means that only the 'sure thing' will get the green light. That means the same games over and over with greater graphical fidelity, just like the big budget action movies don't stray too far from the accepted formula.
- talmand 14y ago
  Interesting that the groups that get to define what makes an "AAA" game are the groups that can afford making such games as defined. Gamers need to get away from the AAA quality labeling as it means next to nothing these days. For instance, what's an A or AA game? Seems to me these days the number of A's only suggests the retail price but not the quality of the game. Personally, I would put Super Meatboy or Mark of the Ninja up against any of these so-called AAA blockbuster games any time.
  - samspot 14y ago

kmfrk 14y ago

Worth adding to the story that the CEO of Square Enix also resigned over the sales figures.

ijk 14y ago
And the CEO of Electronic Arts.

Lewisham 14y ago

Tomb Raider sold 3.5 million units in 4 weeks, and yet failed to meet sales expectations. This is because Square Enix is using Eidos to prop up its Japanese arm, which has been floundering wildly. They then shift all the hopes onto the Eidos studios to keep the shareholders happy. Tomb Raider did gangbusters by all metrics apart from what Square Enix needed it to do to keep investors happy.

caycep 14y ago
does that mean potential spinoff in future?
- Lewisham 14y ago
  My guess is that either the company as a whole exists or it doesn't. They won't let Eidos go because they need the revenue, and breaking up Square and Enix seems infeasible at this point. My guess is it'll go the same way as Sega and LucasArts if things go very south; release the third-party development studios from their contracts, shut down internal development, and move to licensing and hope you survive.

rhizome 14y ago

Where are the "expectations" coming from? Could it be that only they are out of line, with the rest of the industry held captive to whatever figures emerge from the woodwork?

hkmurakami 14y ago

Square-Enix is an absolute shitshow that should be a lesson against having a guy who doesn't understand games at all as CEO. I think their fate was sealed when Wada fired a huge fraction of their experienced workforce resulting in a talent deficit which in turn lead to poor quality games (FFXIV...) which then snowballed into a lack of trust for Wada and the company as a whole. At this point all they do is make remakes of 20 year old games. edit: that being said if they come out with FFVI for Android I'll probably buy it X_X

deleted 14y ago

[deleted]

nolok 14y ago

The industry is fine, trying to make 30/40/50 Millions AAA games by the truckload is a doomed strategy, but that's not a surprise. Lots of developer are doing a whole lot of money. I cannot find brad wardell's blog from his galactic civlizations 2 dev time (from Stardock), he had a really good quote which perfectly applies; I don't remember it word for word but what he was saying is: it is stupid to make a really expensive game and then hoping to get your money back on it just because another game did, you have to find your market and make a game targeting it. If you sell 3.5 million units and you consider that a loss, then you fucked up, it's not a market problem. There is a reason why indie games are exploding, and it's not a lack of liquidity, editors are pouring money into franchises trying to get the next call of duty, and it's not working the same way every action/sci-fi movie cannot have a James Cameron budget and get its money back.

rdtsc 14y ago

Does this open the space for indie developers? HumbleBundles have been doing ok lately. What if they had slightly more budget, can they do fairly close to these games.

jiggy2011 14y ago
Humblebundles seem to be mainly made up of games that have already been a commercial success to some degree. By the time games hit the humble bundles they have often already been available for $1 on Steam. If I was an indie game dev I would use the bundles to get my old game into as many hands as possible to build a customer base for the next game.
- rdtsc 14y ago
  I see thanks for clarifying it, I wasn't familiar with the process too much. Just remember the sales numbers. Would you say that marketing is a biggest issue? How about art generation?
- Impossible 14y ago
  There have been quite a few games in the Humble Bundle that are commercial failures, having sold thousands of copies on Steam, etc. instead of millions. In those cases the Humble Bundle is often the biggest revenue source for those developers, enough to fund the creation of new games.
  - lifeformed 14y ago
    Thousands of copies is not necessarily a commercial failure. We sold "just" 45k copies on Steam, which was enough for our 4 man team, before we went to Humble Bundle. When it comes to indie development, commercial success just means making enough to make the next game, which can be a surprisingly low amount if the costs of living are low.
    - Impossible 14y ago
      I'd consider 45K a success in your case. By thousands I meant single digit thousands (in the 1K-5K range), not tens or hundreds of thousands. For some teams or individual creators with very low costs of living that's enough to sustain development, but at that point we're talking about living on less than minimum wage...

jiggy2011 14y ago

Is the industry fucked or is it just the case that it is a winner take-all situation? I assume that the big games like COD , Halo etc are still making plenty of cash. Maybe rather than seeking a profit on each game you just try to keep the lights on with the bonus of a lottery ticket that the game might make it huge. For every big AAA developer going bust there are probably 100 indie devs who fail to gain traction and just slide into obscurity.

steveklabnik 14y ago
> Is the industry fucked or is it just the case that it is a winner take-all situation? You say that like 'winner-take-all' isn't fucked.
- jiggy2011 14y ago
  Well, entertainment industries are always a bit like that. Same with startups in general. It's just that you hear more about the losers when they are multi-billion dollar publicly trader companies.

mkeung 14y ago

"The only way to make money from games is what Disney have done, license the IP to other companies and get them to pay for it." Not completely true, Disney has their own dev team and they licensed Temple Run to make their own versions. Still though, it's not a risky bet as it's licensing something successful already. Edit: also not in the AAA part of the industry

teej 14y ago

> The only way to make money from games is what Disney have done, license the IP to other companies and get them to pay for it. I think it's worth noting that Disney Interactive has posted a loss every single year of it's 18 years in existence.

chii 14y ago
i wonder if those numbers they post as loss are actually real loss or creative accounting loss. 18 years is a long time to keep losing money...

talmand 14y ago

You're only speaking of the big boys of the industry that have been on this downward trend for years. The smaller guys that are getting more creative in how to approach their market and how they develop their games are most likely doing just fine.

cptxester 14y ago

If you think that's the only way to make money from games then you must not have heard of this thing called Minecraft.

dsugarman 14y ago

I don't think the AAA industry has to be fucked. I think if you cut out the publishers and all content is downloadable, you can provide higher margins the to studios who actually create the content. Right now the distributors(publishers) are the ones who come out like bandits..

ttrreeww 14y ago

The Fed chairman should open the liquidity window so the game company can trade securitized expected game sales notes to the Fed/taxpayer for hard cold cash!

otikik 14y ago

Minecraft. I win.

cptxester 14y ago
Nope, you lose. I mentioned it here first. Sorry!

elorant 14y ago

The industry is fucked because they charge $40 for a game that lasts on average less than 30 hours. This is a rip-off. Even RPG games don't last long these days. With an economy on the ropes you have to wonder in what kind of parallel universe are those guys living? Give me a game at $10-$15 and I'd definitely buy it. Otherwise, well there are other ways to get them. Not to mention that they went on and destroyed entire genres, like the much loved adventure games. Now we have a bunch of blockbuster FPS games that have started to look the same. As an ex hardcore gamer I miss the thrill of the 90s when games were original and funny. Now it's all point and shoot some villain. After a while it becomes boring.

eropple 14y ago
> With an economy on the ropes you have to wonder in what kind of parallel universe are those guys living? One where length-of-play matters to a minority of gamers. I'll give you a hint, though: it's not a parallel one. > Give me a game at $10-$15 and I'd definitely buy it. Otherwise, well there are other ways to get them. "Give me a game for under a buck an hour, or fuck you, I'll just take it." Fortunately, you are something of an outlier.
jussij 14y ago
Just curious, what other form of entertainment can you get for $1.50 per hour?
- Crake 14y ago
  Just a passerby here, but the majority of my entertainment comes from my $50/month internet connection, and I spend waaaaay more than 30 hrs/month on it.
  - NoPiece 14y ago
    You are being down voted, but I think it is a valid point. Games compete for your time as well as your dollars, and the internet is a big and easy distraction. I spend as much time reading about games as playing them. Look how many views game playthroughs are getting now.

bane 14y ago

Even worse, I find very few modern games that I even want to play. As a result I spend more time playing emulators, old retroconsoles and old computer games than anything new. For the price of a new game you can probably grab an entire SNES and a few hundred hours of really good games. Notice how many of these relatively cheap indy games are setup to recreate this gaming experience. This back catalog (including recent additions) has got to be taking a chunk out of the sales numbers.

lawnchair_larry 14y ago

I think Notch personally pocketed about as much as Square Enix lost in the same period, so the math must be in there somewhere.

jaimebuelta 14y ago

So called AAA games are reaching a point of saturation, probably. They are spending simply too much money for what thy can get back. This is similar to movie studios. There is a limited number of "Dark Knight rises" movies you can do, because you need a HUGE number of viewers to just not loose money. Of course, a good franchise is the best way to secure players (CoD, for example) But the industry is not just those games. Right now there are tools to make a fantastic game with a rather limited number of people and reasonable budget. I am not only referring to very small indie games, but I think there is a market for middle-of-the-road games in terms of budget. Right now everything feels like either Tomb Raider or Fez. The tools are there to ease the development and create a healthy group of companies generating great games that are not state-of-the-art, but are fun. There is also the issue that game companies has been traditionally quite chaotic, with crazy plans, insane management and giving any excuse to just crash. I think the industry is learning what are the problematic points, what makes sense in term of a project. Video games industry is still relatively new, and it has been quite shaky. Hopefully they'll get better at all that...