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Saturday, February 22, 2020

Mailvox: no market for a game channel

An industry veteran explains why it doesn't make sense for us to create a game review site and channel:

Hey Vox - There is a hole in the community, but it's not a hole in the market. Because there's no market for games journalism.

Games journalism traditionally offered three things:
  1. New information about games that ordinary people couldn't get
  2. Credible reviews of games that could guide purchase
  3. In-depth features, interviews, and editorial
#1 collapsed for AAA games because the game companies now all employ large community management teams to communicate directly with their fans. They don't need or want game journalists as gatekeepers. #2 collapsed for AAA games, too. The rise of review aggregator sites meant that gamers just visited the review aggregator rather than any particular reviewer. The pressure on game journalists to have access and ads made reviews less credible, teaching people to ignore journalist reviews and just look at user reviews. And the rise of Let's Plays on Twitch made reviews irrelevant because you don't need to read about how a game plays, you can watch it be played in real time with live commentary.

The result of these trends was that game journalists who wanted to do #1 and #2 had to turn to indie games. That's how you get Zoe Quinn's Depression Quest being something worth talking about. But nobody really cares about indie games outside of that small niche. If they did care, they wouldn't be indy. So the journalists all ended up cramming into category #3 and focusing on features, interviews, and editorial.

But here they ran into a problem, too. If you try to do Rolling Stone type content, you discover that game publishers simply don't let their game developers be rockstar/celebrity/talent the way other creative industry does. You're simply never going to get to talk to a game designer and get real truths anymore. And if you do manage to talk to them, it turns out gamers don't really care anyway, because it's a participatory medium and they'd rather be playing. The only thing that gets traffic is outrage, so you trigger outrage. But if you trigger outrage about anything meaningful, you lose your ad dollars and what little access you have left. So it becomes all faux outrage all the time. Meanwhile, fewer and fewer readers and more and more people just watching YouTube and Twitch. 

Meanwhile, even if you say "yes, we'll ignore all that and focus on great personalities who don't worry about ads and make money from subscriptions", then you run into problem #4. Gamers don't want to spend money on content. They get outraged if a mobile game costs more than $2.99. They are furious about having to pay $60 for a game that gives them 60 hours of joy. They angrily rant about DLC. And even so, such money as they have, they do spend it all on games. They don't spend it on subscriptions. And to the extent they do, it's clustered into a tiny number of top streamers like Pewdie Pie. Then it becomes a dry well. To put it into perspective, a gaming site doing 60 million page views per month, with multiple million-view streams per week, earning $1M in ad sales, might earn perhaps 1% of its revenue from subscriptions. .

Jeremy Hambly of The Quartering has been trying to make it work, with a new site; as has One Angry Gamer and a bunch of others. No one is having any major financial success. There's a community, there's just no market.

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48 Comments:

Blogger Karen took the Kids February 22, 2020 12:32 PM  

These are all fair points. We've been spoiled in the last decade, although you wouldn't know it with the amount of complaining that goes on. I've been guilty of it in the past myself. This veteran has hit the nail on the head.

Blogger Rebel Shoat February 22, 2020 1:21 PM  

I'd like a channel that has programming that is safe for my kids to watch (not kids programs necessarily). I like home fix up shows on HGTV. Can't watch them with the kids around cause every other couple is gay. A new service with a variety of programming that isn't SJWed and gay might interest a lot of middle America. Just like Fox News filed a hole in the market for conservative programming in the 90 there is a hole in the market for real family safe TV.

There is a lot of talent in the Ilk and Bears. Show #1 could teach how to create content. Teaching the Ilk and Bears who are good at one thing, such as wood working or cars, how to create quality content showing their skill.

Another thought...Netflix appeals to a lot of creative types because they have freedom that networks won't give them. There may already be creators with family values out there looking for a place to land. Netflix isn't going to take them.



Blogger Saint February 22, 2020 1:23 PM  

Great write up.

Blogger Newscaper312 February 22, 2020 1:28 PM  

So maybe just some pre-established non-SJW gaming groups or whatever you call them on Social- Galactic to jump start things?

Blogger Newscaper312 February 22, 2020 1:29 PM  

I do miss the earlier days of PC Gamer etc.
I also tend to prefer reading, screen shots and some video clips to watching a long playthrough or rambling talking head video in general.

Blogger [Redacted] February 22, 2020 1:33 PM  

If there is a market here, it is fostering the complaining and directing it in the right direction. A satirical site in the same vein as The Onion or The Babylon Bee would be fun, but that too faces saturation and pandering to limited demographics.

Writing articles like "Sonic the Hedgehog presents symbolic extra gold ring to the State of Israel" or "Unpaid Anonymous Mod Team Designated Hate Group by the SPLC" would be hard to get paid for.

It would be best just to design a really good game, and get people excited again.

Blogger Dan in Georgia February 22, 2020 1:46 PM  

Interesting that SocialGalactic has a bunch of comments threads already going about this. You can see where the gamers are congregating already.

Blogger Dan in Georgia February 22, 2020 1:48 PM  

Of course, everyone is still swarming the OK boomer post below.

Blogger Joey A February 22, 2020 1:49 PM  

Also, there's communities around serving specialized interests already, old as dirt, see: No Mutants Allowed, "the prestigious magazine": RPGCodex, RPG Watch, just to cover the RPG front.

This time, I think the convergence is more representative of flies buzzing around the rotting corpse of a long dead industry that doesn't have the good sense to go to it's grave than the more isolated indications.

Blogger MaskettaMan February 22, 2020 1:52 PM  

Gaming is the only market where the consumers are somewhat in control. Its a glimpse at the way industries should be run.

Blogger Wazdakka February 22, 2020 2:09 PM  

This comment has been removed by the author.

Blogger The Deuce February 22, 2020 2:09 PM  

Tbh the problem in the game industry isn't a lack of alternatives to the SJW journos, but rather that the SJW journos exist at all. They provide no service that we need. The actual "hole" in the market is for games urinalists to stop existing and for developers to stop listening to them. If somebody could come up with a business plan to make THAT happen, they'd be rich. Not sure IGG will let you fund a journo vaporization ray though.

Blogger James Dixon February 22, 2020 2:26 PM  

I can't argue with his assessment. Sometimes there's a gap in market coverage because there's simply no market there.

Blogger God Emperor Memes February 22, 2020 2:48 PM  

Since sports are a generally popular topic here, I would think a show based around that might be good. Something that emphasises the connection between participation in sport and not being a Gamma/Omega.

Blogger Pathfinderlight February 22, 2020 2:49 PM  

Gamers have seen their share of financial abuse over the past few years with games made like Skinner boxes with window dressing, cookie cutter asset flips, and slow-playing microtransaction machines. It's no wonder gamers are jealously guarding their wallets. These things are designed to suck people's bank accounts dry without providing anything of value.

Game journalists SHOULD be providing value to the community by steering people away from these games, towards games with real merit.

The sins of the game media that created Gamergate weren't about sleeping around or any single act of incompetence, it was a systematic betrayal of their social contract with the gamer community.

That broken social contract tarred the entire industry with scandal. Every journalist and review company paid the price for the backlash whether they were guilty or not. Gamergate actually helped alleviate this somewhat by documenting the offenders, but the damage was done. The genie could not be contained, and the mass release of "gamers are dead" articles only demonstrated how deep the corruption actually was.

To completely rational people this would be a blessing, but like most successful movements, we were motivated by passion.

Recent history shows the surviving game journalism companies became more corrupt, not less. With gamers still jaded over the first Gamergate war, the solution is clear. Ally with the gamergaters. Give them a voice on your site. Earn trust.

This is hard to do in a field that's been so tainted by the stink of corruption that many won't want to give you a chance, but if it can be done, the company that does will dominate the field.

Blogger Out of Nod February 22, 2020 2:50 PM  

Great assessment!

Blogger furor kek tonicus ( The Surprised Pig hadn't had any idea he tasted this good ) February 22, 2020 3:01 PM  

speaking of holes in a market, Epstein started a bank
...
after his first pedophilia conviction.

https://www.youtube.com/watch?v=2gd6k1kJra4

Blogger Calvin809 February 22, 2020 3:04 PM  

Lets plays on YouTube are what PC Gamer used to be for me in the '90s but you can see the game being played. Also you don't need the demo disk that they included because it's all online. I basically ignore the user reviews and all of the review bombing and other insanity that goes along with those.

Blogger jarheadljh February 22, 2020 3:07 PM  

Honestly,I think that the game industry has been zombified. Sometime around the middle 2000's the industry slammed head first into the wall of diminishing returns. There haven't been any new genres created in twenty years. The push towards photorealism from the graphics card companies aren't being followed up by the corporate AAA devs because it costs too much to develop for when all they care about is pushing product, while the indie game devs aren't even capable of what the AAA devs are doing. The AAAs never finish a game, instead they deliver it broken, patch it until it kinda works, and then abandon it. Alternatively, they deliver a new coat of paint on an old jalopy. There's a reason why the NES, SNES, Genesis have made a comeback, why GOG has had great success using DOSBox to resurrect old games. All of that also means that the market is over-saturated.

It isn't just the games industry, it's all entertainment media - movies, TV, comics. We've always known that there is nothing new under the sun, but now there's nothing that even *feels* new. It's all retreads of properties that should have ended a decade or two ago but continue on because copyright law is now allowing corporate IP holders to hoard and milk existing properties instead of forcing them to have to create new ones.

And if everything is just a reminder of something else, why would you bother reading up about it? Why would you tune in to a games channel to see it previewed?

Blogger Lukas Brunnor February 22, 2020 4:01 PM  

That break down was on point and I think settles that matter. There are probably better areas to exert force. Let the enemy waste their efforts.

Blogger RedJack February 22, 2020 4:21 PM  

JarHead.

I know that GOG was got me gaming again after a long break. Heck, I bought Pathfinder: Kingmaker for that reason!

But it is a bit like today's movies. Reskins of old games, old plots, old themes. Granted, I love Crusader Kings and Panzer Corp, but how about something different?

Blogger map February 22, 2020 4:25 PM  

So I meandered over at zerohedge and found this article written by Mish Shedlock:

https://www.zerohedge.com/political/make-american-steel-great-again-backfires-trump-lawsuit

Basically, an American subsidiary of an Indian Government conglomerate is complaining about the steel tariffs, that they cannot source raw steel locally and they want an exemption from the 25% tariff. Currently, the steel user is paying $184 million in steel tariffs and it running production at "unprofitably low" levels.

This is the nature of globalism. We're supposed to believe that both shrinking the gross margin of the business by $184 million and shrinking the size of the business by reducing production and, therefore, impacting revenue, is a cheaper alternative to simply...buying US steel.

Even if the tariff is impacting gross margin, the solution is never to shrink the business by reducing revenue. NEVER. It is always cheaper to take a hit to gross margin than to shrink your enterprise.These are the absurdities of the mercantilist system masquerading as free trade.

Heck, just seize the company from the Indian conglomerate and sell it off to private equity with the stipulation that they have to source US steel as an input. That would be a better result than being subject to the whims of the Indian government.

Blogger Zendo Deb February 22, 2020 4:29 PM  

"There's a community, there's just no market."

You say that like it's a bad thing. Not everything has to be a market. Not even in a Capitalist economy.

Blogger Doctor Mayhem February 22, 2020 4:45 PM  

Anyone remember when Roosh did Reaxxion? He had hoped to tap into gamergate and offer an alternative site for gamers to go to in order to get gamer news and etc.

Yeah. Didn't work out. For the reasons stated in the article.

Blogger Snidely Whiplash February 22, 2020 4:47 PM  

Zendo Deb wrote:Not everything has to be a market. Not even in a Capitalist economy.
Perhaps not, but it does have to support itself. Without a market, that doesn't happen. I don't think VD is going to want to subsidize it out of his own pocket. Nor, I would wager, are you.

Blogger losemoneyfast February 22, 2020 5:16 PM  

Very sensible comments by the industry veteran.
The Quartering's site is already quite good, but I must admit I have not bothered to visit it much for exactly reasons mentioned. Any time I have to read about games I would much rather spend playing. So until Jeremy's site is overflowing with success, makes no sense to start another.

Blogger Servant February 22, 2020 5:17 PM  

I disagree with the gamers don't want to spend any money. I believe that's kayfabe to justify monetization schemes.

Blizzard doubled their subscription numbers on a part of their platform that has zero monetization schemes.

Wildcard has zero monetization for ark and even their dlcs aren't strictly necessary. They are having zero problems.

Many companies are ratcheting back monetization schemes and going to more traditional price schemes. Destiny has basically moved to a subscription model.

Also gamers pay memberships, donations, superchats to these same twitch streamers, so clearly gamers don't mind paying.

Total warhammer on the pc is the most expensive game ever released at the end of the day and it's going strong.

Yeah ign circa 2000 is dead. Release day reviews are dead. In depth technical analysis is possible if you find smart enough writers. Design analysis of gameplay components, critique of pacing, none of these are covered in a day one review and have plenty of interest to be mined.

Tell your game designer buddy the only time I complain about sixty bucks for a game is when you put free to play mechanics and virtual currencies. I happily paid 100 for xcom 2 because I wanted to play it on the PS4 and get the expansion, even though I owned it on the PC. Bought Diablo three multiple times, because I don't care how many Babylonian magic squares I have to spend, is it a good time when I get there, but putting a tax on my fun, like the virt currency gold bars in red dead online, representing a time investment in game before unlocking content that you can have away with a wallet.

Falling for the meme that gamers bitch about spending money on a game shows a fundamental lack of understanding about what it is they are actually complaining about.

Blogger Silent Draco February 22, 2020 5:26 PM  

Great summary from someone in the industry. The channel is there, so investigate Plans B-F.

Blogger Servant February 22, 2020 5:26 PM  

Sorry for double post, but Zoe Quinn's depression quest was not worth writing about because of a focus on indie games. There are plenty of indie games worth writing about, plenty that came out at the same time, none that checked all the boxes. This guy might be retarded.

Blogger Doktor Jeep February 22, 2020 5:28 PM  

It seems like not do many people are into games as they are say 14 to 15 years ago. But it also seems like nobody has any feeling for anything for that matter, and I suspect it's due to the politicization and weaponization of every damned thing under the sun. Sucking the life and love put of everything.
Here's a thing: find one of those YouTube videos that plays classic WoW music for an hour or more, like "Music of Elwynn Forest" or something, and look at what comments people make and the nostalgia they feel. It seems like this was the last years of people being into anything as mundane as a video game. Now satisfaction only comes from either screwing people or screwing them back so to speak.

Blogger doctrev February 22, 2020 5:36 PM  

I'd take issue with the last point of this submission. Speaking as a gamer who once pre-ordered AAA games and bought DLC, I can tell you that a great many people hate DLC that is a cash grab for things already coded into the main game, especially if its absence results in a crippled product. I actually understand the advantage of DLC for the developer- it permits a larger and more gradual flow of income and gives the publisher incentive to keep more of the dev team. I know this, and so do other people who vote with their wallets. So the idea that gamers are generally impoverished college students who always hate paying for DLC are wildly off base. From KC:D to Star Citizen, there's no question that gamers will throw incredible amounts of money at their hobby with the right incentive. How much money? At the time I write this, The_Donald's Discord channel has 46 boosts (people willing to pay $100 for an annual subscription). Vampire: Bloodlines 2 is a debatably AAA sequel to a cult classic RPG, and its official Discord has fewer boosters than some independent vampire roleplay channels, or Kenshi- a fun post-apocalyptic sandbox indie. And Cyberpunk 2077's official channel has a suicide-inducing 106 boosts.

Game companies that understand the need to act like a service industry to their customers can get fanatic loyalty, tons of cash, and the ability to tell whatever stories they want. I'm sure there's a lesson in there for anyone who wants to bring back games journalism, and while I wish them all the luck in the world your correspondent is right about one thing- it's a red ocean with very poor possibility of return.

Blogger Ransom Smith February 22, 2020 5:37 PM  

Why would the gaming studios need the press, when for a limited amount of money they can have their own in house PR firm handle things with much less of a downside.
In fact, as Hello Games learned, the media is more likely to screw you and attribute things you didn't say as promises.

Blogger Ahărôwn February 22, 2020 5:42 PM  

I do miss the earlier days of PC Gamer etc.
I also tend to prefer reading, screen shots and some video clips to watching a long playthrough or rambling talking head video in general.


Ditto for both points here. As I mentioned on the previous thread, I typically read Steam or Gog reviews before I buy.

OP's other points are spot on, too.

Blogger bodenlose Schweinerei February 22, 2020 6:05 PM  

His last paragraph would be a bit more believable if many gamers didn't know that are more than a few developers who aren't dedicated to offering up quality products and providing quality service to their customers. As doctrev notes, a lot of DLC is just dirty chiseling, and that $60 you pay for the game can also easily give you 60 hours of frustration with bugs that never get fixed, wonky mechanics, endless grinding, and nary a response from the developers.

Blogger Up from the pond February 22, 2020 6:29 PM  

Say what you will about grabblers, they are excellent at working together to create revenue streams out of almost nothing.

Comic books, nickelodeons, candy, kitsch, gaming, jewelry, bundles of bad mortgages or used rags - whatever it is, they set up structures (markets) which make people spend and WANT to spend money on things that most people wouldn't give a cent for otherwise.

They know how to make outsized fortunes off marginal goods. If you've got a novel or a demo tape in your closet, they have a ticket to sell you. I think this is a big reason why they're tolerated long enough to get their hooks into a nation.

There's nothing inherently wrong with making marginal goods pay, as long as people can afford them. The trouble comes when desire overrides sense. An example of that is when people go into debt to buy things they don't need. Grabblers are excellent at making credit available as well.

Our platforms won't scale until we control media, education, banking, and politicians. Making a dent in any of those areas is good for our platforms. Taking power is key.

The alternatives to taking power are two: 1. renounce the world and become an ascetic, or 2. neither renounce the world nor pursue power. Option 2, the lukewarm option, means one will at best have some kind of second-rate position or niche position.

Blogger swiftfoxmark2 February 22, 2020 7:45 PM  

Wildcard has zero monetization for ark and even their dlcs aren't strictly necessary. They are having zero problems.

Not only that but Wildcard also rewards modders and gave free DLCs that were made by other users, mostly new maps.

That didn't bite them in the butt either.

Blogger Sterling Pilgrim February 22, 2020 11:47 PM  

Once Social Galactic has reached full implementation, I plan on covering games as an exercise in critique, like literary criticism but for games.

Blogger Archella February 23, 2020 12:44 AM  

This is neither here nor there, but it came to me, that a search engine, only for games (video, table top, card, all games), would be a pretty sweet thing. Just brainstorming here.

Blogger Gregory the Tall February 23, 2020 5:41 AM  

Rule of Thumb:
If you cannot feed a family from it don't do it. Exceptions:
a. You have no family at the moment.
b. You have or are making enough money to feed the family anyway and are doing it as a hobby.
c. The family accepts your hobby.

Blogger JAG February 23, 2020 5:43 AM  

Sorry for double post, but Zoe Quinn's depression quest was not worth writing about because of a focus on indie games

I actually played through it because I just had to see for myself. I'll play anything at least once from pong to high end pc, Stroker 64 to Gal Gun, and all points in between. Avoiding the genetic fallacy, the game wasn't completely worthless in my opinion. As interactive fiction goes I've played worse.

Blogger Restitutor Orbis February 23, 2020 12:04 PM  

I'm the industry insider who emailed Vox. It seems a few of you are taking issue with my comments on gamer spending habits. I worked for 5 years as a marketer in the MMO space and worked for 10 years in game journalism.

Within the media and entertainment industry, it's common to discuss "dollars per hour" spent for entertainment.
-- the average price of a movie ticket was $9.16 in 2018. The average movie is 2 hours long. That's $4.58 per hour of entertainment.
-- the average price of a cable subscription is $125. The average 25-34yo watches 64 hours of traditional TV per month. That's $1.95 per hour of entertainment.
-- the average price of a mass-market YA novel in 2017 was $8.49. The average YA novel is 50,000 words and the average reader reads 250 words per minute. So that's 33 hours of entertainment for $8.49, or $0.25 per hour of entertainment.
-- the average MMO subscription costs $14.95 and the average MMO player spends 22 hours per week playing the game, or 88 hours per month. That's $0.16 per hour of entertainment.
-- the average Call of Duty player (per Activision) pays $25 for a copy of COD and invests 160 hours per year into the game. That's $0.15 per hour of entertainment.

Videogames are literally one of the cheapest forms of entertainment available to consumers, yet videogamers by any metric complain about the price WAY MORE than moviegoers, bookbuyers, or tv watchers. Anytime game publishers make any effort to get more dollars per hour, it's seen as a grotesque cash grab. But it's not. Monetization of DLC and F2P is the only thing standing between game companies and annihilation. The inflation-adjusted price of videogames has been flat for decades, while the development cost of games has increased by an order of magnitude with each of the last three console generations. The cost per hour of entertainment of gaming during that time has gone *down*, not up.

Believe what you'd like about the spending habits of gamers, but if you try to build a business based on the idea that they are going to be a great source of cash flow, you're setting yourself up for a forced march to Chapter 7. The game industry is really, really, really hard to make money in.

Blogger VD February 23, 2020 1:02 PM  

Let reason be silent when experience gainsays its conclusions....

Blogger Solon February 23, 2020 2:18 PM  

@41

Your analysis of the monetary situation applies to AAA games perfectly, but much of that is spent on shiny graphics and rushing out unfinished product because the big wigs at the top need their new yacht.

Indie games and old games are becoming more popular because they're much simpler to code, have less pressure to force out into the market unfinished, and they dont have to spend countless (expensive) man hours on graphics development, and they come out FINISHED.

Do you understand WHY a game like, say, Master of Orion 2 is, to this day, considered one of the greatest space 4Xs ever made? Do you understand why Distant Worlds Universe manages to sell copies, even at full price, for a game with graphics that belong in the 2000s and mechanics that still arent well understood even to people who have played it for a long time? Do you understand why Hollow Knight was such an amazing metroidvania?

Until you do, a straightforward cost analysis will benefit you none.

Gamers are passionate, as a group. Gaming is a hobby. It's not about the money, it was never about the money, it's about the adventure, it's about the experience, and it's about the stories.

Gaming as a medium is better thought of as a story where the player can interact with it.

Would you buy Lord of the Rings when you pay full price for the first book, and then pay another 10 bucks for each of the other 5 books (yes, LOTR is a sextology, not a trilogy)? Probably not; it comes off as sleazy and underhanded, no matter how good the first book is.

Gamers want the whole story, and what we get is teasers. Its insulting and frustrating. Make the WHOLE story, sell it as is, and we'll happily shell out for the experience. If you want to add to it later with DLCs, make them free, plenty of great games do this, like Oxygen Not Included and Dominions (although Dominions has the issue of putting out new ones that arent a significant improvement on the old).

We're tired of buying partial games and then being expected to pay in more to "complete" the game, or waiting until you patch all the problems, or add in content that "should" have been included from the start. That's not "entitlement," that's expecting a product that we paid for to be complete. It's like buying a car but being told we have to wait six months for power steering, and then another six months for radio and CD players.

Stop it. Sell it complete, or dont sell it at all. And if you insist that the complete product will be more expensive, make it worth it, or lower your costs by stripping all your expensive executives and graphics designers. We dont care about the fancy paint job on the car, just that it runs and runs well.

Blogger B-Rex February 23, 2020 4:40 PM  

I would still love to see gaming content on UATV. there may not be a market for a gaming new site, but 90% of my time on youtube is spent watching gaming related video, so I'd love to have an alternative on UATV

Blogger Restitutor Orbis February 23, 2020 5:05 PM  

#43 Your 10-paragraph response couldn't have proved my point better. If I had wanted to write a stereotypical gamer response to prove my point, I'd have written what you just wrote. Game companies make $0.15 per hour from you. Your time is worth less to them than a 14-year old who likes to read Twilight trash fiction. Catering to your demands is simply a money-losing proposition, and therefore they don't do it.

You have fallen prey to a common, but typically left-wing, belief that game companies are immune to market forces and that pricing is somehow set by big wigs who need a new yacht. That's such utter nonsense I'm surprised to see at on this blog.

Let me spell out the economics for you:
1. The industry has sold around 105 million PS4s and 45 million Xbox Ones, for a total of 150 million consoles.
2. A AAA-videogame costs between $25 and $250 million to develop, with between 25% and 100% of that then spent on marketing. We will, out of generosity of spirit, assume $50 million per title.
3. The tie-in ratio is the number of games owned per console. For PS4, the tie-in ratio is about 9.6. It's lower for Xbox One but for simplicity we will round to 10 per console, for a total of 1.5 billion games sold.
4. There have been 2447 games released for PS4 since 2013. Virtually all of these were also released on Xbox One, with the exception of some exclusives. Let's call it 2500 games total.
5. With 1.5 billion games sold, and 2500 games total, a game company sells an average of just 600,000 copies of any game.
6. A typical AAA game initially retails at $60 and its price quickly drops from there until it reaches about $20. We will assume a mid-point of $40. Of this dollar amount, the console manufacturer gets a royalty, the developer gets a royalty, and the retailer gets a fee. The game company ultimately nets perhaps $30 per game.
7. 600,000 x $30 = $18,000,000. That is not enough to cover the development cost of even a Single-A console game, let alone a AAA console game with marketing.

That's the brutal economics of the game industry. You live or die by a tiny number of mega-hits which sell widely and for which you hope to figure out how to monetize more broadly.

The economics are *even worse* for PC gaming and mobile gaming. There are fewer PC gamers than console gamers, but the number of PC games released annually dwarfs the number of console games; and the number of mobile games exceeds that.

Given these economics, the real question is "why do game companies even make $50M AAA games in the first place when gamers might be willing to settle for single-A games with pretty good graphics." And the reason is market forces drive them to do so.

Consoles have a lifespan of 5 to 10 years. What drives purchase of a new console is upgrade in hardware performance and capabilities. What shows off upgrades in hardware performance is better graphics. Therefore the 1st party publishers and console makers are incentivized to develop, publish, and promote games with great graphics. The 3rd party publishers who want to compete are then forced to do the same. The competition for better graphics leads, in turn, to the explosive increase in game budgets every generation. This cycle is considered a *curse* by game publishers and they would love to escape it, but they can't.

They thought they'd do so in mobile games but they discovered that when the barriers to entry were lower, the market became overcrowded; and with the market overcrowded, the only way to get eyeballs on their games was with marketing. The amount of money that mobile game publishers spend marketing their games is orders of magnitudes higher than their budgets and devours their cash flow.

It's a brutal, winner-take-all business, and whining about "waaahhhh evil game publishers" isn't going to change the cold hard math that most games lose money, and most gamers aren't worth a 25 cents an hour.

Blogger Joe February 24, 2020 12:37 AM  

Things end, but that doesn't mean they can't be replaced by something. A hybrid that combines content creators with followers/fans could gain a lot of traction. It might not be a money maker but it could go a long way in the culture war, and can especially generate high levels of interest in various projects in a way that formerly depended on the old guard media.

It's simply not true that nobody cares about devs. I've watched several hours of Richard Garriot interviews, and was fascinated by inside stories of how Ultima Online was developed. Most AAA companies keep their talent behind closed doors for whatever reason. Chances are it's because they don't want to be eclipsed. If game developers put themselves out there, they will gain a following -- doubly so if they "give back to the community" by hosting seminars or what have you.

Blogger The CronoLink February 24, 2020 4:26 PM  

Sounds like the foundation of current game industry is based in a lot of business mismanagement and will crash because the market will force it to crash.

Blogger Unknown February 25, 2020 8:21 AM  

To anyone looking for a good gaming review channel I recommend "Worth A Buy" on YouTube.

It offers well spoken, witty, logical, honest reviews by a seasoned gamer.

The theme of political correctness and SJWs ruining AAA gaming are one of the reoccurring topics of this channel.

Well worth a watch.

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