advance in sudden leaps: since the 1980s, an entirely new generation of machines has arrived approximately every six years, each time bringing with it a wilder rush of growth followed by relative decline. Given the increasingly vast amounts of capital required to develop a next-generation console, this cyclical pressure has over time made the games industry both volatile and highly reliant – among mainstream publishers – on coming up with hit titles, whose revenues offset the increasingly huge up-front costs of hardware and software development.
In the first few years of the twenty-first century, there were genuine fears that the mainstream games industry was becoming a victim of its own success, crushed under the weight of escalating budgets and consumer expectations, with profit margins actually shrinking and publishers becoming increasingly risk-averse. The price of a major game failing after a year or more of development and the expenditure of a seven- or eight-digit sum could easily be bankruptcy. As the CEO of one of Britain’s largest independent games developers explained to me, ‘the costs of making a big game have escalated faster than sales in the shops. Sales go up 15 per cent a year, but creation goes up 25 per cent. That means it is very difficult now to make a game that sells enough to be profitable.’ Gaming was at once an over-invested, dazzling and yet strangely constricted world.
Digital distribution has since begun to transform this situation, opening the floodgates to smaller and more innovative projects by allowing games to be sold directly to their audience online rather than through the expensive, marketing-intensive and extremely limiting arena of retail outlets. Despite games’ numerous natural advantages as media in a digital era, however, it’s far from the case that companies across the industry have simply breathed a collective sigh of relief and begun to make a fortune online. For a start, although their products may be digitally robust in comparison to print or music, the business model of most major publishers still relies on the most conventional of twentieth-century tactics: selling boxed products out of shops, backed up with multi-million-dollar advertising campaigns and quasi-monopolistic distribution networks. Now that even minor competitors are able to sell directly to consumers online, many of the biggest games publishers around are facing the paradoxical situation of a hugely successful industry within which their own financial exposure and levels of risk are higher than ever.
Digital distribution has ushered in a whole new class of medium-priced ($5 to $20) titles with less glossy production than the biggest budget titles, but far more scope for experiment and, often, old-fashioned gaming fun: good news for consumers, and for levels of creativity in the industry as a whole, but bad news for companies for whom such offerings won’t be able to replace the kind of income generated by an old-fashioned boxed sale.
While consoles remain by far the most valuable sector of gaming for the moment, it’s above all on the open internet that gaming’s future is taking shape. And, for all the success of the mid-priced movement, this is looking increasingly like a tale of two extremities. At one end are the makers of virtual worlds – companies creating realms that millions of people can enter, embodying themselves in virtual alter egos and struggling to attain virtual items and achievements within an entirely absorbing context. At the other end, though, is perhaps a more unexpected class of game that draws as much inspiration from the industry’s very early days as it does from the glittering prospect of evermore-advanced technologies. This is what is known as the causal or ‘independent’ gaming sector, a field that is enjoying more growth in terms of actual games and users than the rest of the industry combined.
Casual games tend only to cost a couple of dollars, or even to be
In the first few years of the twenty-first century, there were genuine fears that the mainstream games industry was becoming a victim of its own success, crushed under the weight of escalating budgets and consumer expectations, with profit margins actually shrinking and publishers becoming increasingly risk-averse. The price of a major game failing after a year or more of development and the expenditure of a seven- or eight-digit sum could easily be bankruptcy. As the CEO of one of Britain’s largest independent games developers explained to me, ‘the costs of making a big game have escalated faster than sales in the shops. Sales go up 15 per cent a year, but creation goes up 25 per cent. That means it is very difficult now to make a game that sells enough to be profitable.’ Gaming was at once an over-invested, dazzling and yet strangely constricted world.
Digital distribution has since begun to transform this situation, opening the floodgates to smaller and more innovative projects by allowing games to be sold directly to their audience online rather than through the expensive, marketing-intensive and extremely limiting arena of retail outlets. Despite games’ numerous natural advantages as media in a digital era, however, it’s far from the case that companies across the industry have simply breathed a collective sigh of relief and begun to make a fortune online. For a start, although their products may be digitally robust in comparison to print or music, the business model of most major publishers still relies on the most conventional of twentieth-century tactics: selling boxed products out of shops, backed up with multi-million-dollar advertising campaigns and quasi-monopolistic distribution networks. Now that even minor competitors are able to sell directly to consumers online, many of the biggest games publishers around are facing the paradoxical situation of a hugely successful industry within which their own financial exposure and levels of risk are higher than ever.
Digital distribution has ushered in a whole new class of medium-priced ($5 to $20) titles with less glossy production than the biggest budget titles, but far more scope for experiment and, often, old-fashioned gaming fun: good news for consumers, and for levels of creativity in the industry as a whole, but bad news for companies for whom such offerings won’t be able to replace the kind of income generated by an old-fashioned boxed sale.
While consoles remain by far the most valuable sector of gaming for the moment, it’s above all on the open internet that gaming’s future is taking shape. And, for all the success of the mid-priced movement, this is looking increasingly like a tale of two extremities. At one end are the makers of virtual worlds – companies creating realms that millions of people can enter, embodying themselves in virtual alter egos and struggling to attain virtual items and achievements within an entirely absorbing context. At the other end, though, is perhaps a more unexpected class of game that draws as much inspiration from the industry’s very early days as it does from the glittering prospect of evermore-advanced technologies. This is what is known as the causal or ‘independent’ gaming sector, a field that is enjoying more growth in terms of actual games and users than the rest of the industry combined.
Casual games tend only to cost a couple of dollars, or even to be
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