Global Game Industry News Blog

Wednesday, April 18, 2007

BBC on the Game Industry

There is an excellent article on the BBC website examining the video game industry. I hate to say it, but it actually exemplifies some of the differences in coverage that can be offered from blog sites to those on new sites which have attempted to get at the deeper story, willing to take a little extra time to dig more deeply.

Consoles games
2006: $11.2bn
2007: $12.2bn
PC games
2006: $3.9bn
2007: $3.7bn
Source: Screen Digest

Games industry enters a new level
Hardware makers are losing hundreds of dollars on every console sold, and games publishers face an "increasingly difficult environment, as rising development costs and small user bases [mean] that return on investment in next generation games development is unlikely to be achieved before 2008," according to media analysts Screen Digest.

More importantly, though, the video games publishers are facing a revolution of their business model.
"Scale does matter" in this industry, says Mr Florin, because "the more complex games become" the more tools are needed "to keep costs under control".
The real money spinners are console games, but subject to the ups and downs of the hardware cycle as consoles launch or go out of fashion.

To ensure steady revenues, says Mr Florin, games publishers therefore have to build strong brands.
"Wonderful innovative titles are sometimes ignored [by consumers], while some repetitive titles with minor improvements in game play and graphics provide much better returns to the games publishers," he says.
"You only learn what you can do with these platforms over time, and as a result using 100% of Playstation 2 [PS2] is nearly as good as today's starting point of PS3 games," says Mr Florin.
Games publishers face a dilemma, though. To reduce cost, they would love to put their games on as many platforms as possible.

It used to be relatively easy to port a game from one console to the next. Nintendo's "Gamecube, the Xbox and PS2 were much more alike," says Mr Florin.

Next generation platforms are different, he says: "Now we have to have very distinctive games for each machine and can't port that much."

That plays into the hands of the console makers, who want exclusive games to lure gamers to their platform.

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