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.

VIDEO GAMES SALES
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.
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"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".
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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.
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"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.
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"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.
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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.

The Long Tailed Game Industry

I think the biggest limitation that the game industry is going to face if it wants to take advantage of the "long tail" effect is that currently it is impossible to get games onto anything other than the PC in a distributed fashion. Most of the major digital distribution systems only support Windows PC's and likely this will soon require Trusted Computing systems to ensure that games are not being redistributed.

While some are predicting the "death" of consoles, I suspect that what you're really going to see more of is the console-ification of PC's. More and more they are going to be closed much like PC's. Perhaps the real convergence is the loss of consumer flexibility. Serves us right, we've been going along this path for a while without realizing it.

At the same time, the power of the long tail is that it tends to fight regulation. It prefers openness, but the dominant understanding of the PC and video game console are at the other end of the spectrum. At the same moment as more companies are moving toward open models, others are further closing themselves off.

The Long Tail for Games: Survival of the Fittest?

Pick up Deux Ex today and see what I mean. We've been next-gen spoiled. I love the game, but it can't help looking awkward and primitive next to current releases. This may be overcomable: black and white films may have looked "primitive" when the transition to color was happening; but now filmmakers use it for effect, and film buffs appreciate the black and white medium for its own merits, its own beauty. Music doesn't have this problem either - those recordings made forty years ago still sound good, and in fact modern bands are playing around with recreating that garage style, that recorded-with-a-mic-in-a-coffee-can sound. Will games go retro like this too?

There are some games that don't age: Wind Waker is a stunning example of this. Because of its cel-shaded art and stylized animation, it looks just a fresh as it did when it was released. This problem is a version of the uncanny valley - the more "realistic" a game tries to look, the less successful it becomes as a representation of reality as graphics technology overtakes itself.

I have other questions about the long tail as it applies to games, too. Do game companies care enough about it to release their back catalogues? In other words, are they being paid enough to do that? Services like GameTap are of course doing a superb job of collecting and releasing a wide collection of games. I don't know what sorts of deals they are doing - for the companies, if GameTap pays anything, it's pretty much free money, so that's wonderful.

Don't Step on my Long Tail

Digital distribution and eCommerce are at the heart of what I do for a living. And nowhere is the Long Tail more at home than at the junction point of digital distribution and eCommerce. Someday, when greater volumes of content are featured on XBLA, it should turn into a perfect Long Tail paradise, right?

Well, that’s what I’m hoping for. But there are a few potential issues that muddy the waters. Some of them are issues facing all community-centric online systems. Some of them are specific to video game services. I’ll give you a couple of examples, and hopefully you can give me some ideas in return!