Are 3rd party publishers sealing their own demise?

[Ail]

Gamerace said:

I call this the PS2/Wii effect.  Malstrom calls it a flood.  While Nintendo continues to rack in billions with the unstoppable Wii/DS and their cataloge of evergreen titles much of the rest of the industry is floundering.   I just read a couple articles which amount to: Activision see huge increase in profit (CoDWaW/GH:WT) but THQ has huge loss, cuts 250 jobs/games.

http://www.latimes.com/business/la-fi-games6-2008nov06,0,7224919.story

THQ's response:

"There is a softness at retail, not just in the U.S. but globally," THQ Chief Executive Brian Farrell said in an interview. "The big titles are still working. So we're going to focus our energies on fewer titles, make them bigger and better."

In another article EA posts big losses, and cuts more jobs, cancels more games.

http://www.latimes.com/business/la-fi-games10-2008dec10,0,5143813.story

EA's response:

Company spokesman Jeff Brown said consumers this year were buying more intensely from among the top five bestselling games, whereas in the past they had spread their purchases more among the top 20. So publishers are deciding to make fewer titles.

"We are going to make some changes in our publishing strategy to publish fewer games but making bigger bets on them," Brown said.

 

Are these people stupid?! Or just plain blind?  Worse, from what I've seen this is a prevading attitude in the industry.  Games have to be bigger!  Better!! More expensive!! If we are to compete.   Are they not listening to themselves?  Only the top, the creme de la creme of AAA action games are selling.   The top 5.  Not everyone can be in that group.  Bigger bets will mean bigger losers, bigger losses and bigger layoffs.

Nor do they seem to realize why this is.   In the PS2 days a broader range of games sold well and everyone could benefit.   Now only a handful of games are money makers.  Why?  Because the 360/PS3 have a narrower market than the PS2.  PS2 was last generation's Wii and PS3 put together.   Now the more hardcore and casual sector's have been split.  And while the 'core' gamers buy a lot of games even they have finite cash.  They are also the most discriminating consumer and the one most likely distracted by the next big thing.  A couple poor reviews and your game is history.  Forgotten almost instantly.   On the PS2 developers had the benefit of the more casual consumers taking up the slack and buying AA games because they want what interests them and are less concerned with review scores.

But this generation 3rd party developers have treated the casual market which is by and large on Wii like idiots and saved all there tops titles for the HD core gamers.   They never made any AAA Wii games, never developed a market on Wii for those types of titles and now doubt they can sell any on Wii.

The other factor of course is development costs.  This is a huge problem.  There's a reason Wii isn't HD.  Nintendo correctly realized it wasn't worth the cost.   If you made a game on PS2 for $10-30m for a 100m userbase you had a good chance of realizing profit.  Now they are making, mostly, the same games in HD for a 35m userbase at three times the cost.   Some games are realizing similar sales despite the smaller userbase but none are realizing the same profits.  And those that sell less because of a smaller and more core userbase are screwed with huge losses.

What should they do? Diversify.  Ubisoft makes some core games like Assassin's Creed and PoP but they also have the Imagine, Petz, My Coach, RRR and other lines that cater to totally different market segments.   Ubisoft is profitting because of it.  Even if one AAA title (Haze) bombs, they have stable profit from those casual titles until the next AAA game releases.  Now Ubisoft has some pretty crappy casual titles and I don't endorse selling 'casual' gamers crap - give them respect and quality too and they'll reward you but tapping the expanded market is the way to go. 

Yes, EA has Boom Blox and THQ De Blob.  But Ubisoft and Activision have casual brands (Imagine/GH) not casual titles.  EA's only casual brand is the very long in the tooth Sims (MySims) and maybe Rock Band which they've totally screwed the pooch on when it comes to Wii.  THQ has none and frankly De Blob (imo) isn't all that casual either.

Now if they simply cannot grasp what Nintendo is doing with evergreen titles then do like Ubisoft - target a sub-set of people (girls) or like Sega is trying to do (35+ gamers - Conduit/Madworld/HoTD:Overkill).  Heck there's this huge market of adult women who are almost totally ignored currently.  Make something for them.   Or make AAA games for the gamers owning Wiis!

But no.  They'd rather cancel AA games and some AAA games and try to outdo Call of Duty: Modern Warfare 2 next Christmas.   Does Activision look worried to you?  No, me neither.  See you at the funeral.

They don't really have a choice.

EA needs to generate several billion of dollars of revenue every year to keep sales just steady and Boom Blox might be nice and all but you hundreds of Bloom Blox to generate that kind of revenue...

What is happening too is, especially with the recession some gamers tend to purchase the AAA titles and rent the others and that's the revenue loss for the non AAA titles.

If you look at these holydays too there were way too many A+ titles released at the same time and some are suffering due to that so they need to cut back on the number of titles ( and they need to spread them more over the year.......).

There's room for 4-5 AAA titles around the holydays ( CoD and GeoW2 didn't seem to affect each others sales much) so each of the big company can have its big title...

Like I already said in the past, the gaming industry is becoming like the movie industry. Each studio will have it's blockbuster they are betting on and they will market the shit out of it ( the same way every year we get 4-5 blockbuster movies in the May-July time-frame).