Article: What's Killing the Video Game Industry?

[theRepublic]

Great article.  This will be bookmarked.

 

Despite GTA's declining returns, the initial sales numbers were so compelling that other companies are desperate to follow suit. During Electronic Arts' last quarterly call, CEO John Riccitiello explained that the company would be pursuing blockbuster hits as a primary revenue source. Perennially successful sports franchises like Madden—titles that always come out on time and on budget because the company's bottom line depends on it—have given EA a bit more wiggle room than its competitors. Riccitiello has decided to use that wiggle room to craft expensive games of exceptional quality, products that don't ship until they're deemed perfect.

The industry has long discussed going with this "Hollywood model," in which a few games/movies turn a profit, those hits more than covering the other losses. The analogy between the Hollywood blockbuster model and the games business falls apart, however, because of the huge difference in overhead costs. Electronic Arts steadily employs 7,400 developers. The industry standard is a $10,000 man-month, meaning the company burns through more than $74 million for development each month. The big Hollywood studios, by contrast, make movies by giving money to temporary production companies, which then hire temporary crews with one-project contracts. The temporary entity will make the film from start to finish. And once production is complete, the studio receives a finished product that it can distribute to theaters—without the continued overhead expenses that game publishers often face.

This is insane.  The industry is already "hit" driven.  Only 20% of video games make a profit.  Do publishers really want to push farther in this direction?

Publishers have really painted themselves into a corner by trying to push graphical boundries with every other game they sell.