Article: What's Killing the Video Game Industry?

[SlorgNet]

I'm not convinced by this article.

> Games weren't always expensive to make: In the early days, a boy with an Apple II could rule
> the world.

Boys and girls still can. Cellphones? Handhelds? Does the Nintendo DS ring a bell? Not every game has to be MGS4.

> be heavy initial investment costs to retool—Electronic Arts spent a record $372 million on
> research and development during 2008's third quarter—they expected returns on that
> investment, something that's so far failed to materialize.

EA's problems are homegrown: overreliance on less-than-stellar ports, plus derivative forms such as sports spinoffs which get churned out every year, and are really extended fan service to a limited audience. The studios in trouble are the ones which are most like Hollywood studios, actually.

> 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.

The article leaves out one crucial point: Hollywood gets lots of its money from private equity and pools of leveraged capital, especially from the Eurobanks, and that honeypot is gone forever. Live by leveraged credit, die by leveraged credit. The games industry should absolutely NOT be like the Hollywood studios, which are dinosaurs heading for extinction, but should depend on us, the consumers: create good games, and we'll buy them.

> Make the story shorter. Use lower-quality graphics. Recycle proven tools and technology.

In other words, churn out overpriced crap, because us consumers are idiots and are desperate to subsidize an unworkable business model. Not. Going. To. Work.

The videogame industry is fundamentally healthy. Sure, some big names need to cut back, but that's normal in a $50 billion annual industry. There will be churn, some stars rise and some fade away.

> though, doesn't seem to have absorbed the lesson of this success story. EA doesn't need to
> find its own Grand Theft Auto—it needs to let 1,000 Portals bloom.

Not at all. The GTAs and the Portals can and should coexist. There is no single biz model which dominates the game industry, nor will there ever be one in the future - the thing is too big, complex and fans have too much power for any monopoly model to ever work again.