Pachter: 'We Now See Just How Wrong We Were'

[NJ5]

Edouble24 said:

Some of them are losing money based on releasing bad games. I know companies are losing money this year, but that's normal in any industry. Every industry has it's downtime and the lack of strong releases is hurting 2009. The revenue of the game industry is just fine, poor management may be hurting some companies as they adapt to change. It's nothing to be doom and gloomy about. Some companies report decreases in profit while others report increases. That's just how competitive markets are. 2010 will easily move things back into place due to big games actually releasing. Companies like EA and Activision will be just fine in the long run.

Companies aren't just losing money this year. Many of them have been losing money basically since the generation started. That goes for EA, Take 2 and THQ. Ubisoft and Activision are the ones doing better.

Activision I'm sure will be fine, if nothing else because they have Blizzard.

EA, they have downsized by about 25% and are still losing huge amounts of money. It's not a one-time situation that you can brush aside as being normal.

You can attribute it to "just bad management", but I don't. I attribute it to development costs rising faster than revenues (which yes, can also be seen as bad management, but at a more critical level). In each of the last few generations the average development cost of a game has doubled. The size of the gaming population and revenues certainly haven't (even after increasing the price of many games from $50 to $60).

It's basic mathematics that the game industry's path was unsustainable. We're now seeing the results of that, and will continue to see them.