Update: OnLive reportedly hit with mass layoffs, possibly filing for bankruptcy

[richardhutnik]

mrstickball said:

richardhutnik said:

DirtyP2002 said:
So if onlive was losing money, I doubt Gaikai or any other game-streaming service was ever profitable. Future of gaming? Not so fast.

It is just a bubble that bursted really quick. Zynga and Facebook games are on their way down as well. Next stop is free to play games, before we go to mobile gaming. I am not saying these business models will be dead and gone forever. I am saying they will come back to a more reasonable rating. At the end of the day people will realise that 3 million people paying $60 to play a game offers more chances for profits than 10 million people paying nothing, but a fraction might eventually use microtransactions to buy ingame items for 99 Cent.

Thing is that the barrier to entry is so low, and new developers keep jumping into this low end market, that the supply is large that it drives costs down to that point.  Companies can also recycle old IP and put it out there cheap also.  The thing also, about the $60 to play games, is those studios are also going under.  Most games at that price point don't make back their money.  There is talk of, for example, the developers of the Darksiders studio going under, if sales figures aren't met.

Reality is that there may be a contraction going in the videogame industry, that will shrink it and realign it.  There appears to be no magic bullet spot either.  MMOs are now free to play, and Zynga has issues, as does large studios and also the 99 cent arena.  Maybe the target is $10-$20 range stuff as the sweet spot, with DLC added later.

Not at all. In transition? Absolutely. But in terms of revenues generated, the industry is stronger than ever. Its just not in the retail space. You're correct that there's no magic bullet, as the way people play and what they play is more diverse than ever. But that doesn't mean it is, or will, contract.

If the person I was responding to is correct, then there is NO segment of the videogame market that is profitable, because they named them all.  If you look at it, the two biggest names in the videogame industry: Blizzard-Activision, and EA, are seeking buyers.  You don't seek a buying unless you are gearing up for retirement or have concerns for your financial future.  Zynga has peaked also.  MMOs are becoming free to play, so shifting there, hoping they can get micropayments.  And then if the 99 cent realm is not going to cut it, what is left, particularly in light of question the OnLive model?  Having a few winners on top, with most everyone else losing money, is not a viable model for business.  I didn't say the industry was going to crash like it did during the 1980s, but there are risks there of contraction and repositioning.  You can't just say, "Based on revenues, the industry is stronger than ever" because it fails to account for profitability.  If they industry has costs exceeding what it generates revenue-wise, to get the revenues, it is going to end up having to contract.

And revenues could shrink also.  The market may not decide to jump on next generation either, or in ways the industry would like either.