Opinion: Gamers are behind the Game Industry Implosion

[gumby_trucker]

kitler53 said:

now you can say whatever you want about the "hardcore" game industry.  but the fact remains, the wii audience is an audience that the industry didn't expect, doesn't understand, and has no clue to why they were so enamored by the wii.  i mean, the industry gave wii sports a 76 on metacritic.  the industry thinks wii sports is a mediocre game.

so tell me...what should the industry have done?  porting over their usual fair like CoD didn't go so well.  it sold terribly on wii compared to the ps360 and really why should we have expected any different?  games like CoD where shunned by this new casual wii audience for at least the last 2 generations.  why would it suddenly become appealing?

some games came that tried to replicate the wii sport/play formula. some failed.  some, like carnival games, inexplicably succeeded. 

you said, "3rd parties shat all over the Wii and produced subpar 'casual' products which to the majority of the audience was their first encounter with this medium." but tell me, what was it that didn't follow the wii sports/play example that was so wildly successful?  low budget graphics, check. simple gameplay mechanics spread over several small (mini) games, check. a non threatening, cheerful artistic direction, check.  if these games were soo subpar than please give me the point by point breakdown of where the differences in quality reside.

but more to the point, nintendo couldn't even consistently replicate their winning formula.  wii music, fling smash, mario sports mix, rhythm heaven, wii play motion.  nintendo had a lot of late in the gen losses and more importantly, a complete lack of raging successes.  whatever formula for success nintendo found early, they lost it. 

so i'll ask you again.  what should the industry have done?  walk away from what they do best in hopes they can figure out how to deliver to a new consumer they don't understand?  or stick to their "limited" but well known audience that has been with them for ages?  

Sorry for the late reply. I bolded the main points and will try to address them all.

This industry is a business, and just like any other business, money talks. More accurately Profit talks. You gain profit by doing two things: Increasing revenue and decreasing expenses. 

For the past ten years Nintendo have been extremely vocal about rising expenses due to graphics becoming more advanced and production values going up, while revenue from game prices and sales hasen't increased accordingly. Consumers obviously benefit from this in the short term, and as it happens, so did Nintendo's competitors in the console market, as it allowed them to pursue a direction Nintendo would not. The problem with their direction, besides contributing to the growth in expenses, was that they became increasingly dependent on a stagnating market. Their user base wasn't static, but it was nowhere near growing as fast as it needed to in order to keep up with expenses. This was as plain as the sun to anybody with minimal business education. You may recall Nintendo, despite losing in sales and market share during the GC years, actually ended up leading in profit. How is that so? Becuase they were making tons of revenue developing and selling simpler hardware and cheaper to produce games on the GBA. And unlike Sony or MS, they also weren't losing money in their home console business. 

They should have been the least worried about the future of the industry during those years, and yet they were years ahead of anyone else in acknowledging these problems. They could have kept this information to themselves and perhaps gain a competitive advantage going forward but they didn't. Long before Wii or even DS were announced they were already talking about expanding gaming, and reaching a bigger audience. The fact that nobody in the industry bothered to listen is just another sign of how backwards the industry is. Nintendo didn't magically come up with Wii Sports or Wii Fit. They weren't lucky to know what appealed to a broader market, they educated themselves by doing research years in advance. Just like any smart company would do, they saw a worrying trend ahead of time, and through research and experimentation developed a strategy to maintain growth by adapting to it.

When you say 'the industry didn't expect and didn't inderstand the new audience', what you are saying is that the majority of the industry didn't bother doing their homework, and didn't care about the obvious risks facing them in the near future. By all reasonable considerations, they were simply failing to do their own job and consequently have only themselves to blame. Capitalism is a bitch like that, you snooze you lose.

By the time they had realised this it was almost too late. Wii had been out for at least a year, gaming was clearly experiencing a huge wave of economic growth the likes of which it hadn't seen in nearly two decades(!), yet they weren't gaining anything from it! The entire industry was in the midst of a financial boon so big it effectively shielded it from the global financial crisis for the better part of two years, yet only a small percentage of the industry was prepared or willing to capitalize on it.

When you aren't prepared for something ahead of time, the only thing you have going for you is luck. And as luck would have it, some last-minute cash-grab releases succeeded, and some didn't. The industry looked at the success and failure of their own various releases, some of higher quality, some of lesser quality, and saw no pattern! Instead of facing the reality of their situation they blamed the audience for being 'too casual' or 'too unpredictable', but these are just lies aimed at investors. The real truth is that they didn't have a clue what was going on becuase they never bothered to do the research in the first place.

To be clear, predicting market trends is difficult, and sometimes you bet on the wrong horse and make expensive mistakes. Mistakes like Wii Music or Wii Play Motion. Those are given the credit of being called mistakes because they were based on a thought-out plan that eventually didn't fit with consumer demand. Luckily if you're a big company, your success doesn't depend on one or two titles, you have a large library of releases, you win some, you lose some, but at the end of the day if you're smart and don't put all your eggs in one basket (and plan ahead as I've already emphasised) you survive and hopefully thrive. That's what Nintendo did this generation, in a nutshell. There is plenty to criticize them for, and there is much they can do to improve, but comparing Nintendo to some of the other big publishers is akin to comparing a simple-minded man to a headless chicken!

Other big publishers' failures don't even qualify as mistakes becuase they were half-assed random moves with little to no planning behind them! The only planned move the industry was able to execute is sticking to what they know. Naturally this meant addressing none of the problems that are the premise of this discussion! So we get bigger more expensive versions of the same game every year while the industry scrambles to somehow gain additional revenue like trying to extract water from a stone in order to cover the rising costs. We also get a continued emphasis on putting all of your eggs in one basket which means if you're a giant like Activision, instead of having one or two CoD teams, there are now ten teams, and in the process you have swallowed up tons of talented independant studios and transformed them into factory workers on an assembly line.

That's if you're lucky enough to be Activision. If you aren't that big and managed to corner yourself into sticking only to what you know, then the bets have just gotten a whole lot higher! You're in a crowded market, which means you have to put your entire weight behind each individual release and you will be severely punished by the competition unless you do AAA (AAAA?) work consistently. You are forced to release less games becuase each one has to be bigger and in turn each failure is a bigger blow until you get to the point where if you can't guarantee your own success you are dead.

As you said, even Nintendo can't guarantee every title they release will be a success, so in other words, if your in this position, you're on life support and it's just a matter of time until you make the mistake that kills you.

What is the moral of this story?

A) Always plan ahead.

B) Never keep all your eggs in one basket.

C) Know that mistakes are inevitable, so do your best to keep them cheap.

D) You'd be amazed at how many top level business men seemed to have skipped class the day these were taught..

ishiki said:

wouldn't apple/smartphones still be considered on that path, beings many many people  that play these games didn't normally play games. 

But, they are getting more and more games that are "casual"? Isn't this case similar to the wii except for that it's still growing. Many "hardcore" gamers dismiss this too.

The fact that there is a market for "casual" games on smartphones can be seen as a possible indication that there is also a market for bigger games in the general population. But this isn't a clear cut conclusion, especially with pricing models being what they are on those platforms. Go in to a dollar store and look at all the crap that gets sold there. Obviously there is a market because these stores are plentiful. But does that mean Walmart or Sears should start selling premium versions of exactly the same products? Hell no! People are much more likely to buy something they don't need or don't even care about when it's dirt cheap. 

Not only does this mean the seller and manufacturer in such a system are revenue-choked, it also means that as time goes by, the consumer will expect prices on such products to remain low, which means the manufacurer will have to make a greater and greater effort to convince them to spend more. And as time goes on, competition in every niche will only continue to get more fierce. So growth is effectively choked too. So little revenue and little opportunity for growth in a market that revolves around inessential products that are meant to entertain. Sounds like a problem to me, becuase both quality assurance as well as originality require considerable investment. Without that invenstment, either quality goes down to the point where the consumer loses interest, or failure to find new ways to entertain causes the consumer to lose interest.

And we're back to square one. Only this time even if a different business model comes along, developers will have to work much harder to change the consumer's bias towards the product. This is because by this point, to the consumer, the product and the business model are one and the same. Part of the same service. Once games are ingrained in their consciousness as cheap throw away thrills it is very difficult to change that opinion.