Is shrinking market size all that bad?

[sundin13]

Dr.Henry_Killinger said:

sundin13 said:

Errr...but that logic is broken from the start. First of all, no game sets "everyone" as their target demographic. From Call of Duty, to GTA to Mario Kart, there is always someone that is excluded. Therefore, target audience is generally fixed into some group within that everyone, although it may be a big group.

Its an example, a thought experiment. Logic means any reasonable argument, and that is a reasonable if abstract example.

Now if a game sets its target audience as a big group, why would the game have to be any different whether the size of the same group is 10mil or 20mil people? The game might try to branch out into different groups to try to get some crossing of audiences, but then its just dipping into two target audiences. Once again, theres not really any differences based on the size of that market. The way you are talking about this makes it sound like devs are trying to do something to please each person as an individual, while they are actually trying to please (or leech money out of) a collective, with no regard for the individual.

That's not what I'm saying. I mean something as simple as Bioshock Infinte's cover ended up being determined changing to entice the most consumers, let alone what happened to Songbird. If the game was more focused on appealing to a more dedicated audience rather than appealing to the masses, games could be more creative. Games could be more inline with developer's visions rather than simply what sells the most.

I think what you are getting at is the fact that games are allowed to be bigger due to the fact that they have a larger market size, which is certainly true, and yeah, that may lead to less risks being taken, but that is what I mean by development philosophies. In the current market, there is not really anything preventing developers from branching out into niche markets except for the fact that everyone is fighting over the biggest slice of pie. Market size doesn't increase cost, greed does. That is a problem with the management of publishers, not with the market size...

Sure, you could have the same effect by reorganizing publishers, but just because the market shrinks doesn't mean revenue will be lost, is what I'm saying.

The real problem with your argument is the assumption that shrinking the market size would make anything better...first of all, the market is slow to adapt, so the transition period would likely be difficult for a lot of companies and catastrophic for others. If they cant bring in their millions with their big budget games, they may collapse as we have seen many times in the past. One underperforming game can destroy a company.

But you're making the same lkind of assumption in that shrinking market size would make things worse. If markets are slow to adapt then a fast growth would be just as destructive as a fast increase. If it is a matter of rate then, a slow decrease could easily be beneficial. Consider this. These companies came into being on smaller markets and died on our current larger one. Remeber THQ, Midway? If you don't join these Mega Corps like EA and you aren't japanese or on PC your gonna have a really hard time trying to comepete against the giants.

Secondly, I don't see how decreasing the market size would increase variety. Publishers would continue fighting for the largest slice of pie, however that slice will be smaller, meaning that overall the games may become smaller, or fewer companies will be able to obtain that goal.

The importance of publishers came about because devs need more money, a smaller need for money would mean that companies like EA wouldn't be able to push companies like Bioware and DICE around.

Basically, you are saying that a smaller market size will force publishers to employ more variety, but who knows if that is true. We have already seen plenty of developers move to smaller games, such as iOS/Android games, and change their business models in ways that aren't beneficial to us (sucking more money out of us with each game through DLC and whatnot) because their just isn't enough pie to go around. In a larger market, there are more niches and more places where developers can expand and exploit in ways that would be tremendously beneficial to consumers, but they don't. That is a problem with philosophies, not with the market size. With a bigger market, there are more possibilities. After some thinking, I can see what you are saying, but you are thinking that publishers will adapt in one way when we have seen plenty of times, that they would likely follow a different path.

We can't know its true, but we do know its opposite, that the increase in marketsize means games have to take more risk and be the same will be true.

Finally, this "1 million on a game that sells 2 million makes a lot more money than a 15 million dollar game that sells 10 million." is simply not true...assuming, 1mil sales = 1 mil $ (the scale likely leans much to more than $1 per sale), you are saying making 1mil$ is better than making 5mil$ which isn't true obviously. A publisher would rather have a title that makes it a ton of money than a title that makes it a smaller amount of money, hence why everyone is chasing the biggest market. If what you said were true, we would see many more niche games than we see today...

In that example, the game that costs 1 mill makes 1 mill in profits, the game that costs 15 mill loses 5 million in profits. 1 mill > - 5mill

Not to mention on a budget of 1 mill a dev can self publish and tell the publisher to screw off, while a dev that disagrees with its publisher after asking for 15 mill gets closed down, for refusal to cooperate.

(that was tiring ;-;)

Except, its an example.

Okay...uhhh where to begin:

-"If the game was more focused on appealing to a more dedicated audience rather than appealing to the masses, games could be more creative." You say that is because of the market size, I say development philosophy. Once again, the world you are envisioning can exist in this current market with a change of philosophy and be more strongly supported than it would otherwise be in a small market (under identical circumstances, sales are higher with larger install bases).

-"Sure, you could have the same effect by reorganizing publishers, but just because the market shrinks doesn't mean revenue will be lost, is what I'm saying." And just because the market shrinks doesn't mean anything will get better either, however it will mean that less games will be sold overall.

-" If markets are slow to adapt then a fast growth would be just as destructive as a fast increase." Why would more people buying games ever hurt anyone? The reason we lost a lot of developers/publishers last gen is because they miscalculated demand (and in some cases, skill). Also, as I've said many times, the problem is that everybody is trying to fit into the same space (and trying to compete against giants), when there is plenty of untapped potential in the market.

-"The importance of publishers came about because devs need more money, a smaller need for money would mean that companies like EA wouldn't be able to push companies like Bioware and DICE around." First of all, a smaller budget would likely shrink the scope of the games Bioware tends to make exponentially. Second of all, publishers are going to be necessary unless game dev costs drop well under 10mil and that isn't going to happen any time soon, in a time when costs can be in the hundreds of millions... Finally, there are other things that publishers do, such as marketing which typically doesn't get handled by the dev teams.

-"In that example, the game that costs 1 mill makes 1 mill in profits, the game that costs 15 mill loses 5 million in profits. 1 mill > - 5mill" My mistake here...I flipped those two numbers in my head. But lets take a more realistic scenario where 1 sale = $10 (once again, this number is generously low):

2mil cost->1mil sales->10mil income=8mil profit
15mil cost->10mil sales->100mil income=85mil profit

See the difference now?

-"Not to mention on a budget of 1 mill a dev can self publish and tell the publisher to screw off, while a dev that disagrees with its publisher after asking for 15 mill gets closed down, for refusal to cooperate." If you knew anything about developing games, you would know that 1mil really doesn't get you very far...Publishers aren't going to become obselete any time soon.

Closing statement:

The fact is, we've seen the market contract before. Just look at handheld gaming. Last generation was huge and amazing with games fitting into every niche imaginable. Big games and small games were working together in harmony to create a healthy gaming space. Then, the market shrunk. Instead of adapting to the changing market and focusing on making smaller cost games with more diversity and whatnot, handhelds were largely abandoned in favor of smartphone and tablet gaming. We have seen numberous companies state their intent to support phones more strongly and handhelds less than before...

You have a lot more faith in these businessmen than I do if you believe that they will start appealing more strongly to niches due to a shrinking market. We have seen them abandon smaller markets and try to suck cash out of whats left of the ones we still have with anti-consumer practices, looking for a quick buck.

All logic and evidence points to not much good coming out of a shrinking market, but the potential for a lot of bad. We will see how everything plays out but with declarations from Ubisoft saying that they will make less new IPs and all the things I have seen happening to handhelds and the things I have seen at the beggining of this generation...I don't see how you can have so much faith.