Okay, so I don't post alot of non sales stuff, but I was thinking about posting this. Hopefully it makes a few people think, and I'm sure that somewhere along the line, some dev, or market head might realize I am right, and begin to change the most tremendous challenge in gaming, despite very little being done by the hardware companies to fix this problem. Alot of incredibly talented companies have died due to poor-preforming titles and the costs of making games.

Mr Stickball's (aka Ben)

The Biggest Blunder of Next Gen

Recently, there has been many discussion between company heads, sales junkies, and analyists about the rising costs of development, and the major contrast between next generation competitors. The PS3 and the Xbox 360 have taken the tried and true route of expanding the power and capacity of their machines, as in similar generations. For nearly 20 years, each generation of succuessive technology has given us great advances in media storage devices, internet capabilities, processor speeds, and everything in between to enhance the graphics, and abilities of the developer.

However, this generation, there was a switch, as the Wii has favored a new, different route unlike Sony and Microsoft, to keep development costs down by releasing a severely underpowered system, citing rising development costs (1) as a major detterant from new, originial software, thus justifying the slight increase in hardware preformance from their previous console entry, the Gamecube.

Sony and Microsoft, of course, know this, but advise everyone that the abilities of the Playstation 3 and Xbox 360 are vastly improved, and give developers a good bang for their buck, citing far enhanced abilities of their systems power versus the Nintendo nemesis.

Despite Sony and Microsoft's pleas, Some 3rd parties (2) are beginning to flock to the Wii due to costs of developing a game being 50% of the competition.

 However, this begs the question: What happens to development costs 5 years from now, when the Wii is as powerful as a PS3? The fact is, despite the Wii's reduced hardware preformance, and obvious discount to produce a game, it's costs are still slightly above that of a Playstation 2 game.

Regardless if the Wii signals an absolute change in the hardware specifications 5 years from now, the biggest blunder with the hardware developers is the total lack of regard to actually improving the abilities for developers to reduce costs on their games, regardless of specifications of the hardware they are working with. Even back to the Atari Jaguar, companies with ill-regard for the ease of programming on a system, have fallen by the wayside. After all, what good does it do to make a game that costs twice as much on one system, when another system can produce similar sales points, but require half of the programming effort for the same results?

But despite all the blunders of poor hardware archatectures, and incredible rates of development inflation, even Nintendo has not truely given developers a strong way to cut costs.

I liken the rise in development costs to the US gasoline price increase as of late: Everyone is clamoring for a hybrid vehicle, or sub-compact car, but are not asking what can be done to reduce the price of gasoline. Likewise, the hardware manufactuers such as Nintendo are only curing the symptom, and not the cause.

Developers have had to make drastic cuts, even as of the Playstation 2 era to cope with costs: By merging with other studios to decrease costs for their video game studios (Namco-Bandai, Square-Enix, SegaSammy, and EA's various mergers and aquisitions come to mind).

Hardware maker's first party games have also gone a similar route, with Microsoft buying Lionhead Studios, and Rare, among other recent aquisitions, anticipating a major trend-shift to 3rd parties developing major IP franchises to 2, or all 3 systems. However, this has come as great expense, as they pay the same salary to developers as every studio does.

The Rise of An Answer

Within recent years, I believe a solid answer has come, that although not entirely in it's infancy, is the true answer to developer woes: Middleware.

In every enterainment medium, except for Video Game production, there have been drastic ways to reduce costs of producing forms of entertainment: Home Recording Studios have hampered album costs for both many indie bands and major touring artists, computer workstations and cheap high-def cameras have allowed movie creators to drasticly reduce costs of a high budget movie (Robert Rodriguez's action movie Once Upon a Time in Mexico was made for a fraction of typical hollywood blockbusters, by using $3,000 cameras, a home studio for the soundtrack, and a film editing workstation at home).

Although somewhat despised by many developers, middlewear has been a great boon to reducing video game prices, even moreso than what the Wii has offered, as middlewear attacks the fundamental reason video games cost more: with rising CPU power, more can be accomplished, therefore developers must spend more and more time on the various facets of game development between physics, AI, graphics and lighting, and the actual gameplay of the creation.

The Comparisons:

2 Games quickly come to mind, as both were extremely hyped, both recieved strong sales, and were made by very prominent companies.

Gears of War

At E3 in 2006, a no-name game made by the famous makers of the Unreal series recieved very strong buzz for their title, and the hype continued. Gears of War, by critical standards was very well recieved, receiving Game of the Year titles, and very high rankings on gamerankings.com's averages. This was what many thought the HD "Next Gen" was all about - flashy graphics, no framedrops, and good online multiplayer components. Sales, likewise, have been very strong, garnering 4,000,000 units worldwide, and increasing. Overall, one could consider it a massive succuess.

Red Steel

Likewise, when E3 buzz and momentum was shifting strongly in the Wii's favor, a prominent Ubisoft title came to head. The game featured very strong graphics, on a supposedly inferior machine (although far from Gears of War), innovative controlls, and a fresh new take on the First Person Shoote genre on the ultra-popular Nintendo Wii. Red Steel recieved mixed reviews, as some cirtics were negative to the Wii's controls, although the game was certainly adored by many owners of the game. Sales wise, Red Steel is one of the most popular games on the Wii console, at nearly 1,000,000 sales since launch - very strong considering the poor sales in the FPS-weak Japanese sector.

Despite both games being given heavy attention, and Gears of War being the flashier title, it was actually $2,000,000 cheaper to make, according to both sources (3) (4)

How could a Nintendo Wii title be 20% more expensive than Gears of War? The simple reason: Epic makes the very-popular Unreal engine, the second most licensed middlewear suite in the video game industry (the first being the Havok Physics engine). The Unreal engine provides developers a large portion of tools to create games with, allowing for more significant time to be devoted to the game itself. Gears of War is certainly an anomaly in it's class, with other highly-anticipated Xbox 360 games Lost Planet and Dead Rising from Capcom both costing an estimated $20,000,000 each to make, and garnering less than half of the sales of Gears of War.

Some critics might excuse the Gears of War anomaly, stating that Epic made the engine, therefore was the biggest candidate to make the game cheaper. Although this is a true statement, it's still fact that shows that having a pre-made engine can drastically reduce costs, giving Wii-like price reductions versus their competitors.

The Future of Middleware

A company has recently emerged as a huge proponent of the emerging middleware beast, Square-Enix. How would an East-Asian mega developer, known for spending millions on building engines for each succuessive Final Fantasy respond to the Unreal Engine? Very favorably.

It was only January 25th when Square-Enix was reported purchasing the rights to the Unreal 3 Engine from Epic (5) signaling a huge change from their past ways, as they always have favored either outsourcing work to cheaper countries, or making their own engines.

Just within the past few weeks, the reason the UE3 engine was purchased was given a name: Last Remant (6). In just under 5 months, Square-Enix has started from scratch, and now has in-game photographics of the new IP. I believe this is very important for the video game industry, as for comparison, FFXIII might be released after Last Remenant is, despite being in development for nearly 3 years longer.

But why talk about UE3's example so much? There are many suites out there, such as Havok (already mentioned), microsoft's XNA, PathEngine SDK, Crytek (the PC game)'s CryEngine 2, and others. There are currently quite a few minor solutions out there.

Where does the Sony, Microsoft and Nintendo fit in?

The true challenge is that none of these studios have the funds, resources, and abilities to truely present major middleware suites. UE3, the most mentioned (and one of the most licensed), and Havok (the most licensed) are so popular because they provide developers with the 2 most important aspects of next-gen and prev-gen gaming: texture mapping and libraries, and Physics.

However, despite this, it's still in it's infancy, and as stated, neither Epic, nor Havok, nor any of the other companies have the funds or resources to enable software developers to drastically lower the costs of their video game product.

Nintendo, Sony and Microsoft spend billions of dollars, anually, to research new video game systems, and for the most part, do a good job (and are getting better) at new developer toolkits for their systems. Despite this, it's certainly not enough, as documentation has been a part of making a video game since ET bombed (and Big Rig Racing was released to show us all why some playtesting is needed).

Microsoft has made *some* strides by releasing the XNA suite and promoting the Unreal 3 engine, which has most likely, been the reason that many developers have shown strong support for the oft-left behind Xbox platform. However, despite the strides, the prices of software aren't coming down. Software is still $50-$60 per game, as these atrocious prices are needed to recoup the monumental costs of developing games.

So what can be done? Each company, instead of spending near-billions of dollars in 3rd party aquisitions, and new first party games, could easily divert a few million dollars into new, stronger, more complete middleware suites. Or in Microsoft's case - buy Epic and Havok out and combine them. I believe that each company is guilty of hurting the consumers that pay $50-$60 for software (PC software is typically cheaper), and most importantly, the thousands of developers that have become unemployed because of smaller studios not being able complete their titles without higher investments.

I believe it's in each companies intrests to do everything it can to reduce game prices. As we can see, Wii Sports and Wii Play are doing phenominally software-wise primarily (I believe) due to the fact that the games are budget priced, but are very good games. The same can be said for the many million-selling Nintendo DS titles.

 (1) - http://arstechnica.com/news.ars/post/20070301-8950.html - The rise of development costs

(2) - http://www.majescoentertainment.com/press/jan2907.php  - Majesco announces more/exclusive Wii Support due to lower development costs

(3) - http://kotaku.com/gaming/mark-rein/gears-of-war-a-mere-10-million-to-make-234504.php - Article concerning Gears of War's $10m budget

(4) - http://spong.com/article/10460/Red+Steel+to+Rack+up+10M+Euro+Dev+Budget?cb=688 - Red Steel to cost 10 million €

(5) - http://www.1up.com/do/newsStory?cId=3156713 Square Enix buys rights to unknown UE3 game

(6) - http://www.gamespot.com/ps3/rpg/thelastremnant/index.html - Last Remnant Pics & Info

So what do you guys think? I don't think this exact issue has been addressed yet.

Interesting read...My only concern is that I don't want to see replicates of games...The repetiton of genre (WWII shooter, Sand Box GTA) is already bad enough.  Perhaps I don't completely understand the way an engine functions, but I don't know how happy I would feel if every game was just a skin on another.

But economically your idea is sound.  I'm not a bif fan of paying so much for games.  However, I'm not sure that developers, given their tendency of late to charge up to $100 for a limited edition, would be inclined to reduce the price.  For Wii sports and Wii play and even Resident Evil the price point makes complete sense, because of the limited development costs.  Even if a game were to use middleware and be made on the cheap, the developer isn't so likely to pass on those savings, especially since gamers seem willing to shill out and extra $60 for a halo helmet.

As with your gas price analogy, when the consumer keeps paying premium prices, why would the gas companies ever drop them.

Very good post, MrStickBall. I completely agree.

You should put Valve somewhere in there. Source isn't as frequently licensed as Unreal, but Valve was VERY clear about their intention when the engine was released two years ago: they knew the development costs were rising, and that smaller companies needed help making their games. In other words, Valve saw this coming a long time ago.  

erm, Red Steel was also made with the unreal engine. Just thought I'd mention that of course, Epic doesn't need to pay to license the Unreal engine, no idea how much that costs though

The thing about PS2 vs. Wii in terms of development costs is that the PS2 has been around for well over 5 years, so naturally the cost and effort spent in development have been reduced due to familiarity with the hardware.

The middleware thing I completely agree with and it really showed recently when Square decided to use Unreal Engine on their new 360/PS3 RPG the Last Remnant instead of using their White Engine or making a new Engine or whatever.

On the other hand, wouldn't the big companies think about the high cost of games this way: make a bunch of low budget easy to make games for the Wii (or lower budget and easier to make games) and make money off of that while taking their big ventures on the costlier 360 and PS3 games and keep their cutting edge games on those platforms.

If the Wii is going to be driven by casual gamers foremost and Nintendo fans second then there isn't really a big need to make Gears of War type games on the Wii, but rather make those on the consoles driven by 'hardcore' gamers such as the 360 and PS3. Rather companies like Ubisoft and Square and whatnot will launch their secondary games on the Wii and keep their biggest games on the 360/PS3. That's how I think that is gonna go.

I don't think suddenly the big companies are gonna go ahead and make their biggest titles on Wii and forget about the other two because the Wii is going to be the console of casual and Nintendo games for the most part (not exclusively). They will still make good money off of their Wii games, but they will continue pushing technology on the other two.

 Engines won't cause games to look the same, just look at the Unreal engine: Gears of War and Roboblitz look nothing alike. So rest assured that won't happen, that matter more on the artistic and design decisions made by the companies making the games.

There is a problem with your thinking though... Most companies already have game engines and middle ware that works with the Wii, PS2, Gamecube etc. There are new middle ware solutions for the 360, PS3 and PC. Companies can choose to use their old solutions to work with Wii development as they'd have a lot of choices already. Ubisoft bought some updates for their Unreal 2 engine which they were already using and made it work with the Wii. That was a one time up front cost. I'd say all of the big companies have nothing to worry about in this regard. Capcom has the Resident Evil 4 engine, Nintendo has many different engines to work with from the cube era, EA is fine as well, as is Squaresoft etc. The problem that any of the developers may have is that some of them jumped the gun early and bought new engines for the new systems without waiting until the costs came down. Nintendo has it's own middle ware software which any developer can purchase to work with Wii games.

Yeah, agreed. Good post in general, but I think DarkNight has some reasonable points about the solutions. Also, yeah Red Steel was made with the Unreal Engine. I mean, in the end, I don't think the Wii's success this generation will result in any issues with the next generation middleware. People are already drooling over the Crysis engine for example, which hasn't even been released yet. Middleware will continually be developed. The "massively underpowered" view of the Wii is somewhat misguided. After all, the weakest system has lead sales both of the prior 2 generations, and middleware is still continually being developed. Most high graphic system middleware is going to come from PC game develoers (Source engine, Crysis engine, Unreal engine), but every company offers their own middleware to cut down on development costs. It's not all that often that a game is built from the ground up anymore. Just because developers don't necessarily mention what middleware was used in the development of the game doesn't mean that there isn't middleware involved. I think you are a little too worried about he situation.

Edit: I also doubt that developers will continue to focus on the high graphics systems.  Look at how little support he Xbox and Gamecube got vs. the PS2 (which was weaker than either).  It would have required a lot of middleware to make Xbox games, but when developers saw there was no money in it, the continued to make ground up graphically inferior PS2 games on the promise of a higher user base to purchase those games.  I can't really see big franchises hanging around the 360 and PS3 past 08.  The only reason you even see them now is that the big PS3 and 360 games started development 2-4 years ago before they knew the Wii was going to be the generational winner.   I wouldn't be surprised at all to see many big games switch over, for the sheer convenience of a readily available user base that is willing to purchase 3rd party games (see Red Steel and Rayman for examples).  A lot of developmental support swings towards the best selling console, even when it's the weakest.  Look at the PSP and DS.  Square took their best selling Japanese RPG (in Japan that is) and stuck it on the DS.  Why?  It will sell the most copies.  They could have made it anywhere, but they put it where it sells.  This happens EVERY generation to the expensive high graphic consoles. 

 Very good post!!! And im hoping that this is what a lot of developers will do!