I think the main reason is not necessarily under performing PS360/PC games but high development costs and long development times. What this causes is that you only release a few big projects a year, and for small developers only one every few years. But you also are thinking to the future and developing on other projects. Thus you are solely dependent on outside funding and the success of the current titles on the market. Meaning if one of your titles doesnt' perform well then your current titles start eating away at more money as you aren't getting a lot of money in return. Even if one of your big titles does great, you are still depending on it doing more than you expected for extra profits to fund your current problems.

This is something that has hurt western developers. AS many have said, they just took on too many projects and the HD Platforms hurt them because they yielded high development costs and long development times. They are left with few projects releasing and a mass of ones in development. It's easy to understand how they'd go in the red even with titles performing well. Took the PS2 generation mentality which worked due to the opposite for development and it backfired. It also doesn't help how the HD consoles are not the ones who took off and are getting all the media.

Thus we are already seeing the switch of developers because they just can't keep all these projects in the works for the companies. At first they were able to slide by, by using Wii, DS, PSP, and PS2 as quick cash cows but after mid 2008, that just won't work anymore. We've already seen the Japanese developers jump ship to the platforms that are less risky and you'll see the same thing happen with the western developers. Sure they'll keep the main products on PS360/PC because they know they can still make good money but all those extra projects in development that we do and don't know about will be canned or transfered in favor of Wii/DS/PSP/PS2 development. Especially considering the userbase this only makes sense.

I mean PS3 and 360 sell software just like Wii and DS and at high rates considering the user base but right now it doesn't matter about that. What matters is being able to release numerous products at little to no risk and having a few to jump to high sales and gaining large profits. Hell with the Wii and DS right now everything seems to be doing that which makes them even more approachable. I'm not saying PS360/PC will lose all development but devs are going to cut back. I think Monster Hunter 3 to Wii was the first sign of this happening and then Dragon Quest X was the next one. They will still get the big games we expect, that won't change, but they aren't going to get the mass and many exclusives.

One of the biggest issues for the Industry is this:

The Wii didn't bomb.

HD consoles didn't bomb either

Now I got your attention.

One of the major problems for the industry is for the first time ever, the console market is split precisely into two parts. There are two major platforms and for the most part the games produced on either are largely incompatible. The group responsible for causing this are the big 3, Nintendo - Sony - Microsoft. They are equally to blame for this situation.

If the current situation was like the previous generation. Say HD consoles had 70% of the market share or the Wii had 70% market share the situation the Publishers are in would have been alleviated greatly. The current split market configuration is expensive and makes developing on either platform more risky than otherwise. The two big expenses, advertising and development cost cannot easily be split between the two consoles. You can't advertise a Wii game the same way because it effect showing the HD versions would be considered false advertisement and the publishers would be fined heavily.

The other point I would like to make is this:

If the total number of big release games falls by 10% in the next two years, the improvement in profitability for these titles would be greater than 20%. At the moment its too many companies trying to make money on a market which is too crowded. Software development is funny, once you break even ever $ of revenue after than is almost pure profit.

OMG HD gaming is killing publishers! ;)

But really, it might be.. Considering that the budget nearly quadrupled in one generation, and the price did not, profits are far less. for every game we can list this generation that is profitable and successful, there are 8 that are flops or just didnt pass the red/black line.

I find it amazing how I wrote my last "other side" on this about a week ago and now everyone thinks its new. Come on people I told ya this already with some pretty good reasoning haha. HD development is killing developers and its apparent. It's the developer's fault for not adjusting to the new times and of course their fault for not treating the platforms on a factual basis rather than a stereotype.

Sorry, I didn't mean to sound insulting, it's just the first name that popped into my mind.

Second, I didn't say that game doesn't sell on the Wii, it's the one that sell the most software after all, I just say that they need to make different game, not new one on it. Again I didn't say that EA Fit won't sell or that the cart game wont, I say it won't become blockbuster, the same way Saint Row didn't, for the simple reason that there is already blockbuster of these two games, Wiifit and MK. Good revenue to be had, sure, a new cash cow? No, and EA need one.

EA got a lot of franchise, with the Wii they have the opportunity to make something different with them, and I don't mean dumb the game down and put a family friendly box art on it, but to use the feature of the Wii to change the experience these game provide. But they don't know how to do it, they don't know how to take a well know but shrinking franchise, build it around the Wii feature(which mean they can't port it to every platform know to man*) and make something different out of it, turn there back on the one that deserted them, like Nintendo did, so as to have the advantage of a well know brand and at the same time have feature that will bring a new audience to it, the best of both world. Do it well and you have the new Mario Kart Wii on your hand.

*It may be one of the other problem of EA, they are used to port there game to all the hardware available to maximize sale, a good strategy when all of them use the same style of controller, a not so good one when the console with the biggest marketshare use a new control set and you stubbornly design your game around the old one.

Your first paragraph is simply incorrect. SNES/Genesis had the market split almost exactly 50/50. But I don't recall massive losses among third parties in that period... I also don't buy that the Wii and PS360 are "largely incompatible" markets. What about Guitar Hero, and other such games? Anything genuinely mainstream (i.e. not targeted specifically to 15-25 yr. men) has done well on all three platforms. This just sounds like excuses to me.

The second paragraph here is just crazy. Do you really think publishers would be better off if there were an "HD" dominance? Huh? Are we watching the same market? Wouldn't the gaming industry be going through a gigantic contraction right now if the Wii didn't exist, or were completely marginalized?

I hope you don't seriously believe that the majority of the Wii's audience would have simply bought 360s instead.

If the large amounts of revenue isn't enough, then that must mean that development costs for PS360 games are just plain off the chartz.

Guitar hero is the exception, not the rule. Other games have required seperate development efforts for both the Wii and HD versions. Seperate advertising efforts too. Btw why would I make excuses? What exactly do I have to excuse?

The publishers would be better off if there was one platform with dominance. It doesn't matter which way it goes, they still would be better off. Btw the games market wouldn't have shrunk even if Nintendo ceased to exist at the end of the last generation. The PS2 managed to increase the market size over the PS1 inspite of Nintendos weakness.It just wouldn't have grown as much. It wouldn't be the size it is now, but it wouldn't have shrunk from last generation to this generation. Infact with a similar platform between the PS3 and Xbox 360 it would have grown for other entirely seperate reasons.

And yes, I believe that the majority of the Wiis audience would have bought a PS3 or Xbox 360 eventually. Remember a majority only has to be 50.1%.

That's because you're not even taking into account the fact that PC has the biggest share on EA's co-publishing and distribution revenue. You're not taking into account the $100-ish millions that EA makes in digital distribution every quarter, nor the fact that most third party games published by EA are for PC.

I explained this before on an earlier thread:

http://www.vgchartz.com/forum/post.php?id=1383825

http://www.vgchartz.com/forum/post.php?id=1386260

Try advertising, testing, and development costs. Wii games suffer from the lack of the first two, HD games suffer because the third makes extra spending on the first necessary and with larger games the 2nd is also going to spiral in cost too, due to bugs.