This is what happens when the rising cost of develop rise to steeply to fast, while the amount of games are being purchase stay roughly the same. The sale of these high budget games have remain on the most part flat while the cost increase, which has affect the ROI drastically.

Sorry, but I'm just not emo enough for that.

I wasn't saying that HE said it was the Wii.  I was stating that what he said is part of the problem and then I was referring to other things.

For the record, I'm not into the Wii.  I've played with it and had some fun (SMG was pure joy), but its not really my thing overall.  But I'm fine with that, the industry is bigger than my gaming wants and that's a good thing.

The problem that the Wii has created, though, is that people flock SO much to Nintendo games that 3rd party developers are not finding the success that they SHOULD.  Its the hottest system but buyers are not purchasing as many 3rd party games as they are on other consoles.  Nintendo had this same problem with the N64 and especially the GC, but not with the NES and Super NES.  Those systems were GREAT for 3rd party devs and Nintendo.    This may very well be the first time that the top system is not a generous well for 3rd parties.  That creates a problem.

The industry could just be going through some growing pains concerning the expanding of the market.  That's what we all HOPE it is, as the Wii is not the NES, Super NES, PS or PS2.  It should expand the market to NEW gamers while the 360 and PS3 target the old.  But is that what is happening?  Or is it simply that people are buying the hot system like previous gens and being content with not supporting it with many game purchases due to the other things that Maxwell stated in his post?

For the record, I'M NOT BLAMING THE WII!  As I stated in my initial post, this is a much, MUCH larger issue than one console and what Maxwell stated in the OP is unquestionably a big part of it.  A perfect storm could be brewing, and by focusing on only one part we'll miss the forest for the trees.

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Oh but in the past we also saw companies making excellent games and got bankrupt with probably the best example 'clover studios' guys from Okami.

 Ugh the last 20 years more than 200 video game companies probably got bankrupt and I am pretty sure you can find some who made some great games and got bankrupt after making one dud.  That is nothing new in this industry.

Edit:  Here is a list of all video game companies who don't exist anymore if you love to search you can find some who got bankrupt like Free Radical for just one dud.

http://en.wikipedia.org/wiki/Category:Defunct_video_game_companies

Wait what?  If that is true why do we get articles like every year that says more games are sold this year than last year with a nice percentage included?

I find it hard for the consumer to make video games... you know... the things that the video game industry runs on... consumers fund the market and also has a hand in choosing weather it lives or dies, but when a developer can't survive cause of development costs that's a real issue... sure they can make a better game but development costs hinder that as well... and downloadable games are a limited market still, as with handhelds you're limited to more people and kids that don't know how to hook their systems to a wireless router, then you have another factor which is people fearful of buying anything over the net, having downloadable games is limiting yourself a lot.

I dont since the first generation of games period came from end consumers and many who are making them today are also consumers.  If they didn't have any consumers they would the industry would fall as if it didn't have a backbone now wouldn't it. 

People can find much success in limited markets.  Ask the creator of Braid.  Developers NEED to learn that they aren't pleasing themselves they are pleasing the people who will purchase the product.  If they can't do that in their current business model then it is time to find a new one.  Given the Wii and Downloadable titles and the success of XBLA I would love to hear people say that it's impossible because we play today the proof that it is.

Overall the gamers that came into gaming during the Saturn, PS1, and N64 era of gaming generally love the looks of games, 3D was a big part of bringing them into gaming as well as image, so many of these gamers want more and better graphics without knowing what it's taking to produce these graphics, hell you got some of these people out there everyday spouting how their PS2 was graphically superior to the Gamecube.  Companies like MS and Sony listened to these fans and made consoles with tech to try and rival the PC which in the console business had never been done before, sure there was the console here and there that tried and failed horribly but on a large scale it has never been done and trying to make near PC graphics standard and now we're seeing backlash to that with developers like Free Radical having to let go a lot of it's staff because of one flop...

Sounds like some companies shouldn't be competing in this kind of market if they aren't sure of the payoff.  Sorry but businesses close when they aren't paying enough attention to market environment and demand.  Sounds like irresponsible management to me.  Any company can go the way of the dodo.  Why should i mourn Free Radical for their mistakes? Do developers get some kind of pass on the rules of reality unlike any other business?

I think alot of the problem is Microsoft brought the Xbox 360 out 2 years too early. When they did that, Sony were soon to follow suit and all of a sudden the HD era was on us probably 2 years earlier then it should have. Games like FFXIII and MGS4 began developement on the PS2 but then moved when Microsoft moved things on.

I don't think Wii is the profitable goldmine some people on here have it wirtten up to be, there isn't as high risk on a Wii game but with few third party games breaking 500k - many of which only do so after heavy price cuts - I don't think there is that much profit left for the developer once you take all the other deductions out the way. Not enough to satisfy the likes of Factor 5 and Free Radical's share holders - albeit it does give a steady income of revenue.

So companies are left with two options - higher risk with bigger potential gains, or lower risk but not so much to gain. I think the obvious choice is to try and get a mixture of the two, and time the releases so you can at least stand up financially if the high risk doesn't pay off. Whether these companies have the resources to developer a few Wii / PSN / XBLA / DS games simultaneously is the problem I guess.

I just don't think theres a black and white answer, nor do I think HD developement is really hurting the industry that great or is Nintendo Wii saving it. A Multiplatform strategy is the way forward for all companies, I don't think this generation holds any more risk or less potential payoffs then any others - it's just companies need adjust their management and not put all their eggs in one basket hoping for to have the hit of the summer.

I do not think it is that simple.

The problem is the market is fractured between PS360 and Wii and neither market is easy for third parties to make money in. The HD market has high risk due to development expenses as you mentioned. On the other hand the Wii market is just as risky because it is so new and different that the devs need to spend a lot of money trying out new ideas to see what works, both in terms of the new controls and the new gamers.

For example if the Wii had not been such a success or had used a traditional controller then developers could have used a single content/code base to target the entire market so risk would have been reduced. Or if the HD consoles had included motion controls comparable to the Wii from the start devs could try new ideas that evolved from traditional ones that had a better chance of resonating with some demographic in the larger combined market.

I am glad not to be in the game industry right now, because I just do not see a clear way forward for a lot of the developers.

Another thing I've wondered but never bothered to ask is if the Wii is really this cheap, low risk system people make it out to be? Companies can easily whip up a minigame compilation in a few months for next to nothing and throw it on the market, but that's not really what we're talking about here.

If companies are going to really try and take a bite out of Nintendo's dominance and produce the software on-par with it, for a start developement is going to cost a significient amount. Definitely not anything like the HD consoles but I'd estimate it at $6 milion to $8 million on an 18 month to 2 year developement cycle. Hard to get figures, I'd imagine stuff like Smash Bros and Mario Galaxy was even higher, but they are the crem de la crem.

Where I think the risk with the Wii comes in is marketing, Wii takes alot more marketing to really reach the core of it's userbase, and marketing don't come cheap. I know EA in the past have cancelled finished games because they didn't think it'd sell and cover the extra marketing costs alone, I've not got any solid figures for how much a strong marketing campaign would be though, if anyone would help.

There are other revenue things too, 360 / PS3 RRP is an extra 10 $ / £ and it gets extra money from DLC, not sure what royalties Nintendo / Sony / Microsoft claim though. Also I'd imagine the PS3 / 360 model of having their sales heavy at the front of release results in greater returns - no games sold at price cuts and less competition from the pre-owned market.

I don't know, guess I'm posting to see if anyone has much of a clue. I don't think anyone on here really knows well enough how much games costs and if the Wii is really as cheap as people make out. Anyone care to help? Seems to go pretty well with the original posters point.

Here are some issues which indicate the deeper problems in the industry.

1. The PS3 is too hard to develop for.

False and True. It's not too hard to develop its actually easier than the PS2 was based off the old PS2 standard. The issue with the PS3s development indicate that with the expansion of the industry the number of people who are competent enough to work well with the system are vastly dwarfed by those who are not. The systems must be friendly to the "average" developer, and the competency of the average developer is vastly lower than it was 5-10 years ago.

2. Project management seperates the men from the boys.

The simple mistakes get repeated time and again. Its something that afflicts your average developers far more than your apex developers. Reviewers see the same mistakes time and again because many developers cannot get their house in order. The simple things like content creation pipelines, focus group testing, and general bug catching don't indicate that the developer is incompetent technically but the production.

The real problem is in gameplay testing and actually paying attention to what the testers tell you. If your focus group stares at the screen for 5 minutes before giving up then its a pretty obvious indication something is wrong with the game. If your professional testers take 3 months off work due to waggle related injuries then thats a pretty obvious sign also. If you have trouble motivating them to make a 3rd playthrough then either the game isn't replayable or isn't fun. Either way it has to be reworked.

3. Too many hands, not enough cookies.

If pretty much every Publisher is either not making enough money or making a loss then the pretty obvious answer is that there are simply too many developers, especially average ones in the industry. Does the world really need the 6th best shooter developed in 2008? Beyond the top 3 the pickings start getting slim for the developers who try to catch the crumbs. For other genres like Racing games, are people just waiting for Need for Speed to become relevant again or is the genre in decline? Perhaps they forgot what really made the games fun and NFSU was probably the most fun I ever had in a casual racer. Every game after that has been less fun than the predecessor.