The BBC on Monday reviewed a report from media analysts Screen Digest which concludes that technological advances in the gaming market are breaking companies’ backs financially.
Several strategies to counter the significantly higher investments in game development are being tried: Microsoft is making deals for game exclusivity to expand their market, while Sony has expanded their own in-house development team, and Nintendo has been targeting a diverse market with their games. In addition, more games are either based on popular films, or on previously successful games. While game sites have been discussing whether “episodic play” is attractive, game producers are looking for ways to reduce engineering costs and these games fit the bill.
As Mark Friedler in Game Daily notes, with rising costs of game software creation driving prices up, the companies’ profit strategy based on number of units sold is going to be dampened. He thinks that counting shrink-wrapped packages sold to consumers is outdated, and also notes that the market has changed significantly since the last round of major gaming unit releases a number of years ago.
In the current market, he notes, the target demographic for games is approximately 15-34, and those consumers have a lot more media vying for their attention these days. There are iPods, websites such as Myspace which he notes had a tenfold year to year increase in users, various Internet media and online gaming as many users have moved to broadband, and the whole realm of television-based entertainment as well. In other words, games aren’t just competing against games anymore.
Friedler thinks that game producers need to think about their games as media, and compete for “timeshare,” the amount of attention their games are getting. It’s a more complex model, and harder to measure. Nevertheless, as the market gets riskier for the companies involved, he notes, the level of creativity involved in game production will normally drop, but those “sure thing” games might not get the play that more innovative products would. He notes the irony that the major factor driving this risk avoidance will be the advances in technology in the new units, and the costs they drive in the games.
There’s also the question of the audience for games. In order to grow the number of consumers buying expensive gaming units and games, Nintendo has been offering a broader spectrum of games, and Microsoft’s “Live Arcade” has been drawing consumers, he notes.
With new markets such as casual games for women opening new possibilities, Friedler believes that there is an entirely new business model for the gaming market, that producing, marketing and shipping product and “hoping for the best” is no longer viable. As game producers and manufacturers work to produce new and exciting games, their financial and marketing arms are going to have to work just as hard to explore and adapt to the new face of the market.