Epic Budgets

Games have become more sophisticated, requiring larger teams and longer development schedules. The risk of releasing a stinker has not changed. Individual publishers and the industry as a whole cannot afford to be caught with too many expensive howlers and must therefore mitigate the chances of disaster by releasing smaller titles with less exposure or franchises that have a dependable history of returns.

This is one of the reasons why new IP is so rare; it’s a $50 million gamble at long odds, weighed against a series of $10 million gambles at short odds. 

However, managing risk is what publishers are paid to do. Those who fail find themselves out of work; there is no shortage of former game industry execs who have found this out to their cost.

The best remedy is senior management that really understands games and displays a readiness to murder projects mercilessly that don’t look as though they’re going to fulfill expectations. We’ve all wondered aloud at the folly the publisher who insists on sticking with a project in the vain hope that it would come good. Such loyalty is rarely commended by shareholders.

Fame and Celebrity Culture

Videogames play a big role in the entertainment lives of millions of people – not just self-identifying gamers -  and yet they still play a relatively small role in our overall culture. That will change.

Super-connected celeb Ricky Gervais’ appeared in Grand Theft Auto IV because he wanted to; because he appreciates the value to his career and because he likes the product.

More singers, actors, writers and other personalities, who have been brought up to appreciate games as entertainment and as art, will begin to seek inroads into games. It will no longer be the province of out-of-work B-rated actors doing voice-overs, but of A-listers allying themselves with hot properties.

This represents a challenge to the game industry, which has a sorry history of going slightly ga-ga over the merest glitter of Hollywood endorsement. A line must be drawn between pandering to the egos of entertainment’s elite and adding value to the gamer-experience.

Likewise, a migration of celebrities into games – were it to translate into actual extra sales and therefore commercial value – would carry a hefty financial penalty. Agents would love to crack this industry open to their dark arts. All that glitters is not gold.

Hardware Pricing

The complexities of PS3 and Xbox 360 have raised the price of games consoles to levels that were previously assumed to be deadly to growth.

These consoles are too expensive, even now as we enter the middle years of their lives. The fault lies with Sony and Microsoft’s congenital megalomania; their desire to “own” the living room and thus create over-priced devices crammed with innovations which, arguably, have little to do with games.

Even so, one can hardly carp when growth rates in the market are so impressive. Nor can we ignore Microsoft’s and Sony’s need to actually turn a profit in the game industry, or the wisdom of recognizing that we all now use our consoles for more than just gaming

In the next few months and years, prices for these consoles will come down; new reams of consumers will be available to mine; publishers must anticipate the timing of these events correctly and, as always, exert pressure on manufacturers to get busy with their price-cuts.