by Anton Shilov
08/31/2011 | 10:02 PM
It is not a secret that along with the slowing economy, the video games industry is taking a hit as well. Partly, this happens because gamers play more and more on their smartphones. Some video game business specialists believe that the lack of breakthrough innovations is hurting the industry, but others believe that everything is fine and next-gen consoles are not needed for the time being.
"Already a longer cycle is resulting in fewer sales, as consumers fill their need for new and innovative forms of interactive content on new platforms [...]. The traditional games market needs new, innovative hardware and content to grow. [...] Today’s traditional games market is in trouble. The retail packaged video game market is down and has been declining for 2 years. July 2011 was the worst month since October 2006 for U.S. retail game sales," wrote Robin Kaminsky, the co-founder and CEO of 1st Street Partners and the former executive vice president of publishing and the general manager for the games business at Activision, in a column at IndustryGamers web-site.
Ms. Kaminsky reckons that the development costs of console games have gone from a few million dollars to make for the PS1 to $20 - $50 million to make games for the Xbox 360 or PlayStation 3. As a result, nowadays publishers need to sell at least two million units or more of a title to break even on their development investment. Nonetheless, less than 40% of the top 100 game in July had life to date sales of two million units or more in the U.S. and Europe. If the trend continues and the costs will rise to $50 - $100 million per AAA title, it will hurt both software and hardware providers as both the former and the latter will need to keep console cycles longer. As a consequence, the pace of innovation will be sacrificed, which will slow sales in general as well.
"For traditional games to grow, I believe a new generation of consoles is needed, consoles with real innovation and the resulting onslaught of new IP and innovative gameplay. Ideally these consoles will bring a breakthrough on how games are played or what kind of game experience can be delivered. It cannot be just bigger, more complex games or yet higher definition graphics," said the former SVP of Activision.
But Frank Gibeau, the president of EA Labels, does not imagine what next-generation game consoles should be like. Mr. Gibeau believes that current-generation Microsoft Xbox 360 and Sony PlayStation 3 still have more horsepower to squeeze and make better-looking games.
"It is hard for me to conceive what you would do on a PlayStation 4. The displays are already 1080p, you're already connected to the internet. You could make it faster, you could have more polys and you could up the graphics a little bit, but at what cost? It will be interesting to see how [Sony and Microsoft] think about it in terms of the next generation but it seems to me that customers are happy, and we are happy to build games on [X360 and PS3] right now," said Mr. Gibeau in an interview with CVG web-site.
In fact, the high-ranking executive of Electronic Arts does not seem to worry how long console cycles slowdown sales and innovations. Moreover, he does not believe that the next-generation consoles will be revolutionary.
"The way the business used to run where you had these big console transitions just isn't happening anymore. They are much longer, the online capabilities are making the way customers interact within the audience very different from when we went from PSOne to PS2. [...] I'd like to see the cycle last a little longer. I don't see consumers right now banging on the walls for a new platform. They seem to be very happy with their PS3s and 360s. They love the online connectivity, they have great communities and great libraries," said the president of EA Labels.