A broad dearth in game quality has negatively affected the U.S. video game industry revenues significantly more than the country's recession, according to Nintendo CEO Satoru Iwata, who believes his company's 3DS can inject new experiences into the market.
"My belief is we should not blame the bad economy for the cause of slow sales of video games," Iwata said in a VentureBeat interview. "The slow sales must be due to the lack of great software that everyone wants to buy."
According to Iwata, modern video game consumers wear out new gameplay concepts much faster than they used to, putting more pressure on developers to innovate.
"[This year's] titles might have been big hits three years ago. But now this year, they are not selling that much," he explained. "People get tired of games more quickly than they did before."
With the launch of the Nintendo 3DS, which can display 3D graphics without the need for special glasses, Iwata thinks Nintendo will have a fresher palette from which to paint.
"We recognize [the 3DS' solution] will not be eternally appealing," the exec acknowledged. "However, it's not a shallow concept that can be forgotten as a momentary fad."
As for his competitors' attempts to innovate on the hardware front, Iwata was unsurprisingly skeptical, at least publicly.
"Asking consumers to pay more for additional hardware is not ideal," he said. "If I were one of the developers for Kinect or Move, I would wonder if Microsoft or Sony would have a large enough installed base of this accessory to justify investment in a game."
I think he is right and I find it astounding, that somebody from within the industry finally admits, that declining sales could be a problem of the industry and not the economy.
I think it is even more astounding, that this statement comes from the CEO of the company, that is least affected by the current video game crisis and still reports healthy profits.
But then, on a second thought, maybe this is not so astounding, maybe they still make money, because they are able to see such things, when others, who don't make money, still only blame the economy.
I also think that introducing a $200+ hand held device also is not the way. Gamers, even those of us with plenty of disposal income, are becoming more prudent with their funds. Novelties like the Kinect and 3DS are going to compete with limited budgets when the AAA game pool is increasing immensely.
The PSP launched to high initial sales of $250 in 2005, and has gone on to install nearly 60 million units. The DS launched at $150 in 2004 - I think the speculative extra charge is tolerable. The demand for something new will always come around, and there surely is demand for new Nintendo handhelds. And it's not like the demand for old Nintendo handhelds will go away overnight. Where the 3DS fills the premium space now, the DSis represent the more affordable options. Over time the cost and price of the 3DS will scale back, just in time for the less well off and late adopters of DS's to trade up. The cycle continues.
And hey, it's not like AAA games were just invented - If there weren't something to the allure of all things cool and new then legions of teenage boys would never have traded up from the SNES to the PSX what with the non-stop 16-bit awesome.
If the 3DS is as awesome as everyone says, it will sell at whatever price N puts on it. Ask Apple. It's not the price, it's the product. And N puts out excellent, profitable, product; both software and hardware.
Actually, it is the price, not the product, because people have limited funds no matter how good a product (or products) may be. Ask Sony. It wasn't the poor quality of the PS3 that kept people from buying it. Same with gaming quality PCs. Same with anything, even food. Healthy food is often treated as a luxury item, even in fast food chains. A large pizza at $5 can last a couple of meals while a Subway foot long veggie sub costs a bit more and only covers one meal. There are many more examples, but you cannot squeeze blood from a turnip, as the old saying goes.
Nintendo is hardly one to criticize anyone else when they keep releasing new hardware each year. That's greed, not need.
In addition, new isn't necessary superior. It's just new, after all. That's why so many people enjoy older games, for example, or older movies, books, etc. Of course, they may also enjoy newer stuff, too, but with limited funds, the choice goes where they are assured of the value, and that's with proven products.
Companies can keep innovating all they want as long as they have resources, but consumers do not have endless resources to buy the latest stuff and have to call a halt sometime. It's called sustainability, or lack thereof.
There's also the whole issue of impact on the environment, recycling (or lack of, as the case may be) and other issues. Petrochemical products are used throughout electronic equipment and almost any other area of our lives. Again, the issue is sustainability. If we don't need it, we should think very carefully about using resources to make new stuff.
I'm not sure how an argument about sustainability suits this article.
The industry is in a downturn because the two biggest (in terms of marketshare) console-makers in the US are closer to the tail-end of their lives than the beginning. The PS3 will get there too probably next year though because of the blockbuster opportunity of a real Gran Turismo this fall.
This is ironic coming from the company who revived the industry by instituting tight controls on their licensing after the Atari 2600 was buried under shovelware, only to have become the revolving door that has allowed so much poor-quality Wii and DS software to clog the shelves.
If you compare the situation of 1983 and now, you will see one big difference, Atari, the market leader reported multi-million losses back then, as did the 3rd party publishers. Many of them went bankrupt, not because of the shovelware, but because Atari wasn't able to deliver a successor of the 2600 in time (the 5200 flopped horribly and the 7800 was ready to be launched in '84, but that was to late).
Today Nintendo, the market leader, is reporting record profits and they announce the successor to the DS, while this platform is still alive and kicking.
The problem wasn't the shovelware back then, it isn't the shovelware today. Every part of the entertainment industry has it's shovelware, most Direct2DVD movies are, generic Spin Offs in the Comic business are and rip offs of rip offs of once succesful novels are shovelware too.
The problem is the AAA software, that lacks innovation, in '83 the problem was, that the limited hardware of the 2600 didn't allowed something new (and the competitors from Coleco, Mattel and Vectrex couldn't offer something new either).
Today the problem is, that most companies think it's ok, to spit out one AAA Ego-/Third-Person shooter after another, they all look the same, they all play the same, the whole experience isn't new anymore, if you played CoD:MW1, then you know exactly what to expect from CoD:MW2 and you probably will skip the new MoH, cause it tries to be exactly the same as CoD, which tried to be the exactly the same as MoH, when it first appeared a few years ago.
The problematic shovelware today are the AAA titles, not the cheap budget titles.
@Daniel
"Oversaturation anyone? "
Read an interesting interview yesterday, with Klaus Ollmann CEO of Atari Germany in the early 80s, he described a meeting with the heads of Atari in the USA, during this meeting the managers announced, the market saturation of Atari was over 30% in the USA. Mister Ollman joked, what happens, if Atari ever reaches 100% market saturation? From his words, the other managers looked completely puzzled and didn't even understood, what he was trying to say.
Considering we are recreating the same games over and over, he is right. Can't anybody in the industry think of anything new anymore? Or are they too busy working on their next FPSs?
What baffles me is why there is so much crunch in this industry. Seriously if you keep making the SAME FPS over and over again you should be an "old hand" and crunch should be non existent.
The issue isn't a lack of great software: of late, we've had games such as Red Dead Redemption, God of War 3, Super Mario Galaxy 2...
The issue is more around the sheer volume of software and the wide range of platforms. There's the PC (with everything from social games to physical media), the PS3 (and PSN), the Wii (and Wiiware), the Xbox 360 (and XBLA/XBLIG), the PSP, the DS, the iFamily, Android phones: the market is heavily fragmented - and each of these channels has dozens (if not hundreds) of new games appearing each week. So a game has to be very, very good (or very well marketed) to make an impression.
Nintendo didn't create this problem (though the high volumes of shovelware on the Wii hasn't helped): the main issue is the fact that all of these platforms have DLC capabilities. So new games are competing against both other new titles and the long-tail of the thousands of existing titles.
A crash in the style of the 1980s seems unlikely: video games are too well embedded in popular culture now and (as per above) there's lots of alternative platforms for gamers to move onto. However, there may well be some shuffling. Quite where it'll all go is anyone's guess: I'd expect Sony to drop the PSP altogether (and/or shift to an souped-up Android platform: if you can't beat 'em, join 'em and include some value-add) - and looking further ahead, it's possible that Nintendo may also move out of the handheld market: the 3DS may well be shiny, but given the expected development costs (approaching Wii level), can it really compete with the large volumes of cheap iFamily/Android games?
'Slow Sales Due To Lack Of Great Software' I say Lack of great games.. Bah!!
First off with that comment you can tell whos not a gamer or one who sees great as great..
I see this from a whole different perspective, the fact is there have been alot of great titles released over the past few years. note Fallout3, demons souls, final fantasy, badlands, COD MW, GT prolgue gears OW2, God of War...
So where has Iwata been? Obviouly not playing these or likely any great software thats been released.
I don't blame the full slump in sales on the economy but its still a very big factor!
Face up there are people who lost jobs (like me) who bought 2-5 games a month now i can only buy 2-3 a year. Morgages, rent & other necessities come first.
After the economy fell & good jobs dissapeared (in the US) by the "hundreds of thousands per month" for a few years alot of people woke up to whats most important.
Ask the former GM & Toyota employees why they don't buy 1 to 2K worth of games a year anymore..
Thats an example that affects over 2 million consumers directly & millions more indirectly.
Another factor is saturation rate.
Not every household will ever buy all three major systems, let alone a stack of games for each or for any one system every single year.
Last report i saw console saturation rate for US households was over 70%. It maxes at 75-78% and thats at $99 console price range.
So often its silly to see comments from company big wigs that are so far out of touch beyond stat memos that are dropped on thier desk.
Most everyone in the major economic countries that wants a console has one. (or two)
These guys want to know what the problem is?
Think of looking outside the memos to factors like goverment public assistance numbers & average wages for "recreated jobs". Theres a whole real world ouside of thier business perspective.
Face it millions of americans, europeans & japaneese people are not close to the financial standing they where even 2-3 years ago and he says its lack of great games... OK
Every company dreams thier next game is the next pop culture success on par with WOW or COD MW..
Skill can get you the game but luck gets you massive success like Fallout3 had.
All comments i saw from those at Bethesda said it was far more successful than they had expected.
AKA a great game & lots of luck.
Thats my view of things from the real world not a office in a skyscraper or multi million dollar private nintendo compound.
I know this post was a bit agressive but "he has no clue what its like to be a gamer seeing so many great titles flood the market" & not having them within your grasp! Trust me there are Millions of us without the ability to support what we love to the extent we once did.
I'm sure alot of game industry people can relate as it is today, once your game is done alot of you gotta wonder is this team getting cut?
After e3 theres no denying theres more greatness comming our way. Rage, Bulletstorm, The new Zelda, Metroid... I could keep going but whats the point?
Most people, even the gamers didn't buy 2 or 3 titles every months, in fact at the moment, it is difficult to find 2 or 3 titles every months worth buying, if you consider yourself a gamer. And the fact remains, that other parts of the entertainment industry (movies, DVDs, books, comics) aren't as affected from the economic downturn as games are.
I don't say, the financial crisis didn't had an impact on the games industry (I remember, when I argued on Gamasutra 2 years ago, with people, that said, the games business will be completely recession proof). But if you look at other branches, the games industry is hit harder than others, this has to have a reason, besides the economic downturn.
You give many examples of games, that are great in your opinion, but most of these games are sequels, many originated in the last generation, Gran Turismo and Final Fantasy going back to even more ancient systems.
These games, may be executed well on a technical level, but they are basically minor revisions of their first incarnations.
Nintendo faces this problem as much, as the other companies, at the moment, they seem to achieve the goal, to renew their franchises on a regular basis, by keeping the core concept and twisting it in a way, the end-product is something new to the consumer (e.g. Super Mario Galaxy), they are in the lucky position to own franchises, that are what Mickey Mouse is for Disney and Star Wars for Lucas and even they have problems, that people start complaining about the lack of new games, with completely new ideas. At least, they had Wii Sports, which was the last title after Nintendogs and Brain Train to truly be innovative, so that new gamers joined the market.
CoD, GoW, Gran Turismo seem like much more limited franchises to me. The last Final Fantasy showed strong initial sales, but dropped quickly to non-existing sales, for a game with such a budget, this wasn't what Square/Enix planned.
This is the problem, all titles you mentioned are AAA titles, with AAA budgets, this titles need AAA sales, to be profitable. But with the current install base of the HD consoles, the market can only live with few AAA titles, that are cannibalising each other during the holiday season. This situation can't go on for much longer.
The increased crunch times, mentioned by others are a symptom of this situation. Every title has to be out by christmas, the needed manpower is more, than the available man power, budget is depleted (except the extraordinary marketing costs, that rise without a problem), so everybody has to do crunch time, to get the title out.
One issue that I haven't seen mentioned above is this: in the last 3-5 years, it's become amazingly easy and cheap to buy (not pirate) entertainment back catalogs. When DVDs first came out, I remember seeing Star Trek (original 1960s series) at 2 episodes per DVD and each DVD was $30+. Now, you can get all of ST Next Generation for $250 or less. Fans of a TV series can pick up a mega collection of DVDs for not much, and the value per hour is pretty good. Add in Netflix (streaming or trucked), Redbox, etc, and the marginal cost of a DVD is not much at all. Those w/ cable/satellite can get 100-500 channels for not much per month.
Videogames have also followed a similar path of price drops. Legal copies of old games used to be fairly pricey, and inconvenient. Now, Nintendo's Virtual Console has a ton of games for not much. Same with Steam -- AAA games from a few years ago show up occasionally at $5. The iPhone's store also encouraged a race to free/$0.99 as thousands of apps are fighting to be noticed. Some would put MMOs in this category, where some people get dozens of hours per month of gameplay for well less than the price of a new retail PC/console game. Guess what -- people are noticing that there's a lot of entertainment bang for their buck, if you're willing to step outside the latest and greatest stuff advertised on TV. And, if you're busy with what games you've already bought as impulse buys, what's currently latest and greatest on TC will be much cheaper in a little bit.
I do think that reducing initial retail price will probably entice more people to buy retail. A $60 game must be the best thing ever for me to want to pick it up and put aside the $5-20 games I've already got. The games industry can't magically erase all the content I already own. They've got to make their new products more enticing, or reduce price.
@Jane That's because when a new FPS is in the making, the people that made the last one we're let go in order to get new blood with inventive designs (which will die in the hands of publishers), different approaches (which wont work because they are too young or just insignificant to the industry), fresh ideas (that will die because it cannot be franchised), so everything is in a blank slate from one FPS to the other, hence crunch... (waiting on demon soul to come out in EU, and borderlands still to be played)
Also I haven't bought a full priced game in two years, the most expensive one was GoW3 in a promotion for 30 bucks last month (not worth the money compared with GoW1 imho), I always wait for 4 months and then buy the game, I am almost always disappointed, its always the same, over and over, so yeah... he's right, no wonder we're starting to see a bloom of indie developers.
Tiago, I agree especially when it comes to Indie-Developers, the 10€ for Audiosurf where the best money, I invested in the last years, when it comes to Playtime. And games like The Path, Everyday Shooter or Braid are among my alltime favorites. I wish the big publishers would manage to produce something similar.
Nathan makes a good point on the entertainment value, and it is further clouded by how quickly prices drop. Wait a few months and you can find the same game for 1/2 the price. As Tiago noted GoW3 was selling for half price within a few months, and it's far from the exception. You can stretch your gaming dollar 2x as far and still get every AAA title if you just wait a few months.
...and if you wait longer, you just get bigger discounts. Last year's biggest and best can be purchased NEW for 1/3 the price they were released at with few exceptions (the exceptions are only 1/2 off).
So if your choices are:
a) Buy the latest and greatest for $60
b) Buy the latest and greatest from 3 months ago for $30
c) Buy the greatest from 10 months ago for $20
d) Buy the greatest from 2 years ago fro $5
e) Buy an iPhone game for $1
Is it any surprise that option 'a' starts looking not very attractive?
Especially when I could buy 1b + 1c + 1d + 5e for the same price!?
It becomes especially questionable to buy that one 'a' when it is a sequel to a sequel to a sequel. There ends up a lot of feeling of "Been there Done that" when I am asked to plunk down $60 on a PS3/X360 game that is very, very similar to a game that is $5 on Steam.
I liked the bold thought by Christian Keichel above:
"The problematic shovelware today are the AAA titles, not the cheap budget titles."
It's an opportunity for indies, and really any company who is willing to swim in blue oceans.
@Russell-That's a valid point, there are fewer and fewer titles that are still selling at full price two months after release, let alone six months or more.
But, I disagree with a lot of assumptions that are being made here. The first is that demand is unaffected by the economy. Obviously, if consumer confidence is low and people have less disposable income, entertainment products are going to be the first ependitures to suffer. To think that there will be no decline in video game sales in a recession is pretty absurd. At least at some level, more consumers are eyeing and then putting down game boxes that they would have bought four years ago but can't know because they have a reduced budget for entertainment, and can only buy titles that they really, really, want, as opposed to just kind of want.
At least for me personally that is the case. My wife's employer declared bankrupcy and as a result there probably are four or five games that I would have bought in 2010 that I will either wait for huge discounts on or not buy at all.
I think nobody here says the demand is unaffacted by the economy. I said the industry isn't recession proof (and was attacked for that) from the very beginning of the crisis. But the main question is, why are games more affected by the economic downturn, than other parts of the entertainment industry, which have to deal with exactly the same problems, you (correctly) describe for the games industry?
@Andre
I agree with your price argument, and 60 US$ is rather the lower end, if I look at new 360 and PS3 games (especially, when I see, that these games costs 60€ upwards here in europe, regardless that 1€ has a higher exchange rate, then 1US$). But I think realistically, with the small installed user base of the HD consoles and the high development costs, prices for AAA titles have to be that high.
Nintendo seems to have an advantage here, that isn't often discussed. When I bought Super Mario Galaxy 2 on it's launch day, a few weeks ago, I paid 50€, I paid 40€ for New Super Mario Bros. Wii, that was even cheaper. For no other Wii game in the last months (Red Steel 2, Fragile Dreams, Sin & Punishment 2 and a few others) I paid more then 50€, I all bought them in the launch week. I don't think, that a title like SMG 2 has smaller development costs, than an AAA HD console title, but the much higher installed user base (with consumer, that are eager to buy Nintendo titles) allows them lower prices. I think the failure of many 3rd party developers on the Wii comes partially from the fact, that they try to sell their games for 60€.
Sounds to me like CEO Satoru Iwata's opinion is actually speaking more from a competitive analysis viewpoint. From his point of view, innovation is the key to winning consumer dollars away from other companies. I don't think he's even attempting to answer any greater questions. He's just squarely focused on what Nintendo needs to do. Innovation in new titles in his eyes is the key for Nintendo to remain successful. You can't control the economy and you can't control what the other guy is doing, all you can control is what you do. So maybe this economic climate will be good for games in the long run and spark some cool out of the box thinking.
A company like Blizzard shows that it's possible to release nothing but mega-hit after mega-hit. Are they just lucky? I think not.
I agree with Iwata and many of you here. Why should I spend $59.99 (plus tax) for a similar game that I played before? I too, wait a few months until certain AAA titles go down in price. Then, when GameStop has their B2G1F (Buy 2 Get 1 Free) deal, I strike and pick up the games I waited to play and end paying a little over the initial cost of one of those title. Oh, and usually buy them used with my 'Edge Card' and save even more money. If I weren't a family man, then I'd probably wouldn't be waiting as long due to expendable income.
Now about titles decreasing in price over time will depend on initial sales and rating. As a former GameStop Store Manager, I've personally seen many games do horribly and the price drop within a week. Games that do very well, however, remain at their initial release price for months and a used copy sells for $54.99, $49.99 at best!
Agree and disagree. Maybe I'm atypical, but I'm excited by all of the high quality titles coming out over the next couple of years. Granted, that's max 20 titles out of the hundreds that will be released, so he has a point. There are great games coming out, but the percentage of games released that fall into that category is pretty low.
As a nod to the price argument, I just ordered Assassin's Creed 2 brand new for $20 from Newegg. I never even thought about buying it until I saw it on sale. Someone is going to get some money they wouldn't have before because the price has dropped significantly.
However, I'm not exactly sure dropping the retail price at launch to $50 is going to make much impact. The people who want a game immediately will pay $60. Those who are willing to wait certainly aren't going to bite at that price point, they'll wait for something even lower. What do we think is the price point at which increased early (launch to 3 months) sales will overtake the loss in per unit revenue for a high quality AAA game?
I think it is even more astounding, that this statement comes from the CEO of the company, that is least affected by the current video game crisis and still reports healthy profits.
But then, on a second thought, maybe this is not so astounding, maybe they still make money, because they are able to see such things, when others, who don't make money, still only blame the economy.
And hey, it's not like AAA games were just invented - If there weren't something to the allure of all things cool and new then legions of teenage boys would never have traded up from the SNES to the PSX what with the non-stop 16-bit awesome.
Nintendo is hardly one to criticize anyone else when they keep releasing new hardware each year. That's greed, not need.
In addition, new isn't necessary superior. It's just new, after all. That's why so many people enjoy older games, for example, or older movies, books, etc. Of course, they may also enjoy newer stuff, too, but with limited funds, the choice goes where they are assured of the value, and that's with proven products.
Companies can keep innovating all they want as long as they have resources, but consumers do not have endless resources to buy the latest stuff and have to call a halt sometime. It's called sustainability, or lack thereof.
There's also the whole issue of impact on the environment, recycling (or lack of, as the case may be) and other issues. Petrochemical products are used throughout electronic equipment and almost any other area of our lives. Again, the issue is sustainability. If we don't need it, we should think very carefully about using resources to make new stuff.
The industry is in a downturn because the two biggest (in terms of marketshare) console-makers in the US are closer to the tail-end of their lives than the beginning. The PS3 will get there too probably next year though because of the blockbuster opportunity of a real Gran Turismo this fall.
Dana, I've been thinking that for a while. Definitely ironic.
If you compare the situation of 1983 and now, you will see one big difference, Atari, the market leader reported multi-million losses back then, as did the 3rd party publishers. Many of them went bankrupt, not because of the shovelware, but because Atari wasn't able to deliver a successor of the 2600 in time (the 5200 flopped horribly and the 7800 was ready to be launched in '84, but that was to late).
Today Nintendo, the market leader, is reporting record profits and they announce the successor to the DS, while this platform is still alive and kicking.
The problem wasn't the shovelware back then, it isn't the shovelware today. Every part of the entertainment industry has it's shovelware, most Direct2DVD movies are, generic Spin Offs in the Comic business are and rip offs of rip offs of once succesful novels are shovelware too.
The problem is the AAA software, that lacks innovation, in '83 the problem was, that the limited hardware of the 2600 didn't allowed something new (and the competitors from Coleco, Mattel and Vectrex couldn't offer something new either).
Today the problem is, that most companies think it's ok, to spit out one AAA Ego-/Third-Person shooter after another, they all look the same, they all play the same, the whole experience isn't new anymore, if you played CoD:MW1, then you know exactly what to expect from CoD:MW2 and you probably will skip the new MoH, cause it tries to be exactly the same as CoD, which tried to be the exactly the same as MoH, when it first appeared a few years ago.
The problematic shovelware today are the AAA titles, not the cheap budget titles.
@Daniel
"Oversaturation anyone? "
Read an interesting interview yesterday, with Klaus Ollmann CEO of Atari Germany in the early 80s, he described a meeting with the heads of Atari in the USA, during this meeting the managers announced, the market saturation of Atari was over 30% in the USA. Mister Ollman joked, what happens, if Atari ever reaches 100% market saturation? From his words, the other managers looked completely puzzled and didn't even understood, what he was trying to say.
The issue is more around the sheer volume of software and the wide range of platforms. There's the PC (with everything from social games to physical media), the PS3 (and PSN), the Wii (and Wiiware), the Xbox 360 (and XBLA/XBLIG), the PSP, the DS, the iFamily, Android phones: the market is heavily fragmented - and each of these channels has dozens (if not hundreds) of new games appearing each week. So a game has to be very, very good (or very well marketed) to make an impression.
Nintendo didn't create this problem (though the high volumes of shovelware on the Wii hasn't helped): the main issue is the fact that all of these platforms have DLC capabilities. So new games are competing against both other new titles and the long-tail of the thousands of existing titles.
A crash in the style of the 1980s seems unlikely: video games are too well embedded in popular culture now and (as per above) there's lots of alternative platforms for gamers to move onto. However, there may well be some shuffling. Quite where it'll all go is anyone's guess: I'd expect Sony to drop the PSP altogether (and/or shift to an souped-up Android platform: if you can't beat 'em, join 'em and include some value-add) - and looking further ahead, it's possible that Nintendo may also move out of the handheld market: the 3DS may well be shiny, but given the expected development costs (approaching Wii level), can it really compete with the large volumes of cheap iFamily/Android games?
I was thinking the same
First off with that comment you can tell whos not a gamer or one who sees great as great..
I see this from a whole different perspective, the fact is there have been alot of great titles released over the past few years. note Fallout3, demons souls, final fantasy, badlands, COD MW, GT prolgue gears OW2, God of War...
So where has Iwata been? Obviouly not playing these or likely any great software thats been released.
I don't blame the full slump in sales on the economy but its still a very big factor!
Face up there are people who lost jobs (like me) who bought 2-5 games a month now i can only buy 2-3 a year. Morgages, rent & other necessities come first.
After the economy fell & good jobs dissapeared (in the US) by the "hundreds of thousands per month" for a few years alot of people woke up to whats most important.
Ask the former GM & Toyota employees why they don't buy 1 to 2K worth of games a year anymore..
Thats an example that affects over 2 million consumers directly & millions more indirectly.
Another factor is saturation rate.
Not every household will ever buy all three major systems, let alone a stack of games for each or for any one system every single year.
Last report i saw console saturation rate for US households was over 70%. It maxes at 75-78% and thats at $99 console price range.
So often its silly to see comments from company big wigs that are so far out of touch beyond stat memos that are dropped on thier desk.
Most everyone in the major economic countries that wants a console has one. (or two)
These guys want to know what the problem is?
Think of looking outside the memos to factors like goverment public assistance numbers & average wages for "recreated jobs". Theres a whole real world ouside of thier business perspective.
Face it millions of americans, europeans & japaneese people are not close to the financial standing they where even 2-3 years ago and he says its lack of great games... OK
Every company dreams thier next game is the next pop culture success on par with WOW or COD MW..
Skill can get you the game but luck gets you massive success like Fallout3 had.
All comments i saw from those at Bethesda said it was far more successful than they had expected.
AKA a great game & lots of luck.
Thats my view of things from the real world not a office in a skyscraper or multi million dollar private nintendo compound.
I know this post was a bit agressive but "he has no clue what its like to be a gamer seeing so many great titles flood the market" & not having them within your grasp! Trust me there are Millions of us without the ability to support what we love to the extent we once did.
I'm sure alot of game industry people can relate as it is today, once your game is done alot of you gotta wonder is this team getting cut?
After e3 theres no denying theres more greatness comming our way. Rage, Bulletstorm, The new Zelda, Metroid... I could keep going but whats the point?
Most people, even the gamers didn't buy 2 or 3 titles every months, in fact at the moment, it is difficult to find 2 or 3 titles every months worth buying, if you consider yourself a gamer. And the fact remains, that other parts of the entertainment industry (movies, DVDs, books, comics) aren't as affected from the economic downturn as games are.
I don't say, the financial crisis didn't had an impact on the games industry (I remember, when I argued on Gamasutra 2 years ago, with people, that said, the games business will be completely recession proof). But if you look at other branches, the games industry is hit harder than others, this has to have a reason, besides the economic downturn.
You give many examples of games, that are great in your opinion, but most of these games are sequels, many originated in the last generation, Gran Turismo and Final Fantasy going back to even more ancient systems.
These games, may be executed well on a technical level, but they are basically minor revisions of their first incarnations.
Nintendo faces this problem as much, as the other companies, at the moment, they seem to achieve the goal, to renew their franchises on a regular basis, by keeping the core concept and twisting it in a way, the end-product is something new to the consumer (e.g. Super Mario Galaxy), they are in the lucky position to own franchises, that are what Mickey Mouse is for Disney and Star Wars for Lucas and even they have problems, that people start complaining about the lack of new games, with completely new ideas. At least, they had Wii Sports, which was the last title after Nintendogs and Brain Train to truly be innovative, so that new gamers joined the market.
CoD, GoW, Gran Turismo seem like much more limited franchises to me. The last Final Fantasy showed strong initial sales, but dropped quickly to non-existing sales, for a game with such a budget, this wasn't what Square/Enix planned.
This is the problem, all titles you mentioned are AAA titles, with AAA budgets, this titles need AAA sales, to be profitable. But with the current install base of the HD consoles, the market can only live with few AAA titles, that are cannibalising each other during the holiday season. This situation can't go on for much longer.
The increased crunch times, mentioned by others are a symptom of this situation. Every title has to be out by christmas, the needed manpower is more, than the available man power, budget is depleted (except the extraordinary marketing costs, that rise without a problem), so everybody has to do crunch time, to get the title out.
Videogames have also followed a similar path of price drops. Legal copies of old games used to be fairly pricey, and inconvenient. Now, Nintendo's Virtual Console has a ton of games for not much. Same with Steam -- AAA games from a few years ago show up occasionally at $5. The iPhone's store also encouraged a race to free/$0.99 as thousands of apps are fighting to be noticed. Some would put MMOs in this category, where some people get dozens of hours per month of gameplay for well less than the price of a new retail PC/console game. Guess what -- people are noticing that there's a lot of entertainment bang for their buck, if you're willing to step outside the latest and greatest stuff advertised on TV. And, if you're busy with what games you've already bought as impulse buys, what's currently latest and greatest on TC will be much cheaper in a little bit.
I do think that reducing initial retail price will probably entice more people to buy retail. A $60 game must be the best thing ever for me to want to pick it up and put aside the $5-20 games I've already got. The games industry can't magically erase all the content I already own. They've got to make their new products more enticing, or reduce price.
Also I haven't bought a full priced game in two years, the most expensive one was GoW3 in a promotion for 30 bucks last month (not worth the money compared with GoW1 imho), I always wait for 4 months and then buy the game, I am almost always disappointed, its always the same, over and over, so yeah... he's right, no wonder we're starting to see a bloom of indie developers.
...and if you wait longer, you just get bigger discounts. Last year's biggest and best can be purchased NEW for 1/3 the price they were released at with few exceptions (the exceptions are only 1/2 off).
So if your choices are:
a) Buy the latest and greatest for $60
b) Buy the latest and greatest from 3 months ago for $30
c) Buy the greatest from 10 months ago for $20
d) Buy the greatest from 2 years ago fro $5
e) Buy an iPhone game for $1
Is it any surprise that option 'a' starts looking not very attractive?
Especially when I could buy 1b + 1c + 1d + 5e for the same price!?
It becomes especially questionable to buy that one 'a' when it is a sequel to a sequel to a sequel. There ends up a lot of feeling of "Been there Done that" when I am asked to plunk down $60 on a PS3/X360 game that is very, very similar to a game that is $5 on Steam.
I liked the bold thought by Christian Keichel above:
"The problematic shovelware today are the AAA titles, not the cheap budget titles."
It's an opportunity for indies, and really any company who is willing to swim in blue oceans.
But, I disagree with a lot of assumptions that are being made here. The first is that demand is unaffected by the economy. Obviously, if consumer confidence is low and people have less disposable income, entertainment products are going to be the first ependitures to suffer. To think that there will be no decline in video game sales in a recession is pretty absurd. At least at some level, more consumers are eyeing and then putting down game boxes that they would have bought four years ago but can't know because they have a reduced budget for entertainment, and can only buy titles that they really, really, want, as opposed to just kind of want.
At least for me personally that is the case. My wife's employer declared bankrupcy and as a result there probably are four or five games that I would have bought in 2010 that I will either wait for huge discounts on or not buy at all.
I think nobody here says the demand is unaffacted by the economy. I said the industry isn't recession proof (and was attacked for that) from the very beginning of the crisis. But the main question is, why are games more affected by the economic downturn, than other parts of the entertainment industry, which have to deal with exactly the same problems, you (correctly) describe for the games industry?
@Andre
I agree with your price argument, and 60 US$ is rather the lower end, if I look at new 360 and PS3 games (especially, when I see, that these games costs 60€ upwards here in europe, regardless that 1€ has a higher exchange rate, then 1US$). But I think realistically, with the small installed user base of the HD consoles and the high development costs, prices for AAA titles have to be that high.
Nintendo seems to have an advantage here, that isn't often discussed. When I bought Super Mario Galaxy 2 on it's launch day, a few weeks ago, I paid 50€, I paid 40€ for New Super Mario Bros. Wii, that was even cheaper. For no other Wii game in the last months (Red Steel 2, Fragile Dreams, Sin & Punishment 2 and a few others) I paid more then 50€, I all bought them in the launch week. I don't think, that a title like SMG 2 has smaller development costs, than an AAA HD console title, but the much higher installed user base (with consumer, that are eager to buy Nintendo titles) allows them lower prices. I think the failure of many 3rd party developers on the Wii comes partially from the fact, that they try to sell their games for 60€.
A company like Blizzard shows that it's possible to release nothing but mega-hit after mega-hit. Are they just lucky? I think not.
Now about titles decreasing in price over time will depend on initial sales and rating. As a former GameStop Store Manager, I've personally seen many games do horribly and the price drop within a week. Games that do very well, however, remain at their initial release price for months and a used copy sells for $54.99, $49.99 at best!
As a nod to the price argument, I just ordered Assassin's Creed 2 brand new for $20 from Newegg. I never even thought about buying it until I saw it on sale. Someone is going to get some money they wouldn't have before because the price has dropped significantly.
However, I'm not exactly sure dropping the retail price at launch to $50 is going to make much impact. The people who want a game immediately will pay $60. Those who are willing to wait certainly aren't going to bite at that price point, they'll wait for something even lower. What do we think is the price point at which increased early (launch to 3 months) sales will overtake the loss in per unit revenue for a high quality AAA game?