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DICE 2012: Is the publishing model broken?
DICE 2012: Is the publishing model broken?
February 8, 2012 | By Kris Graft

"Is the publishing model broken?" That's the question posed during a debate between two prolific games industry analysts at the Academy Of Interactive Arts and Sciences' DICE 2012 executive summit in Las Vegas on Wednesday.

"I think publishers were great in the 80s and 90s when consumers didn't understand what games were," said Wedbush analyst Michael Pachter at the Gamasutra-attended event. It was also a time when game developers didn't have the digital channels that they have today, through which they can sell games directly to consumers.

They needed someone to bring their games to market. But that's not necessarily the case anymore, so the traditional publisher's role has lessened.

Another problem with today's publishing model is that they're inherently risk averse, said Pachter. When games were cheaper to make, they could take risks, and companies could see profits if their games sold a few hundred thousand units. "Now, I think that if [publishers] look at a game, and it's not going to sell 3 million units, they don't even try [to release the game]."

To Pachter, the publishing model today is a broken system that exploits the creative talents of game developers. He stopped short of saying that publishers are completely going away, but said that there won't be new publishers like Electronic Arts or Activision emerging. The cost to get into that business on that kind of scale is just too high, and way too risky.

"I think you're going to end up with a lot more companies like THQ," said Pachter. The Agoura Hills-based publisher just announced 240 layoffs and made big cuts to its games lineup to focus on "core"-focused games and digital distribution. Middle-of-the-road publishers that don't have the ability to guarantee a couple big, regular, commercially successful franchises are getting squeezed out of the market.

"I think it's interesting that in the last eight years, we lost Acclaim, 3DO, Eidos, Midway. What new publishers have emerged? Yeah, Chillingo, Playfish, but they're not the same," he said.

Activision, Pachter pointed out, relies heavily on World of Warcraft and Call of Duty -- that's just two franchises. The cost to make and market games limits what a publisher can release. "That's not good for the industry, because not as many people are buying content. It's not good for the consumer."

With today's publishing model, Pachter argued, it's business that is driving the creative, instead of the other way around, and that's detrimental to the industry. "We are getting fewer choices as consumers because financial guys are taking over. Financial guys are making the decisions," he said.

Take-Two is one publisher that Pachter said was making good decisions within a broken model. He said the Grand Theft Auto, Red Dead Redemption and BioShock house is an "enlightened publisher" because the executives are letting the creative people at subsidiary studios like Rockstar, Irrational and Firaxis drive the business decisions. The publisher's theory seems to be that if it releases good games, success will come.

"I think the power is going to ultimately shift from the publisher to the developer," Pachter said.

Jesse Divnich, VP at video game market research firm EEDAR, argued that the publishing model isn't broken, and in fact it still plays a major role in the curation of video games in a time when there are more choices than ever for consumers.

"Innovation happens every day. ... But without publishers, there's no way for us [game players] to experience that." He said publishers act like a conduit for content, and without them "innovation would cease to exist."

He used the example of Harmonix and Guitar Hero. Activision identified the potential of the Guitar Hero franchise, Divnich said, and turned it into a mass market hit. (That is, before the franchise fizzled out completely.)

"Innovation doesn't occur at the publisher level, but they do put it in front of a mass market so that [the masses] can experience it," said Divnich. "Your Limbos, Braids, Bastions -- those games wouldn't have been successful without a publisher," said Divnich.

"At the end of the day the publisher plays a huge role broadcasting new IP," he added.

Pachter still isn't convinced that the publishing model is fine as-is, and while publishers have the ability to put a relatively small game in front of a large audience, he said independent developers run the risk of being exploited. The analyst said it's endearing, the humility of some indie devs who are just happy that someone wants to play their game.

But they also have shown their business acumen is nowhere close to their abilities as creative game makers. "It's endearing, but the publishers are going to walk all over them," said Pachter.

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Jeffrey Crenshaw
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Wow, I'm completely agreeing with Pachter for once! This must be a good omen.

Ali Afshari
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Ha! I though the same thing....

k s
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Add myself to the list that agree with Pachter this time.

Joe McGinn
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Same here. Now come with me everybody, I here there's a great snowball fight happening in Hades!

Zack Hiwiller
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I think that just means that we are all wrong too.

Ramon Carroll
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Guitar Hero? Really? Talk about a "shoot-yourself-in-the-foot" argument.

Anyways, please don't stop talking about this, Pachter. Its one of those elephants in the room that's really starting to get old.

Jakub Majewski
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Well, if it's getting old, maybe it will die by itself :).

(of course, then we'll have the smelly carcass of a decomposing elephant in the room that nobody wants to talk about)

Casey ODonnell
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And Activision didn't identify Guitar Hero. Red Octane took the risk first as a small publisher working with Harmonix. Red Octane was later bought by Activision after the franchise was already established...

Jeffrey Crenshaw
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Also -- and I say this fully believing that Guitar Hero was a legitimate series that added to the genre by exposing it to a new audience -- let's not forget Guitar Freaks, which helped the GH brand identify and develop its game mechanics. They were close enough that I feel this is worth mentioning.

Keith Nemitz
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Power will shift from publishers to portals, not developers. A few, successful developers may become mini-portals, but that's the best it'll get.

Tomorrow, Apple could reverse the split for products at the App Store (like Microsoft did), and developers would still upload more apps than customers could track.

Rey Samonte
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That's actually an interesting take that I can see happening if you like playing games on the web or cloud based services. Steam, Kongregate, and IndieCity are just a few examples that seems to be matured or growing. I currently work for a mini-portal site developing bite sized Flash games which has been profitable for the company. There's definitely an interest in trying to grow that business model.

But I also have to agree with Pachter to some degree. There are plenty of channels that developers can take to publish their own games. However, this new transition in the gaming industry is still early and there are dangers if the developers are not careful. For one, self publishing is very risky for the developer. Without the proper strategy to make your game known and the business sense to make it all happen, a good game may never become the financial success the developers hope it would be. That's where the value of the publisher still comes into play.

I think one of the things we're kind of seeing is that the major publishers are starting to buy up these smaller independent developers. Although it might be good for the developers, the danger is seeing the major publishers owning the marketplace and not letting the smaller studios be in a competative position.

Jane Castle
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While I agree with your statements, the barrier to entry for the portals is much much lower. So if the portals decide to squeeze developers and consumers it is much easier for someone to come along and provide a competitive alternative.

This is currently not the case with the current retail, publisher, console environment that is now in place. The barriers are much too high for anyone to provide an alternate avenue with this model.

As for Apple reversing the split, sure they could do that. They have a closed platform. If developers can still make money they will still flock to the device. As for Microsoft I know several developers that will not release on XBLA because of this very reason. There are better alternatives for them than what Microsoft can provide. Of course they are the exception and not the rule.

Bob Johnson
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Great point.

sean lindskog
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Publishers don't have quite the strangle hold on distribution channels they once did. But many game studios couldn't exist without publisher funding.

Daniel Martinez
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Japan's big 3 (Konami, Square-Enix, and Capcom) are prime examples of risk-averse publishers. Development arms were cut off and the IP's were handed to outside developers once people going purely off numbers started calling the shots in an effort to mimic western video game business models. These actions severely impacted Japan's ability to compete; as cited in Kamruz Moslemi's article: "An analysis of the global decline of Japanese console development Part 1/4." Konami now appears to have shifted its focus to social games (see the Gamasutra November 2011 article: "Massive Social Growth Leads Konami To Profitable First Half") in search of new profits.

Such is the problem with being a massive publicly-traded publisher: you are at the mercy of your investors, and your investors only really care about turning as fast and as large a profit as possible for as long as they can. It's great when you have an IPO and the promise of booming growth, but once the growth tapers off, or tops out, you're really up the creek.

Alan Winthrop
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"Your Limbos, Braids, Bastions -- those games wouldn't have been successful without a publisher." Really? I strongly disagree with that statement. I think he picked the worst games possible for that argument...

Bob Johnson
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Yep I was thinking the same thing.

Jonathan Murphy
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It's difficult for indie games to sell millions of copies. However a shift has started. The $60 game is part of a dying breed. As the global economy gets worse consumers will spend more on the $10 game. You can only afford to be neglectful, unadaptive in good times.

Daniel Martinez
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Remember the games many of us grew up playing through the 80's and 90's? Yeah... lol. Let's just say only a select few have staying power.

Timothy Larkin
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The consumer will always desire a big budget game. Big budget games make big money. Everybody seems to be forgetting the history of video games. Everybody thinks that casual mobile/facebook games are the future. Actually, they are the past and people will get really bored, really fast. There will be a casual game crash, just like the crash of '83. In '84, people thought video games were utterly dead. The arcades were literally wiped out. The only reason people returned to playing video games was due to technology which enabled more immersion in game-play.

The big publishers that failed, did so because they were complacent. They pumped out sequels of old franchises until they died. They did not take risks. They made bad games.

Mike Lopez
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Casual games are not going to crash. The number of game players in the world has doubled in the past 3 1/2 years and the majority of the new comers are casual, non-core players. Games are no longer niche or the sole domain of the hard core player. Mass market means a wider spectrum of games can and will be successful to many types of users.

That said, I do see both mobile and social games maturing to include deeper gameplay on average, but I still think there will always be room for the mindless game that casual players can play for 5 minutes on the bus, in the check-out line, or while waiting for the repair man to show up.

I also see more indy developers trying out new things in mobile since they are not at the whims of publishers and hopefully that will continue as publishers become less relevant in that space (or until they consolidate all the little guys and push everyone else out with crazy high budgets and marketing).

Bob Johnson
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I think the current casual hype will crash, but there is always room for the quick short interesting game so it won't die out completely.

But yes current folks will get sick of many of the current casual game ideas. Right now many of those games are just simpler forms of old core games. But new to more mainstream folks. Those mainstream folks will recognize the repetition after awhile and lose interest. Most will not graduate to deeper games because they require too much time.


Games have never been the domain of the core player. Before Facebook we had Flash games on many sites. We had MSN and Yahoo casual game portals. We had online poker. The list goes on.

And one only has to look at board and card games and sports even to see that everyone plays games.

The only difference now with regard to video games is that they are more accessisble to the mainstream. Not only easier to get into, but easier to find and purchase.

But I agree always room for simple fun game play ideas. For one people always have 5 minutes to kill and two, there are always new players coming into the pipeline.

Maria Jayne
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The addition of sites like Steam have given development houses far more control over their own releases, Another example would be Mojang with it's entirely self promoted product which sold largely through internet chatter and video game articles.

This idea that big budget games can't exist without publishers or indeed developers need publishers is starting to look like the reverse. Without publishers more money would be held by the developer, sure they may have fewer boxed products but there is a definite shift in downloadable games and DLC in which publishing has next to no hand in.

How much longer can publishers argue that boxed products and brick and mortar retailers are worth the overheads when only last year something like 40% of uk game sales were digital and more recently 60% of swtor sales were on Origin. With digital sales you also guarantee sales as opposed to boxed products being traded in second hand to be resold again...

Bob Johnson
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Well everything is going digital. Just a matter of when and not if.

The notion of a publisher will always be around in some form.

That is because consumers need to know about your game in order to purchase it.

Digital publishing does not change this universal law.

And publishers have always done more than just publish a videogame. They market it. They fund it too.

But digital distribution does allow a developer to ultimately scale as big as their success allows.

They can start small. And as they make money fund bigger and bigger games. Still the developer assumes all the risk.

You say the developer gets to keep more money because of digital publishing, but have you looked at how much money the big videogame publishers are making as of late? Many if not most are losing money. EA hasn't made money in many years now.

Mathieu MarquisBolduc
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Is the Analysts model broken and outdated?

Also shame on P. for ignoring publishers like Altus and Paradox. I spend more time playing Paradox published games last year than any other (not counting my employer). There ARE publishers who take risks and publish games in niche markets, and make good money doing so.

Tho it seems to me that this generation the bulk of console games were made by publisher-owned studios, which kinda make the point moot.

Carlo Delallana
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While this conversation was happening at DICE the folks at Double Fine launched and successfully funded their Kickstarter campaign.

Michael Lubker
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We don't need publishers anymore if more people do stuff like this. If this keeps going at its current rate they'll have enough money to make 100 games at the level they asked for.

Kevin Reilly
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Good news for Double Fine. I checked the kickstarter page last night it was @ $47,000. Check this morning and it was @ $770,000. Unbelievable. Definitely biggest game financed solely through pre-sales and contributions that I can remember.

Rey Samonte
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Here's an interesting link that talks about publishers moving to mobile:

Michael Bilodeau
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I'd have to agree with Patcher. And on a personal note I'm tired of the "all or nothing" perspective that a game MUST have millions of users or sell multi-millions of copies to be a success. Granted you need enough profit to sustain the company and feed the next projects but that shouldn't be an immediate dismissal of projects that are profitable but not breakaway hits.

Also developers can have alternative methods of funding outside of the traditional publisher role. Double Fine for example had it's new adventure game funded strictly by fans via Not to mention avenues like angel investment or bootstrapping funding.

I do think publishers still have strong pull in brick and mortar distribution channels, but that influence can be quickly lost with too many "failures" flooding the channels. Also publishers don't have the influence in digital distribution because it's easily accessed by all which makes the playing field equal between publishers and developers especially in the mobile space.

Matt Cratty
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The only thing that is killing the industry is the loss of the AAA niche games. And that is solely the result of the big publisher thought process.

There will not be another Baldur's Gate 2 or Dungeon Keeper, etc.. in the current environment.

It's all gone to either Activision-style AAAA titles (which are zero risk and almost indigestible) or small independent snacks.

Yes, that's a generalization, and it's also a reflection of my personal taste (which is no longer served by the console-first paradigm).

HOWEVER, there are signs of, if not life, then reasons to be hopeful. Deus Ex 3 wasn't the disaster that the MW3 mantra would have suggested. Skyrim, while streamlined, was also a vast surprise in terms of detail and excellence (I still think its impossible that an 80-person team made that game).

I guess my post is pretty dumb since I could have just said - "yeah, its still kinda shitty, but there's reason to think it might be shifting a bit". Publisher's need to remember that there's room for games that appeal to smaller segments than "everyone".

Bram Barber
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IMO the lack of small creative developers not being able to step up the plate is one thing that is hurting the industry. We have companies like nintedo who have no trouble pitching new ideas to the public by using something constant (in their case its usually mario). most developers dont have that ability to do so and publishers are unwilling to takes a lot of risks with smaller titles which is a shame because im positilve that there have been some brilliant games made that have been rejected simply due to it being to risky.

It reminds me of a quote i saw. if a man came up to you and gave you this sparkling black bubbling liquid would you have honestly invested into it? most people would say no. That sparkling black liquid turned into coca-cola (IIRC i heard this on TV listening to dragons den)

Basically im saying my point is that the industry feels like its progressed passed the point where risks are far to fatal and the mainstream will start taking less risks simply because they cant afford not to. it will be interesting to see if we can pass this.