2009 brought many welcome surprises and accomplishments that the video game industry can be proud of -- whether it's the ever-broadening definition of "gamer," the proliferation of risky indie video games, or just the higher profile that the industry has today in general.
But not everything in 2009 was worth celebrating -- some very notable shortcomings occurred this year, from continuing third party issues with the Nintendo Wii, to slowing retail game industry sales.
Perhaps the worst thing about our top five picks for disappointments is that all of them are still open-ended problems that have yet to be solved...
5. Ongoing Third Party Wii Hurdles
For some time, Nintendo management has been fighting a PR war against the perception that Nintendo platforms are inhospitable for third parties. In 2009, Nintendo honchos continued to wrestle with that perception. Nintendo president Satoru Iwata noted in January this year that there were 30 third-party Wii titles that have sold over 1 million in the U.S., up from just 12 in March 2008.
At the time, he predicted a trend that third-parties would become increasingly successful on the platform -- a prediction that occurred just months after Nintendo of America boss Reggie Fils-Aime said, "I will be able to say our licensees 'get it' when their very best content is on our platform. And with very few exceptions today, that's not the case."
We'd venture to say that Fils-Aime still wouldn't think third parties "got it" in 2009, with "very few exceptions." We saw third party Xbox 360 and PlayStation 3 titles regularly top the charts, but we never did see a third-party Wii game lead monthly sales this year in the U.S.
2009's high-profile M-rated Wii third party titles didn't seem to fare that well. The sales performance of Madworld, House of the Dead: Overkill, and Dead Space Extraction not only cemented the console's reputation as cold towards third parties, but also seemed to show that the console, like previous Nintendo platforms, isn't friendly towards more adult-focused content.
What third-parties do get the Wii? Capcom apparently gets the Wii, releasing successful iterations of Resident Evil. Take-Two gets the Wii with Carnival Games. Before it went into bankruptcy, Midway got the Wii with Game Party; Activision with Guitar Hero; Ubisoft with Rayman: Raving Rabbids; Namco Bandai with Wii Ski and Active Life; and THQ with Big Beach Sports, apparently. All of these are million-selling third-party Wii titles -- some of them not exactly known for their high-production values.
Who "got it" this year specifically? Electronic Arts had success in the West with EA Sports Active, which released in May this year. The workout game has sold around 1.8 million units and is the publisher's best-selling Wii game to date. EA CEO John Riccitiello insisted: "Third-parties can do a lot better on the platform with the right support from Nintendo. They've always been first party-centric, and they're learning how to be third party supportive. The Wii is not gone."
However, the EA CEO added, "But if [Nintendo] maintains a $199 [price] and doesn't innovate, they're going to have a hard time competing with what's already been announced from Microsoft and Sony [their motion controllers]." And seems like there may already be issues, as Gamasutra's Matt Matthews recently illuminated with a study of U.S. retail game sales.
Matthews noted an estimated 34% Wii market share of all U.S. retail games in November 2008, dropping to 29% in November 2009 -- as the Xbox 360 overhauled the Wii, rising to 37%. If you consider that Nintendo's own first-party games are included in that 29% total, and the relative flood of Wii titles thanks to ease of development, it looks like the Wii game market may be markedly tougher going forward.
4. Clunky Digital Platform Approval Processes
In 2007, industry stalwart and Space Giraffe developer Jeff Minter described Xbox Live Arcade's extensive approval process as "soul-crushing." For many other XBLA developers, it might not be quite that dramatic, but the process for gaining approval to many digital services -- including the iPhone App Store, PlayStation Network, WiiWare, and others -- certainly could have done with continued optimizing in 2009.
There's a contrast in the issue, but it tends to be strict, specific technical requirements that trip most developers up. Surprising holes can open up -- such as an issue with the Unity engine for iPhone -- that can exclude or disapprove entire classes of titles.
For the much more exclusive Xbox Live Arcade and PlayStation Network approval processes, developers have to jump through various greenlight hoops and meet strict technical requirements before hitting the storefront for each release. This stops poor quality or significantly broken games from appearing, but leads to extremely long approval processes at times -- sometimes difficult for indie studios to afford.
But let's not just pick on console approval processes. The iPhone App Store, with its 100,000-plus Apps and more than 22,000 games, has an approval process that is "starting to crack from the seams" thanks to the sheer amount of content flowing through it, Kimmo Vihola, CEO of Minigore developer Mountain Sheep told Gamasutra this year.
While the barrier to entry is much lower, the result of the 'gold rush' on iPhone is that approval times for the App Store can range from a couple days to six weeks, he said. In addition, games do get 'stuck' in the approval process at times, it appears.
And as digital distribution becomes more prevalent, these issues look like they're going to persist for some time.
3. Devaluation of Games
The App Store made the term "Race to the Bottom" a common phrase among video game editors covering the iPhone gaming market. But might that just be rank snobbery from those who don't understand Apple's radical free market approach?
We're not just talking about the avalanche of 99 cent software, although that is at the root of the predicament of value perception on iPhone. We're also seeing impressively fully-featured games that might sell for $20-$30 on a PC or other platform sell for a measly $5-$10 on the App Store.
Ian Bogost, video game designer and academic, wrote about this skewed value perception earlier this year on Gamasutra. He said that a person may buy a $5 magazine, read it for a bit, then leave it on an airplane with no qualms. Or a badly prepared coffee might cost $1.49, and you'd just trash it without much of a second thought.
But people buying games off of the App Store have different value expectations for games as opposed to a cup of coffee, and in 2009, that skewed perception was not in favor for higher game prices, much to the chagrin of iPhone developers. A September analysis by UK site Pocket Gamer found that the average price for a top-100 iPhone game was $3.20; a top 10 game was $1.89.
But what else should we expect? The App Store encourages this Race to the Bottom with its storefront, which lists games according to unit sales. Of course, when a game is listed at 99 cents as opposed to $10, the 99-cent game is already at a distinct advantage over more expensive games, and likely to land a higher billing. (Apple did add a 'highest-grossing games' chart with a lower billing in 2009, however.)
Obviously, low price points can be great for consumers, and there are games that have seen admirable success at the 99 cent price point. But even at rock-bottom prices, consumers still aren't guaranteed to bite, and the market becomes even more hit-driven than normal, as devs cut prices to vault into the Top 100. As Bogost noted, "Apparently 99 cents is a risk worth taking on a cup of coffee, but not on a sophisticated, long-form video game worth ten times more on another platform."
2. Market Broadening Is Hit-Driven
The "Long Tail" was supposed to be a driving factor behind the expansion of the video game market -- more people would play a wider array of games across easily accessible digital platforms, and everyone could make a good living satisfying those niches.
While we continued to see an expansion of the video games market, it turned out that the Long Tail had a limited impact on the games industry's broadening in 2009. Companies that had enough marketing and advertising resources to turn a game into a hit are the ones that drove expansion.
Even in a digital world, it's the sales-leading companies that grab more market share. Just take Activision Blizzard with World Of Warcraft, Zynga with Farmville and Mafia Wars, and even -- on a more conventional retail front -- Nintendo with Wii Fit (and just about all of their other internal titles).
Just because there's more choice doesn't mean that people will buy games more evenly, as consultant David Edery has been pointing out and a recent The Economist article defined particularly well across all creative media.
As the magazine noted, under a subheading called 'The Tyranny Of The Hit': "As sales become ever more concentrated, it is becoming both more urgent and harder to establish a foothold near the top of the market. A book or film that fails to attract a mass audience tumbles quickly into the depressed middle."
It's this danger that even larger games are increasingly falling into, which is why you're seeing executives like Take-Two's Strauss Zelnick recently commenting: "The demand for top-tier products is okay. The demand for lower-tier products is not so clear... The safest place to be is in triple-A."
And if you think the same thing isn't happening on digital platforms - check out the swift hit status of Zynga's latest Facebook games, thanks to heavy cross-promotion with existing hits like FarmVille and Mafia Wars, as well as Electronic Arts and Gameloft's domination of the iPhone's top revenue games charts.
1. Retail Video Game Sales Down
We started this year well aware of 2008's ugly economic environment, confident that video games could weather -- or even flourish -- during tough financial times in the new year.
Early in 2009, there were reports that video games would even benefit from the credit crunch, as people may opt to stay home for cheaper entertainment, rather than venturing outside for expensive trips or meals out.
That seemed to be the case at first. January U.S. game retail sales were up, as were February's. NPD called it a "fantastic start." But that growth would not be sustainable, as the next six consecutive months would see U.S. retail video game industry sales revenues decline. The excuse of tough year-on-year monthly comparisons, while legitimate to an extent, couldn't explain the ongoing shortfalls.
The recession was affecting even the resilient games industry. Through November, video game sales were down just over 12 percent from 2008. NPD analyst Anita Frazier said following the results for that month that "Breaking even [with 2008] seems more out of reach."
But 2008 video games generated a record-breaking $22 billion at U.S. retail (up 23 percent from 2007), which does make for a truly a tough comparison, particularly when the economic odds are stacked against this and virtually every other industry.
In particular, the rise of the online game and digital distribution -- not tracked at all in these high-profile retail charts -- has birthed suggestions that social network gaming (FarmVille), free-to-play online games (MapleStory), digitally distributed titles (Steam), and subscription MMOs (World Of Warcraft) are more than compensating for the retail slump.
But in an industry that has gotten so used to such strong growth over the years, recording an annual retail game decline can be labeled as nothing other than disappointing -- and it is in no way clear that digital is completely making up for the loss.
- Kris Graft
Tadhg Kelly: "[The long tail is] clearly not feasible in the console sector in particular where spiralling costs and small install bases have created a decade of narrowing selection. Consoles are becoming like blockbuster cinemas, with only room existing for mega-buck hits. Even the online offerings of consoles are too managed, tailored and all about the brand of the console rather than the developers to really let the creative cats out of the box."
David Delanty: "In defense of game developers and their publishers [regarding on-disc DLC], I feel that the root of the problem comes from gamers themselves. It may sound incredibly stupid to try for a cheap cash grab by being able to put some sparkles on your horse's butt, yet what's even stupider is that the gamers are willing to pay for such content in the first place. You can't really blame the supplier if the consumer base is providing a demand for trivial knick-knacks."
Daniel Martinez: "The Nintendo 3rd party bit really caught my attention. In SNES/SFC days Nintendo embraced companies like Konami, Rareware, Acclaim, Midway, Squaresoft, Enix, Activision, EA, Etc... but it appears the shift in corporate strategy that took place during the late 90's effectively shunned out and alienated most of those companies because they were not making 'family games.' It would be two consoles (a decade) later until Nintendo once again opened its arms to 3rd party developers for more-mainstream games, however, it seems the devs are still weary of Nintendo's overall strategy.
"Differentiating yourself from the pack is a good thing, as is innovation, but burning bridges with devs and publishers isn't, and it's going to take time and a lot of hard work to build new ones."