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The Worst Things To Happen To Games In 2011 (According To Analysts)

The Worst Things To Happen To Games In 2011 (According To Analysts) Exclusive

December 20, 2011 | By Chris Morris

[From layoffs to the rise of freemium/smartphone gaming, several analysts share their biggest game industry disappointments and unhappy trends of the year with Gamasutra.]

Analysts, by nature, are critical beings, so having heard their thoughts on the best things to happen in the gaming industry this year, we definitely wanted to hear what they thought had gone wrong.

Retail sales are set to record their third consecutive year of declines, after all - and while some companies have seen their stock prices rise (congratulations EA!), others continue to lag.

Here's what Wall Street's most notable game industry analysts thought went wrong in 2011:

Michael Pachter, Wedbush Securities

Pachter was pretty upbeat on the video game industry in 2011, but noted there were two events that were discouraging to him. While he didn't have any animosity towards Sony after this year's high-profile hacking incident, he was upset that games and gamers, which had previously been off limits to that subculture, became a target.

"The worst thing that happened to the industry is it became the target of dickhead hackers," he says. "It's a shame hackers have nothing better to do than screw up everyone's enjoyment."

A close second, he says, was the shut down of Team Bondi, leaving dozens of employees unpaid. That might surprise some people, given Pachter's controversial statements on unpaid crunch time, but he says "I feel bad that something like that happened. It's just wrong. People that work in this industry and make great games deserve to get paid."

And while he listed the growth of the multiplayer phenomenon as a good thing, he notes that the success of titles like Modern Warfare 3 often come at the expense of other games.

John Taylor, Arcadia Research

The Wii U may have had people wrapped around the corner at E3, but it didn't hold that fascination after the show. Combine that with the underwhelming launch of the 3DS and Taylor says it makes Nintendo as a company one of the year's biggest disappointments.

"Wii U underwhelmed people and so we'll see where that goes - and the same with the 3DS," he says. "I say the disappointments are both on Nintendo's side, specifically the price structure vs. its performance. ... There are lot of people wondering if they need another dedicated box in their house. With iDevices [selling] 10 or so million units every quarter, it's getting harder and harder to justify that strategy, even with the world's best games."

P.J. McNealy, Digital World Research

McNealy joins Taylor in pointing to the marginalization of Nintendo as a disappointing trend of 2011.

"The industry needs Mario, needs Zelda, needs Donkey Kong, and right now, with the slowing Wii console sales, and lack of apparent developer enthusiasm for making games for the 3DS, it's not helpful to Nintendo longer term," he says. "Granted, industry observers have tried to call the demise of Nintendo before, and Nintendo answered (hello, Wii!!), but right now, with consoles going more media-centric, it's a trend that doesn't play to Nintendo's core strength."

Eric Handler, MKM Partners

Like Pachter, Handler believes the rise of smartphone gaming has been one of the best things - and worst things - to happen to the gaming business. The infusion of new talent and the return of garage developers making money for their games is encouraging, he says, but the impact on the larger industry - particularly publicly traded game companies - has been less so.

"It has killed the device casual platform like the DS and the PSP and it has taken a $35 business and made it a $3 business," he says. "The economics have really changed. It's hurt revenue from that standpoint and changed the entire economic model."

Billy Pidgeon, M2 Research

Pidgeon had mobile on his mind as well, but in an entirely different way. His big frustration this year was the conventional wisdom that phone and tablet gaming was the same thing as portable gaming.

"People have been saying that freemium and iPhone games and games for the iPad are going to take down traditional gaming," he says. "As long as gamers are looking for quality entertainment, they're not going to settle for what's available on tablets and iPhones. That's a snack, but it's never going to be a meal. Some people will exist on snacks the rest of their lives, but that's not the gaming audience."

Pidgeon also said he was frustrated with the emphasis on sequels the industry has fostered recently - and which really seems to have come to a head this year. However, he notes, he understands the reasoning behind it.

"There is this franchise-itis, but I really can't fault that," he says. "You can't blame [publishers]. It's expensive to put these games together and they really can't afford to take that much of a risk."

Jesse Divnich, EEDAR

Hackers were on Divnich's mind. The analyst said he was frustrated with the string of attacks that occurred this year, since the gaming community is generally supportive of some of the loftier stated goals of Anonymous and other organizations who have been known to cause trouble for others.

"While security breaches and threats occur daily in our world, it is saddening to see the video game industry hit so hard in 2011, especially since the developers and gamers, who are the biggest proponent of free speech and consumer rights, were ultimately impacted the most," he says. "And maybe that's the problem. We walked around with our defensives down and that ultimately made us an easy target -- too easy to pass up apparently."

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