Hot Topic - Is the Triple-A Game Business Model on its Last Legs?
Written Sunday, January 30, 2011 By Dan WebbView author's profile
There's no denying it, this current generation of HD consoles has made a lot of developers and publishers rethink their strategies. More so now than any other generation of consoles, games development is on a tightrope and has become a much riskier business. Thanks to the surge in consumer expectations and a demand for high-end HD visuals, developers are walking on eggshells. One step wrong and even the most renowned developers can see their years of hard work and graft go down the drain. Depending on who you ask though, the response to the future of triple A games is widely different from case to case.
"Crash was born in an era of profitability. Small risk, huge return."
“We're entertaining more people in more ways than we've ever done before, but from a profitability standpoint, the console triple-A stuff is, right now, not quite working,” said Naughty Dog co-founder, Jason Rubin, in a web series last year. Rubin, who left Naughty Dog in 2004, noted that the “Crash Bandicoot era” of $2 million games selling nine million units has been replaced by an era where games can cost $80 million to make, but still retail at the same price – “inflation adjusted” of course.
You've only got to look at the demise of some of the once established studios in the past 5 years and you can see some sense in Rubin’s words. Bizarre Creations, Pandemic Studios, Ensemble Studios and 3D Realms, all of which were once classed as world class developers, have been at the wrong end of this unfortunate position, revealing the tentative nature of the industry. Arguably though, these are studios that have failed to deliver this generation, for the most part. For instance: Bizarre struggled to make a mark with both Blur and Blood Stone; Pandemic never managed to reach the lofty heights they achieved with Mercenaries; 3D Realms spent the good part of 10 years on one game; and Ensemble, a once established PC developer, seemed to be at the wrong place at the wrong time, with the console currently dominating the headlines and Microsoft choosing to close them down. Whether those instances were a result of the increase of game development costs or a result of their failure to adhere to better quality levels and be cost efficient remains to be seen. Incidentally, 3D Realms are still in business, but their Duke Nukem Forever title has swapped hands to Gearbox.
Former Take Two CEO, Ben Feder, said that "any triple-A title needs aftermarket content to be competitive," which not only reveals the industry’s shift towards DLC, but indicates how publishers are trying to squeeze as much out of their engines and products as possible to make the triple-A titles more profitable. It’s also about keeping games relevant for much longer and extending their shelf life.
It’s not just DLC that developers and publishers are looking towards to make their products more cost effective and profitable, but both are experimenting more in the digital download space too, which are infinitely cheaper to make, but far from triple-A.
"Schafer shows off his latest game to the gaming press."
One developer who has bizarrely struggled to wow on a sales front, but still maintains a pretty high level of quality in their products, is none other than Tim Schafer's Double Fine. When Brutal Legend failed to make much of an impact on the sales front, the developer made the conscious choice to create smaller downloadable titles, which have a potential for a much larger profit margin. Simply put, despite EA's behemoth Brutal Legend marketing push, the rock-heavy title didn't really return on its investment. You could argue that this was down to Double Fine confusing its potential audience by not really pigeonholing itself in one genre, but one could surmise that releasing a new IP in the busy Christmas months is retail suicide, meaning that creating new triple-A games is not the only issue, but actually getting its marketing and pre-release promotion right is probably more important. I mean, in recent years the only original IP that really made an impact in that pre-Christmas period was Borderlands, but in truth, 2009 was a fairly tepid year for games, so that definitely helped. Quite why nobody takes advantage of the quiet June-August period is beyond me, and that assumption that no-one buys games in the summer is complete hogwash, but that's another story for another day.
Mirror's Edge is an example of an IP that was pushed out at the wrong time, and with EA releasing that and Dead Space within such a short time of one another, that's a decision that still puzzles me now. I imagine that in a much quieter release period, Mirror's Edge might have stood a much better chance on delivering on its investment - which is what it's all about these days.
In my honest and frank opinion, Square Enix's Deus Ex: Human Revolution is treading a dangerous path and it goes back to not only creating triple-A games being a risk, but not marketing or promoting them correctly is now a much more important part of the process. Now why am I using Deus Ex as an example? Simple, because from what we've seen of the title thus far, it's shaping up to be a fantastic game, but the "buzz" for it seems to be non-existent. The basis for this assumption is simple: we run a gaming website and looking at the page views and unique users for each game we can kind of predict what will sell and what is getting a head of steam behind it. It's a numbers game at the end of the day. Deus Ex's issue is not that what they've shown thus far isn't great, but it's far too sporadic. From releasing a fantastic CGI trailer to a large period of nothingness, Eidos Montreal and Square have their work cut out in the next few months to raise anticipation and "hype" for the title.
"Motivational posters make the world go round."
At the end of the day though, it all comes down to a risk vs. reward business model, and spending $50 million on the development of a game and taking 3 years to develop it not only puts an incredible amount of pressure on the development team to deliver, but not breaking even at the very least could have catastrophic results. I hear from a lot of developers that say as long as they create the games that they love, there will always be triple A games, but the truth of the matter is, that unless they get a return on their creations, it's never that simple.
BioWare’s Greg Zeschuk even went as far as to say that it’s pointless for most development houses to try creating triple-A titles, and says that only the top ten companies will be successful with them. "It's more competitive than it's ever been, it's more dangerous than it's ever been," said Zeschuk at last year’s Develop conference, noting that, "Right now it's precisely the wrong thing to chase."
Ubisoft’s European Managing Director, Alain Corre, seems to believe the exact opposite when it comes to triple-A games... but then again, I guess they come under the top 10 companies category that Zeschuk mentioned supra. “The games that are not triple-A are not profitable anymore. And that's changed in the last 18 months," he said last year.
"Assassin's Creed: stabbin' fools and selling games since '07"
"When you have a triple-A blockbuster it costs more money to develop, but at the end of the day there's also the chance of a good return on it because there's a concentration at the top of the charts. To a certain extent it becomes less risky to invest more in a single game or franchise than spreading your investment between three or four games, because if those three or four games are not at the right quality level, you are sure to lose money."
Interesting point and one that vastly differs from many other industry veterans, but this is coming from someone who’s seen their company churn out many franchises in recent years that have failed to bring home the bacon, while watching Assassin’s Creed turn profit and demonstrate growth since its introduction to the market.
It's hard to sit here and argue that we'll always be blessed with triple-A titles, because in such a volatile and unpredictable market, things can change in a heartbeat. What I can surmise is though that while there is a market and an audience for it, publishers and developers with the resources will always churn out triple-A games. I mean, it's not everyday that a smaller bite-size downloadable game will see returns in excess of a billion. In fact, it’s never happened, but Call of Duty can do it every year... or so it seems, so don’t write them off just yet, despite what many industry folk say.
[Editor’s Note: Hot Topic is a monthly feature here on X360A, where we take one of the month’s talking points and discuss it until your eye-balls bleed through sheer delight. Now that's intense!]