Note that in this post, I will not address the extreme casual market of the Petz and Walk Simulator kind. It’s a whole other beast that others have a much better understanding of than me. Enjoy!
High levels of profitability attract investments, which leads to increased competition, which leads to a wider range of choice, which leads to a refinement of the customer’s desires, which leads to an increasingly segmented market.
Currently, it appears that the game industry’s reaction to heightened competition has been to produce more games for a market that is segmenting, and bet more money on them as the stakes rise. But there are various hidden factors linked to a rise in competition. Since this increased competitiveness is the fruit of percieved profit opportunities by outsiders, a number of poor investments are made leading to low quality games on the shelves.
This leads to a faster drop in prices as they fail to sell at their initial price range, and this quickened price drop leads the customers to expect lower prices at all times. It soon becomes instinctive to them; sixty dollars is too expensive, period, I can wait a month to buy it at half the price, if not less, or buy it used
A streamlined and efficient corporate strategy will work well on calm seas as well as during storms, being able to pass over the short-term agitations of the market of which one has no control over. You can’t prevent a bunch of hacks from trying their hands at making money in the video game market, this is beyond you. The negative impact of their involvement in our industry should not dictate your fate.
Deciding to produce more games at a time when the competition has increased and the market has segmented further is no different than pretending that you can steer your ship with ease in a storm when you had enough trouble on calm seas.
If the return on investment has not increased but production capacity has, then the company becomes unstable and will be toppled as soon as it faces events beyond its control. The bigger they are the harder they fall, and competitive times are tumultuous times.
So what can be done? I see two actions to take in particular:
1- We must reduce overlap in our catalog so as to limit internal competition to make up for the increase in external competition. Each release, on its own, should be as successful as it possibly can be. Internal competition reduces those chances.
2- We need to increase return on investment. A good way to achieve this is to make games that will not become irrelevant six months after their releases. World of Warcraft has become part of gamers’ lives to an extent where they will cut elsewhere in their spendings in order to keep on playing. The same applies to some extent to titles like Guitar Hero, where players have created a personal link to what the game provides them with, something they don't want to get rid of. This is what it means to make meaningful games.
Code written for World of Warcraft almost ten years ago is still bringing in revenue today. Part of keeping a game relevant also implies making a quality brand, and sustaining that quality. Some studios have been excellent at establishing each and every of their releases as quality brands. In the case of video games, we might be underestimating how important a studio’s name is for a relatively significant part of the market. The movies have their actors and directors, we have studios. A well established studio that has been consistent on delivering quality will definitly benefit in competitive times thanks to its reputation. It's another factor behind the gamer's purchase choice.
A game’s worth is also linked to its cost. If a gamer plays twenty eight hours of WoW a month for fifteen dollars, that’s around fifty cents an hour. Sixty dollars for twelve hours of play equals five dollars an hour. Instinctively, gamers know that without ever thinking about it. At a time when competition is so high, this instinct reinforces itself as they become more selective. It’s a natural process. What are they going to get out of the game, and at what price? As WoW has demonstrated, it's cheap to play, and anyone who has experienced its gameplay mechanics understands how it establishes its worth in the player’s mind, although it’s subtle enough not to be directly insulting.
I doubt the guys over at Blizzard see their games as glorified slot machines, they believe in what they do and they commit themselves with dedication, but it also happens to fall perfectly in line with their publisher's corporate strategy
The devs at Blizzard recognize how their games are successful from a gamer’s perspective as well as from a corporate one, and I doubt they have any shame about it. And yet, after all the profits they're the very the source of, they probably rarely ever have to think about the corporate strategy itself, because in the end this is a unified and entirely natural and common sense-based approach. They simply focussed on making a game that stood out from the competition, that was fun, and that provided lasting value. Meanwhile, Activision continues, so far, to make sure that WoW remains the Activision MMORPG, giving the game the room it needs to be the continued success it is.
[Originally posted at http://www.allegory-of-the-game.com/]