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Developers Debate: 'Is There A Future For Consoles?'

As publishers "slash their product lines", the console business is changing, and in a GDC Canada panel, execs from Activision Blizzard, Propaganda, and Timegate talked about the major market challenges.
Is the console business going away? No, but it is changing, said five console-oriented developers at GDC Canada, who discussed what it takes to succeed in an increasingly high-risk, low-return segment of the video game market. Included on the panel were Kelly Zmak, former president of Radical Entertainment; Dan Winters, vice president of developer relations at Activision Blizzard (more Activision than Blizzard, as he said); Adel Chaveleh, president and CEO of Timegate Studios, and Jorge Freitas, founder of Propaganda Games. Disney Interactive Studios operations VP Howard Donaldson, the panel's moderator, pointed out that console sales fell by 11 percent last year: "A lot of publishers have slashed their product lines, which is affecting studios,” he said. “We’ve had major layoffs throughout Canada, the U.S., the UK, and all around the world.” “You have a social gaming session and it’s packed,” he added. "Everyone wants to get into that business.” So what does this mean for the future? Is Console Gaming Going Away? “I think the obvious answer is no, but it is changing,” said Zmak. “The packaged goods business is still a viable business. What it is doing is being impacted by other purchases and other consumer trends. That console business has always been a tough business. It’s a brutally tough business. The iPhone business is no simpler, it just includes less people.” “Call of Duty [Modern Warfare 2] made $1 billion off 15 million units. FarmVille made $200 million, and it only took them 80 million people to do it." But Zmak admitted that those things don't form two opposing ends of a spectrum -- because scale, staff and development costs are so different. Chaveleh agrees that costs of making console games are doubling. “I don’t see the amount of deals staying the same if that’s the case,” he said. “The amount of deals are probably going to be cut in half. From an independent perspective, the digital distribution model is really attractive, but the retail market isn’t going away any time soon either, especially considering the console makers need software to sell consoles.” “I think that the digital distribution piece is an important part of the retail business,” agreed Winters. “Digital distribution right now, for us and probably a lot of people, is a way to build a community around a retail product.” “The complexity of those machines changed dramatically from one generation to the next,” reminded Freitas, noting that console game makers have to constantly adapt to “disruptive technology that we’re facing, like 3D TVs and motion controls.” “The expectations that consumers are about to put on this industry, with successes like Avatar and technologies in other mediums, are going to challenge us to make better titles that people are going to want to buy and play,” he said. How Do You Compete In A World Of Blockbusters? Remember the time when "if you sold a million units, that was considered a hit"? Donaldson does, and points out that now, "to break even, you have to sell 2.8 million if you’re a blockbuster title.” The top 20 is dominated by blockbuster franchise sequels with $40 million-plus budgets, he says, with an average Metacritic rating of over 85 percent. The average title, as opposed to the top 20 blockbuster, has a dev budget average of $20 million, where the break even sellthrough is 1.5 million. Generally these games have a metacritic score of less than 70 percent, he said. “Basically, I would say the average title loses money today,” added Donaldson. So what does it take to compete in this market? According to Zmak, one area to focus on is multiplayer. “We’ve seen it happen that the number of hours required for a blockbuster game has decreased from 14 hours some years ago to 6-7 hours now,” he said. “I don’t believe that putting more on the disc in the console space is actually going to benefit us," he added. "We need to spend more time with what works well for the markets we’re trying to cover." “The online thing I think is a real crucial piece,” agreed Winters. “There are some byproducts that happen from a really good online multiplayer experience. We have data at Activision that says a lot of people probably bought [Modern Warfare 2] and went straight to multiplayer.” “Some people are building a single player game as, I don’t want to say commercial, but a training ground for the multiplayer experience,” he added, stating that there have been over a billion hours logged on multiplayer in Modern Warfare, which keeps the price point at retail high. “If we can keep the price point up for a longer period of time, that keeps our P&Ls up and allows us to invest and make more titles.” “Propaganda being part of Disney, Disney sees its opportunities in its IP,” said Freitas, saying that his company’s M.O. is to release movie titles, reaching out to the people that already enjoy those IPs. “It’s the success of that film and a lot of the other product lines that will help our game be successful, because it’ll be attached to a successful movie.” Freitas used his studio’s upcoming Tron game as an example. “Do we think it’s going to be a 93-rated title? Probably not, but it’ll be successful because it’s reaching out to those people that already appreciate that IP.” Regarding online components of games, he is quite straightforward. “When we’re asked about the games we’re going to make,” he says, “we’re never asked if you will have an online feature set, we’re asked what is your online feature set, and what will be in it.” “We had online co-op in Prototype,” said Zmak, “where you could go tank to tank in downtown Chicago. If we could’ve delivered on it, it would’ve been amazing. But we cut it because we couldn’t deliver on it.” If You Had Your Druthers... During the Q&A, one attendee asked whether each panelist would go back into the present console space if given the chance to start anew. The answer was unanimously “yes.” Zmak, for his part, is at square one, after leaving Prototype creator Radical. When it comes to setting up a new studio and getting funding, “it’s as difficult today as it was 2 years ago,” he says. “It’s tough. It’s always been tough. You hear about people talking about the glory days, but they never existed.”

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