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Game Profile
 Written by Mark Nelson  on March 27, 2006

Specials: Thoughts from the GDC panel on the next generation of game development

For many in the game industry, this was a very important panel, because it discussed the ways developers and publishers can survive the coming console transition. What follows is an amalgam of the conversation that took place between the top game industry minds involved in the discussion.

Show Me The Money
What's the single most important factor for developers moving into this platform transition? Money. Simply finding adequate funding -- anything that will monetize development of the high quality games consumers are demanding for the new consoles. The days of hitting each platform with a mediocre licensed game are gone.

Because of consumer expectation for vastly improved game experiences, and stiff industry competition for consumer dollars, developers and publishers will likely need to specialize in a single next-gen platform or genre. Niche game development like Nintendogs or Guitar Hero, may be the answer for some. For others, the solution will be to simply tighten up their belts and find ways to reduce their costs-per-hour to deliver quality content to gamers. But for all efficiency will be key - through team specialization, improved art, audio, programming and project management tools, and through efficient direct-to-consumer distribution mechanisms like Xbox Live Arcade.

Games for powerful new systems are very expensive to make - but the market for games on new systems is almost always very small due to the smaller installed hardware base. How can developers and publishers combat this? Perhaps by not trying to release an "epic" game in the console's first year of life, but instead focusing on smaller, more creative games. By doing this well they could own a new genre. Others will try to repeat what they think works (e.g., the same old stuff), and instead look to creative new financing vehicles like in-game advertisements.

Some in the industry think that co-development of a creative property across several mediums (shared with a film company, comic company, music company, etc) could be the big answer to the funding problem.

Game Industry Economics 101
Most consumers probably aren't aware that a mid-range next-gen game costs at least $20,000,000 to develop. In order to break even the publisher needs to sell at least 1.2 million units. With the current installed base of consoles so low, this is practically impossible for 3rd party publishers.

In fact, if you took every industry publisher and made a graph of their sales, you'd see that the average is 200,000 units per title. Far below the 1.2 million they'll need to break even in the next generation. Simply put, there are a lot of bad games out there.

Burnig Up the Market
On the other end of the equation is the consumer. Consumers have been burned too many times by bad games and are becoming very savvy of the techniques (marketing language, pricing tactics, etc) used to dump sub standard content into the market. While this may have worked when the only indicators to game quality were magazine reviews, in-store advertisements and "back of the box" screenshots, the internet allows more extensive information on game quality to transmit very quickly - through websites, blogs, and email. These conduits have proven to have incredible reach and influence over consumers. The net result is that people don't purchase on "IF" anymore. They need to "KNOW" a game is good, either firsthand by playing a demo, or by getting a review from a trusted source - not a magazine article, but more likely a friend, blog, or underground website. This means that games industry, in order to continue to thrive, needs to police itself and ensure it doesn't erode consumer confidence by shoveling bad product, falsely advertising sub-standard features, or releasing a glut of copycat games.

When In Doubt - Rent It Out
Rental is going to have an increasing impact on the business. Publishers need to worry if their games have the depth and replayability to last past a two day rental. And "previously played games" are also taking an increasing chunk of the market. Gamers no longer feel the need to have a pristine box or documentation, which can readily be downloaded from the Internet.

But publishers can fight back against rentals and used games through digital distribution - basically downloading your games directly to your consoles hard disk. Since your game resides on your console's hard disk, there are no retail copies for stores to rent or re-release as previously owned. And game prices could drop considerably since there is no need for product manufacture and shipping, or dealing with damaged good and product returns.

It may ultimately turn out that entirely new methods of developing games are needed. One promising idea is for developers to build tiny, free, gameplay prototypes and pollinate the market with them, waiting to see which take hold and develop a fanatical fan base. Once the market for the prototype has built virally, developers could derive revenues from the fan base by extending the prototype into a full-blown product (perhaps with additional funding from a large publisher). Techniques such as these could pave the way for more of what the game industry ultimately needs -- creative new ideas.

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