EA Bid Signals Industry Change @ GameDaily

GameDaily has posted an editorial courtesy of The Hollywood Reporter examining the impact of the recent bid by Electronics Arts for TakeTwo Interactive and alleging it signals a significant change in the way the games industry is structured, saying it is :

..more evidence that the game industry is moving into the mold of other entertainment businesses, with a handful of players and a focus on producing blockbuster hits.
"You can certainly call this the demise of the middle class in the video game industry," said Michael Goodman, Yankee Group's director of digital entertainment. "With what it costs to develop blockbuster titles and the risk level involved, there is no middle ground anymore."

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The article goes on to examine the dynamics of the deal, raising the point that:

...one great franchise simply isn't enough in today's climate. "Does Take-Two have the scale to be successful long term? Probably not," he said. "You need multiple major franchises now. As great as 'Grand Theft Auto' is as a franchise, all it takes is one bad game and you're done."

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More information.

Now I am become Death, the destroyer of worlds.

The fuller quote is more apt I think:

"We knew the world would not be the same. A few people laughed, a few people cried. Most people were silent. I remembered the line from the Hindu scripture, the Bhagavad-Gita; Vishnu is trying to persuade the Prince that he should do his duty, and to impress him, takes on his multi-armed form and says, 'Now I am become Death, the destroyer of worlds.' I suppose we all thought that, one way or another."

Dude don't be so :emo:

I met a traveller from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them on the sand,
Half sunk, a shatter'd visage lies, whose frown
And wrinkled lip and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamp'd on these lifeless things,
The hand that mock'd them and the heart that fed.
And on the pedestal these words appear:
"My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains: round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away.

Is hella more apropos

I thought you may enjoy the whole reality/fallout metaphor of my Oppenheimer quote with regards to this monster EA are constructing.

magerette said:

...one great franchise simply isn't enough in today's climate. "Does Take-Two have the scale to be successful long term? Probably not," he said. "You need multiple major franchises now. As great as 'Grand Theft Auto' is as a franchise, all it takes is one bad game and you're done."

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I have to say that sadly, this is quite correct. The production of games has become so expensive, much like movies, that a stand alone shop will be filing Chapter 7 with one bad title.

woges said:

I thought you may enjoy the whole reality/fallout metaphor of my Oppenheimer quote with regards to this monster EA are constructing.

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Apropos...

I'll raise ya

woges said:

The fuller quote is more apt I think:

"We knew the world would not be the same. A few people laughed, a few people cried. Most people were silent. I remembered the line from the Hindu scripture, the Bhagavad-Gita; Vishnu is trying to persuade the Prince that he should do his duty, and to impress him, takes on his multi-armed form and says, 'Now I am become Death, the destroyer of worlds.' I suppose we all thought that, one way or another."

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Funnily enough, I'm currently reading it. Translated of course. And it is relatively boring to me ...


Seriously, the death of the "middle-tier" of the gaming industry is something I really don't want.

Apart from various reasons why, I must say that I'm used to a big middle class in whatever industry from here in Germany.

blatantninja said:

I have to say that sadly, this is quite correct. The production of games has become so expensive, much like movies, that a stand alone shop will be filing Chapter 7 with one bad title.

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I fear that this is true. All things point to that - apart from the so-called "casual games".

Big companies appear to me something that's - in *this* size - only available in the U.S. . I don't know why, but I don't know many similar big companies here - Bertelsmann (BMG) and Siemens are among the few examples.

TakeTwo Interactive's board of directors can't very well turn this down. That's one of the risks you take when you sell a chunk of your company to shareholders.

Yankee Group's analysis is good (as you would expect), but you have to wonder how much thought they gave to the costs involved with developing for cutting-edge hardware and whether or not those costs were really unavoidable. They obviously assumed they were, and I suppose they may be right.

They would be the first to admit that they've made some bad calls in the past, however, and I'd like to think Yankee Group may be wrong now. If they are, then it would be the same way today's big developers and publishers are wrong. They would be wrong in assuming that video games need to stay on the cutting-edge in order to be competitive.

Games can't be measured by their capacity, volume or speed. Their benefits are subjective, and their individual advantages are difficult to compare. About the only thing anyone can really count on is that kids will like cool new special effects, and that's what everyone's been taking to the bank.

Of course, the folks at the bank probably aren't as smart as the folks at Yankee Group. They're not always right either.

IMO, computer game makers should stop trying to compete with consoles altogether. They should develop for older hardware and make better games with higher quality at a lower cost (but without the latest-and-greatest graphics).

Squeek said:

IMO, computer game makers should stop trying to compete with consoles altogether. They should develop for older hardware and make better games with higher quality at a lower cost (but without the latest-and-greatest graphics).

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Well, that's the thing, isn't it? Those mythical types of games you mention are never ever talked about by the big players. It would be like the CEO of Coke talking about Pepsi during a speech to shareholders. The only time he's going to mention Pepsi is if his company is trashing them in the market. Except that in this case, Pepsi only holds 0.5% of the market.

The most successful way to keep mid-cost, mid-range games down is to never acknowledge the possibility of this business model. They just don't talk about it and everyone pretends that their way is the only way. This approach becomes more and more important as digital distribution gets easier and cheaper.

Regarding the proliferation of huge conglomerates in the U.S. compared to Germany, it's probably because Germany still has anti-trust regulations to break up monopolies.

funny, I thought the quote was about Sheva, not Vishnu.

Ozymandius is not appropriate though (Ozymandius was the Greek's name for Rameses II), as the EA deal speaks of no irony of a a great emperor constantly building trophies to himself only to buried in the sand.

I will raise you both..

To destroy a thing is to control a thing. He who controls the spice controls the universe!

It's Vishnu turning into Shiva I believe.

screeg said:

Regarding the proliferation of huge conglomerates in the U.S. compared to Germany, it's probably because Germany still has anti-trust regulations to break up monopolies.

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Could well be so.

A company of the size like Microsoft is just unthinkable here, except Siemens, for example, which is huge, too.

Even worse: We are just sensitive about Monopolism anyway.

I don't know about this. The tools that are availble for free or low cost to game developers become better and better, and it seems to me the gap to the top is becoming smaller, not wider. Look at AoD - does it look like shit? Actually, no, it looks aged and mediocre, but it does not look 1000 times worse than a current AAA title, as the budget would suggest. The AAA sector spends a HUGE amount of money for that extra 10% of eye candy, so I think that creates a reasonable market for mid and low cost indy games. The key of course is to not even try to match either the eye candy nor the sales of the AAA. In addition gaming becomes more and more commonplace and a normal activity for a wide percentage of the population, which together with the availability of worldwide digital distribution is bound to create new nitches for all kinds of "specialized" games. The market may well soon be 80% or more in the hands of a handful of big companies, but the sector for mid- and low size studios may very well be an expanding market in itself, regardless.

Agreed.

Besides, the most profitable non-casual game on the PC is World of Warcraft, which never attempted to match the cutting edge graphically

This totally excellent article describes everything very, very good what's going on in the industry:
http://www.brandeins.de/home/inhalt_detail.asp?id=2310

Unfortunately it is not in English.

The main point in this article (higly condensed) lies in the dilemma or rather fight between creative ones vs. non-creative ones.

Creativeness is considered something dangerous by the non-creatives, who actually rule and lead the huge, conglomeratic companies.

And so, they to everything to disregard creative people, but on the other hand are happy to exploit their ideas and inventions - which they wouldn't have been able to invent.

And so, they try everything to keep and maintain structures and power hierarchies they benefit from.

Creative people are outsiders, and the non-creative ones try everything to keep it this way - throughout whole industries.

Which leads to stagnation.

Yes, it's the same reason Hollywood has played down writers over the years and why a lot of work places value people that can manage 9-5 everyday even if what they bring to the company is little more than that. Exploit people for money - it's how the world has worked since society was created. It's nothing new.

It sounds like an interesting article, and I wish I were able to read it.

Over the years I've come to the conclusion that many of the decisions managers make are motivated by their own desires for career growth more than anything else. So what's good for their company or its customers is really only a secondary concern.

Bullet statements on managers' resumes work like sound bites in politicians' campaign advertisements. They go a long way toward helping them get ahead. So managers create opportunities for them even when they're unnecessary, the wrong idea or when they stand in the way of someone else's better or more creative ideas.

Creativity tends to get lost in places where there's too many decision makers all thinking in terms of themselves.

It's been brought up here before

The amount of money that it takes to make a game is going to make the market much more conservative than the music industry (I would have thought). Being that, music is much more the celebration of the individuals that create than games are. That's why if I like a game I will buy it because I want to support the creativity and hard work that went into making it.