Game companies obviously need to be profitable or they can't continue to survive and produce games. I've made my share of comments in various discussions bemoaning the trend toward shorter campaigns in favor of multi-player, which is cheaper to code for, and DLC, which essentially has you buying the game in pieces. With game sales in general in a state of decline, the real question is, are sales down because of the cost-cutting or have the game companies resorted to cost-cutting because sales are down? One thing seems certain, game sales wouldn't be down if a majority of gamers liked most of what is being offered.
capaho
Its the middle that is falling out. Top tier games sell better than ever and indies are thriving. The problem is that many AAA games stay in people's systems for a loooong time. In the old days, you could make a solid buttbouncer and maybe catch the interest of the market between Marios and Sonics. Nowadays multiplayer and DLC can keep a person on a game up until the game's sequel hits, so guys who want to get some of that sweet shooter (currently the dominant genre) money inbetween the CoDs and the Gears and the Halos don't really have much of an opportunity. And depending on the genre a lot of money has to be spent to even have the hope of meeting minimal consumer expectations (shooter fans don't just want campaigns, they want competitive and cooperative multiplayer, and each is like building a seperate game).
http://www.gamasutra.com/view/news/182954/The_5_trends_that_defined_the_game_industry_in_2012.php
Mid-tier fallout
At about the mid-point of the current console generation, prognosticators warned the game industry: Going toe-to-toe with studios in the top-tier, high-budget "triple-A" video game sector is going to become an increasingly harrowing task.
We saw this happening last year as well, but the trend continued in 2012 -- mid-level developers and their games are falling out of the picture. Slow sales of Square Enix's Sleeping Dogs hurt the publisher's earnings this year -- a disappointing shortfall, as the publisher made a special effort to scoop the game up from Activision, where it was called True Crime: Hong Kong.
Lightbox Interactive's Starhawk released to some solid reviews in May, but by October the studio was hit with layoffs, and transitioned to mobile games. Activision-owned Prototype 2 developer Radical Entertainment also suffered layoffs; 007 Legends developer Eurocom cut staff and began focusing on mobile.
THQ's Vigil Games didn't see restructuring, and released a well-reviewed game in Darksiders II over the summer. That game sold 1.4 million units, but THQ said it still didn't meet expectations. THQ president Jason Rubin conceded in November: "In the current marketplace only the absolute top tier of releases is making an impact on game consumers."
If you want to survive and thrive in triple-A, and fight against the Call of Dutys, the Gears of Wars, the Assassin's Creeds and the Halos, you're going to need a whole lot of money and a whole lot of talent. And even if you have those ingredients, nothing is certain.
http://www.digitallydownloaded.net/2012/11/the-disappearing-mid-tier-of-game.html
In an interview quoted at Gaming Vogue, Moore said If you think about the industry today, I dont know what they exact numbers are, but the top 20 games globally probably deliver 80 per cent of the revenue. Anything that doesnt hit that top 20 or 25 finds it very difficult to justify itself, its existence, and you kind of wonder why you did it. Now, its likely there is some exaggeration in there, but the reality is that outside of a few AAA-franchises, there are very few franchises in the games industry that could be considered healthy.
Thats why the B-grade games and game developers are disappearing, and smaller, indie teams are forming instead. The games industry seems to be heading in two directions the mobile/ download space where teams of 1-10 developers are putting together experimental titles, and the really big developers churning out the AAA-grade hits.
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