LGF: Big changes on the way for developers

Sony Worldwide Studios' Jamie Macdonald uses his London Games Festival keynote address to predict a major shake-up for developers as we head into next-gen territory.

LONDON--The opening keynote speech at the Game Developers Conference London, part of the inaugural London Games Festival, set out the position that a change in the working patterns of game developers isn't an issue on the horizon--it's a reality now.

Jamie Macdonald, vice president of Sony Worldwide Studios, began the talk by explaining that the "changing landscape of development resourcing" was under way because of two key issues--the increasing cost of production and the shift from "package-centric" revenue streams to "network-centric" streams. In other words, a change from the traditional method of buying games as finished articles from retailers, to the increasingly fashionable open-ended approach.

Although it's becoming possible to identify more diverse sources of revenue, as well as ongoing sources, Macdonald's message to smaller development companies was one of warning. "It's my belief that the impact on small and medium developers is going to be quite stark, that with the scale of the [next-generation] projects we're talking about it's unlikely they're going to be able to self-fund, and it'll be increasingly difficult to find third parties that'll be able to fund such large projects."

At the same time it's his opinion that larger developers will also have to adapt their working practices. Instead of a large permanent staff being kept from one in-house game to the next, Macdonald foresees a situation where the biggest studios will outsource many more of the specific processes--and this is where the smaller studios could gain in the future. That will, he admits, mean potentially significant changes for both sides of the equation, but he also feels that the overall talent resource in the gaming industry should increase, meaning more jobs.

But if that message sounds rather negative, there's better news in the form of greater potential earnings. Among the new sources of revenue that are springing up, over and above the traditional point-of-sale income, are merchandising opportunities, mobile phone link-ups, and episodic content, as well as a large predicted upsurge in money from in-game advertising.

We've already seen the introduction of some of these kinds of revenue streams with Xbox Live Arcade and the now-established business model of MMOGs, where a game is never really finished in the traditional sense, and for the most part players never finish paying for the game either.

Macdonald finished with his hope that the industry would react positively to the challenges ahead and that flexibility on the part of developers would enable better exploitation of new opportunities. While it's likely to be important for the industry to broaden and improve its skills base, his parting message was that the games industry should mostly keep on creating great entertainment experiences.

GDC London continues on Wednesday, when the London Games Summit begins, and GameSpot UK will be on hand to bring you more news throughout the week.

46 Comments

  • R3DN1N3

    Posted Oct 9, 2006 12:20 pm PT

    If that guy is right that means the end of an era....Now were gonna have to depend on big companies for good games. We need the little guys! Most little guys always have great games and if they don't have the fundings anymore that means we can't play their games! >=[

  • Ne0zEEd

    Posted Oct 7, 2006 12:54 am PT

    Yea..I got a BIG problem with this idea of "incomplete" games. GTHD thing I heard make me want to hurt small puppies. This best not become the norm..someone PLEASE think of the puppies..

  • Ravenlore_basic

    Posted Oct 6, 2006 5:46 am PT

    Ultrawoody,

    To give us what we want would cost Huge amounts for great graphics more power and new games.To make games cheap would mean less of all we want. Soon every old game will be available and not just for those who can put a emulater on their PC. But for THE CASUAL GAMER. I feel that If NEARLY EVERY game is made available from every source then more money will be made that way as it is A LOT CHEAPER and many old games are simple gameplay. For the casual gamer who loves Eye toy, Gutar Hero, and other simple FUN games this is the jack pot!!! $5.00 games and not $50.00 - $60.00 games that they can even play on their phones that they already have. Not to mention that Ipods and i Tunes are perfect for RETRO GAMES once they start.
    Look at Next gen consoles they have the SAME games played the same way as before only looks better. What's new I mean you are still going to press A, X, or sholder button to shoot, and jump with another button, and move with anolog stick. Doning the same thing as has been done since PS1, and N64 THE LAST REAL CHANGE to 3D. Things are getting stale agian, though the cost and gamble is high for newer blockbuster games and licensing rights. Now with PS3, PSP, PS2, CellPhones, Ipods, DS, Wii, Xbox 360, PCs, and every other way to make money on RETRO games are comming out how will this affect the Games market and next gen??

  • Murpheus007

    Posted Oct 4, 2006 5:29 pm PT

    I hope this never happens the way this guy is saying. I like the idea of a set of people with a vision set out to make a game that people will enjoy. And to say that small developers will never be able to compete in the next generation is just stupid. Innovation will never be replaced by quantities of content. Now it may be true that small developers will find it difficult to copy some of the larger developers games in order to make a quick, easy, and ill-earned buck, but that is a good thing in my opinion. If there is a change in the overall way that games are developed, then it is not going to happen overnight. I at least take comfort in that.

  • cjcr_alexandru

    Posted Oct 4, 2006 11:12 am PT

    "and for the most part players never finish paying for the game either." I wonder how many WoW addicts realize how much money they paid Blizzard for that game?

  • Monstromo

    Posted Oct 4, 2006 9:51 am PT

    Development goes where the money goes and the customers ultimately hold the purse strings. Investors can make deals and try different strategies but if a strategy fails like AUTO ASSAULT it is back to the drawing board. So who knows if all this crud will add up to anything. This guy certainly doesn't.

  • Dantes_Monkey

    Posted Oct 4, 2006 8:44 am PT

    i still want games with a beggining and a defined end. Open games and MMOGs are cool but i would rather play DMC or Half Life than some open ended never ending, and hence repeating, game.

  • piecake

    Posted Oct 4, 2006 7:29 am PT

    well 360 will win

  • UltraWoody

    Posted Oct 3, 2006 10:23 pm PT

    Just give us what we want and give it to us cheap. That's it!

  • gamenux

    Posted Oct 3, 2006 7:24 pm PT

    He forgot to point out: Even though the industry is changing, developers can still create traditional games (similar to the current gen) on the next-gen platform without utilizing the full cpu and gpu. It is still the developer's choice. They still can continue to use the traditional method of revenue by selling the final product at the retail store. The next-gen platform combined with the availibility of the high-speed network is only an "additional" method for developers to make money. Why can't developers just make a ps2 type of games on the ps3? There is nothing to stop them from continue to make ps2 games.... If people buy them, of course.

    We are definitely in the cross roads... But not because of the next-gen platform but more due to high speed access and the internet. The internet is still in its infancy and will continue to change as people think of new ways to combine it with our lives. The internet is the lifestyle changer... Looks, I don't even watch much tv anymore cause of the internet. I do my research for cars, vacation, trips, airplane ticket, some computer and clothing shopping, yahoo email, skype chat, financial advice, home buying research, banking.... the internet is so much a part of my life and I think it is making the library becoming obselete. But I still rather read a book than reading a pdf file.

  • nintendorocks

    Posted Oct 3, 2006 5:56 pm PT

    These developers keep saying the same thing. The industry is changing and the developers need to change with it.

  • blackthegame

    Posted Oct 3, 2006 2:42 pm PT

    what?

  • comthitnuong

    Posted Oct 3, 2006 2:24 pm PT

    o i forgot about that thing in london

  • ace4mma

    Posted Oct 3, 2006 2:15 pm PT

    WOW......................what?

  • gamer_10001

    Posted Oct 3, 2006 2:08 pm PT

    Well the Wii is still cheap(er) to develope for. Small developers will be able to start there and work their way up.

  • HotTopFade

    Posted Oct 3, 2006 1:39 pm PT

    assassinX01
    "I certainly hope the industry doesn't end up like that; by outsourcing the material and work, those in charge or doing a specific process aren't as involved in the game as a dedicated group would be, meaing the games would come off much more lifeless and unrefined. "

    But think of a developer spending time on game play while another company makes all the in game trees. In the case of PGR 3, out sourced work for cars did'nt hurt the final product.

  • getoconnection

    Posted Oct 3, 2006 1:24 pm PT

    Ofcourse they want it mainstreamed so they cant peddle their stupid blue disks.

  • LexLas

    Posted Oct 3, 2006 1:20 pm PT

    It is the corporate way and it works this way all around the world. To: Raldas89,,, Mcdonalds ?? Dam I was so looking forward to Subway but since you mentioned Mcdonalds I just can't keep it of my mind. Thanks for the lunch reference.... :-)

  • strife22

    Posted Oct 3, 2006 12:59 pm PT

    the best way to explain it is that if u look at it from sonys point of view who also make tv, dvd,movies,mp3 they want to take gaming to the mainstream as main stream as tv. this is a very bad idea because it causes to much tention, between people,companies. it may sound like a good investment but really gaming cant take over something like pc's or tv. i can honestly say that if sony did ever think of trying to pull something like this off it will fail. gaming is gaming it sets u into a world that is not real and thats wot we need a break from reality, from some stresses in our lives. people love to take their frustations out on a bad guy in a game. sony as a huge business are trying to make gaming so big that even all us gamers cant call gaming our own. this is why sony would fail, taking on the gamer on their on ground is madness.

  • Lord_Mango_Jr

    Posted Oct 3, 2006 12:58 pm PT

    It's true. To be next gen, you gotta be a major player. It's kind of sad, though...

  • Bananna2

    Posted Oct 3, 2006 12:22 pm PT

    Oh my god Casmar82??? you can't possibly think that rumbel is what make a amazing game amazing??? that just stupid, if you played mgs, why did you like it??? was it because of rumble??? plz pick another excuse to use to bash sony because that one is just stupid

  • getoconnection

    Posted Oct 3, 2006 10:33 am PT

    No GF, he is saying let the technology catch up with the pricing..or vise versa(I don't know). Don't you feel stupid when you unwrap your shiny new PC to show it off just to have some lammo friend tell you that a newer faster model is out...but you just baught yours a week ago!!

  • casmar82

    Posted Oct 3, 2006 10:32 am PT

    This sounds like many developers are going to drop the PS3 and go elsewhere to make games. Sony is making it clear here by saying that if you wanna be a key player you have to have the budget or else go somewhere else. Sony wants big production games wich sounds great but, the underline is this the gaming industry is moving alongside the movie studio industry. Bigger and more expensive production but even a big production can BOMB!!! take this as an example.. The movie POSEIDON was a $160 million in production cost and the result.. only $60 million was made in the theaters with a big loss. Games will have the same effect it don't matter how much the game cost it matters most to us is how good the game is. Things like this is sinking Sony deeper and deeper, I think Sony has made a monster that they cannot control it has just gone too far and they see their fate they know what's going to happen to them but yet they still deny it. Metal Gear Solid 4 is going to be a huge game I mean awards galore but the game wont be the same it will just be second best or less..... the reason why well they put so much into that game that they forgot one very important ingredient.. Rumble. That is so important to have it makes this and other games a must have but sony dropped the feature because it interfiers with the motion sensors... Hmmm I wonder if Nintendo got the memo.... well NO!!! they have rumble and motion sensors man talk about smart and well design controller and not a rip off add on with insufficiant testing. Damn Sony you had a good thing going to bad it had to end somewhere. Viva La Revolution!!! (Wii).

  • Dreski83

    Posted Oct 3, 2006 10:30 am PT

    I don't like all to much what I hear a guy from Sony saying about the future of gaming... just doesn't fit knowing Sony's history in making bad games in large quantities plus the idea of their future in gaming being more of a heavy business adventure rather than advancing what already works well.

    Good games are really hard to come across now a days and with 360 titles going for an average $60 a pop, I can only imagine how Sony will fair with all their Blu-Ray what not. I understand big productions cost big bucks... but what is to be said by the people who make these outrageously priced items that turn out to barely last more than a month worth of entertainment???

    Even worse... the idea of people like EA or Square making a majority of the games out on future consoles... very lame i say

  • TheCarl

    Posted Oct 3, 2006 10:26 am PT

    I think it will move toward the Big Three being the funding behind all games and the now third party companies will be smaller task specific companys that are brought in to handle a certain taskin the development of a game.

  • getoconnection

    Posted Oct 3, 2006 10:21 am PT

    Nintendo might be in a good position to make waves this time around. If they play their cards right they could support smaller start-up developers. Also...I HATE MADDEN.

  • GFofgaming

    Posted Oct 3, 2006 10:15 am PT

    MasterAsh, so u r saying that we should progess slowly in the industry's ultimate goal to produce movie quality games? Hell no!

  • hemakm3

    Posted Oct 3, 2006 10:12 am PT

    Interesting and scary.

  • j_vega07

    Posted Oct 3, 2006 10:05 am PT

    "Phazevariance"

    Amen DUDE! you read my mind

  • assassinX01

    Posted Oct 3, 2006 10:05 am PT

    I certainly hope the industry doesn't end up like that; by outsourcing the material and work, those in charge or doing a specific process aren't as involved in the game as a dedicated group would be, meaing the games would come off much more lifeless and unrefined.

  • MasterAsh42

    Posted Oct 3, 2006 10:04 am PT

    Heh. . .A VP of a Sony company giving smaller companies warning of the upcoming development increases. . .I find it ironic since I rest the blame soley on Microsoft and Sony for this predicament. The 360 and the PS3 really jumped the gun hardware-wise, and now developer's are going to pay for it. . .

    . . .or not be able to, as the case may be.

  • Thanos_of_MW

    Posted Oct 3, 2006 9:57 am PT

    "bc226
    Sounds like the times coming were youll buy a game and it will be incomplete just so you can shell out more money to continue. If that happens i got a feeling there will be less gamers has i dont want to buy a game just to have to continue to upgrade it and deffinitly dont want to watch in game ads unless it reduces the price of the game. "

    That will happen if people support the wrong developers and marketing schemes. I got a 360, but no way you'll see me paying $2 for "horse armor" Put your money where the game meets all your expectations, and don't support "incomplete" games. And I won't be buying any game where the advertising is in your face and takes you away from the game experience (as in keep it in sports titles, if any), even if it lowers the price.

  • Phazevariance

    Posted Oct 3, 2006 9:54 am PT

    Actualy, companies like Nintendo giving developers the opportunity to make a lower budget game, will keep some of the smaller parties in the race. As long as there is a company out there that can offer innovative ideas at a low development cost, smaller startup developers and larger developers can both have their cake and eat it too. Options at both ends of the spectrum, high end and low end.

  • MarcjinJaume

    Posted Oct 3, 2006 9:50 am PT

    I suppose that as now games are evolving, the way of creating them will also do, so in the future it'll be easier and cheaper to create good games.

  • bc226

    Posted Oct 3, 2006 9:45 am PT

    A lot of sources say most PS3 games cost between 10 and 35 mill per game that why if the PS3 doesnt get good legs expect a large amount of jumpers from that system.

  • Ohidjwae

    Posted Oct 3, 2006 9:37 am PT

    I think there's a lot of truth in what this guy's saying. I imagine this is part of the reason that small developers keep getting swallowed up by larger ones. Before long, game budgets will be larger than that of films. I just hope it doesn't mean that, in a few years, every game will be developed by one of three or four major companies. I think that's bad for innovation.

  • getoconnection

    Posted Oct 3, 2006 9:27 am PT

    It's because of piracy. You can't emulate an incomplete game. You can but it won't be finished.

  • PMB960

    Posted Oct 3, 2006 9:21 am PT

    Hopefully this could mean more support for the Wii. It is supposed to be less expensive to develop for although large projects will still cost alot. Handhelds or the PC is an option too since you won't have to pay royalties to put out a PC game as long as you can find a way to get it published yourself. I just wonder how much it costs to make a simple PS3 game considering the only game I know the price of, MGS4, is supposed to cost around $25-30 million.

  • rusty_duck

    Posted Oct 3, 2006 9:06 am PT

    the little guy can make it developing pc games and distribute them on steam. thats where i'll be. i don't like where the main stream console games are going.

  • SilV3RSix

    Posted Oct 3, 2006 8:46 am PT

    Yep. Gaming is basically going to end up like TV. A few companies will dominate the landscape, spawning child companies that cater to different gaming threads. And while the vast majority of content will stink out loud (Like Survivor), there will still some good things (Like South Park, Sports, Adult Swim).

  • bc226

    Posted Oct 3, 2006 8:34 am PT

    Sounds like the times coming were youll buy a game and it will be incomplete just so you can shell out more money to continue. If that happens i got a feeling there will be less gamers has i dont want to buy a game just to have to continue to upgrade it and deffinitly dont want to watch in game ads unless it reduces the price of the game.

  • Reldas89

    Posted Oct 3, 2006 8:26 am PT

    mmmm macdonalds

  • myrllellei

    Posted Oct 3, 2006 8:24 am PT

    I guess the small timers can always develop for handhelds. An upsurge in in-game advertising is not great news, because the price of games will not drop. Soon, we'll have to watch 3 minutes of commercials between every seven minutes of game time... okay, maybe not.

  • TeraTricker

    Posted Oct 3, 2006 8:14 am PT

    this is great news... i think... oh and SECOND!

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