The Video Game Industry: Economy Of Gaming And The State Of Video Games

Recently I posted my long-delayed “Economy Of Gaming” article on Duel Pass Online (DPO), citing the driving forces behind video game pricing and subscription fees. The key take-aways were as follows:

  • Video games cost money to make and maintain, so someone has to foot the bill somehow.
  • There are plenty of cheap online gaming options out there.
  • Free online games are not always what they’re cracked up to be.
  • Paid video games are better than free video games usually.
  • You get what you pay for.
  • Gaming companies need to put the gamer at the center of everything.

I’d like to revisit PlayNoEvil’s article on the negative impact of used games and piracy on the video game industry. The author of the articles on PlayNoEvil.com makes some very valid points. He discusses how it’s easier to see how profits shift with the growing popularity of used video games, whereas piracy is mostly a non-issue.

If you do a little digging, you can see that large corporations waste quite a bit of resources with their anti-piracy and copyright efforts, along with virtually pointless interrupt marketing. You’d think it would make more sense to just re-invest that money in research and development. Building innovative video games with incentives for early adopters and long-term supporters seems like a smarter investment of the billions of dollars thrown away with silly business.

Any self-respecting gamer will invest money on their gaming lifestyle and favorite video games, especially if they have strong online components. They want to keep their favorite video game franchises alive so it only makes sense. Surprisingly, even though online gaming has kept many video game companies alive, some fans wish there were video games with only single-player modes. I understand the need for story-driven video games but the money makers and trends point to a better way…Pricing, Accessibility, And Exclusivity As Performance Drivers

PlayNoEvil has a vision for the video game industry that I know a lot of us can get behind. They suggest that the gaming industry will thrive more if companies will take some measured risks and bring video games back to the masses (much like mainstream hits like World of Warcraft, Angry Birds, and Bejeweled have done). With regards to single-player or multiplayer-only video games, the WINNING idea is to price the core/basic video games like books. The more extensive and immersive the experience, the more you can bump up prices.

With such a radical paradigm shift, we can see more video games starting at $10-20, before they hit the bargain bins. This will make video games more accessible and less of an exclusive, luxury type of thing. Rather than having gamers become part of some geeky sub-culture, we’ll see more and more people gaming. More importantly, video game companies can sell more units and drive value through add-ons, expansions, microtransactions, and subscriptions, where appropriate.

The premise here is to get away from casual gaming as we know it. There are many casual gamers that do not have the time to commit to video games like they once used to or would like to, but that doesn’t mean they all want to play another Tower Defense or puzzle game, either. Variety is the spice of life, I say!

Sadly, video games today tend to be exclusive, if not elitist. They’re not accessible in terms of price or gameplay mechanics. This is why casual gaming has become a huge market, rather than the guiding business model for all video game development. Let’s look at some of the other things that drive performance and wide-spread adoption of video games today, shall we?

Timing And Proper Planning Of Video Game Releases: Feeding The Need

Quite often, great video games fail because the timing is bad. Developers and publishers alike fail to plan and research the marketplace properly. Instead, they foolishly think that they have something SO good that people will surely jump on-board. Instead, they should be thinking, “What video games will we be competing with and what value to we really bring with this project?” You also have to consider the need in the marketplace. Does your video game project meet a real need or can it create one for others to follow?

Surely, unique content is mostly a pipedream nowadays. Everything has been done or thought of. That means creative engineers have to find new ways to position their products and make them welcoming to new and returning supporters alike.

On the console side of the video game industry, it seems like most FPS games are a dime a dozen. Developers are mostly using Call of Duty as their template and performance dipstick of sorts. Why not make something so new and compelling that you can have others model your success instead?

When initial sales struggle, the video game companies try desperately to milk their products, forcing DLC after DLC out.. Or they abandon their product all together. It’s a shame, really. Plan a little better, folks.

Here’s the kicker to consumers: if sales projections are not met, pre-emptive efforts take place. That’s where the ugliness really begins. Prices may drop on core products but premature DLC releases will off-set savings. These add-ons and expansions may be “optional” but developers find ways to force them upon the consumer. If you’re an online gamer like myself, financial shortcomings can cause servers to shut down, which always sucks.

PC Versus Console Gaming

You can’t talk about the economy of video games and the state of the industry without getting into the obligatory video game debate: which is “better”, PC or console gaming? It used to be that console gaming was a much cheaper lifestyle or hobby, but now prices are about on par with each other. Console gaming is still more accessible and PC gaming is more rewarding.

Let me explain: PC gaming is more expensive because you need the right hardware for the video games you want to play. Constant upgrading is necessary to keep up with the latest video games and not see a performance drop. That said, the experience can be tailored more to your needs and you have a huge library of video games to choose from.

With console systems, there is uniformity at the cost of a lack of upgradeability. That means gaming consoles have a finite life span. For the average gamer, this also means that, by the time you invest tons of money and final commit to your gaming platform of choice, it’s time to move on to the “next generation”. Lame.

Overall, PC gaming is still more for the hardcore gamers, though PC gaming offers far more “casual” video games as well. Look at Kongregate and Pogo: tons of free video games in one place. Good luck finding that on the consoles. It is also easier for developers to release games on the PC since it is a more open platform with tons of distribution channels.

Free online games are abundant on the PC gaming front. Still, consoles have brought online gaming to the masses. I suppose uniformity and ease-of-use are still great trump cards in the industry. If I had the extra dough and time, I’d be more on the PC side, like before, but console games are where my friends are mainly at. It’s just easier, but not necessarily “better”.

How The Video Game Industry Can Be Fixed

Corporate America as a whole needs to rethink their methods and priorities. The video game industry is a global behemoth but the same “old money” strategies are hurting companies all the same. I feel that the “suits” are too busy looking at trends and counting beans when they should be simply asking customers what they want and delivering on promises for once.

I know price wars ultimately go nowhere but I do love the idea of more flexible core product pricing and a focus on driving value through existing video game franchises, rather than reinventing the wheel over and over again (I may have mentioned the perils of reinventing the wheel elsewhere on Y3B.

It’s much easier to have customers engage in impulsive buys with value-priced items. With video games $20-30 is a sweet spot, $40-50 is still a hard sell. The truth is in the proverbial pudding: used games and game swapping account for more than half the video game indulgences around the world. I don’t need hard numbers: it’s common sense. Just look at the steady decline of midnight launches and flagship release parties: people are not jumping on pre-orders and new releases like they used to.

What can video game companies do to entice customers, beyond price? Give more value to early adopters. Consider giving free lifetime updates, prestige/limited items and perks, and early beta access. You really have to juice up the offer at the $59.99 price; after all, a few games at that price could get you…

  • A new video game console.
  • A ton of bargain-bin video games
  • A few tanks of gas to last you two or three months.
  • Several cases or kegs of beer.
  • A nice payment towards that exorbitant electric bill you’ve racked up playing all those video games and spending a bit too much time online.

You get the idea. With luxury and splurge items, people are often foregoing other expenses. Perceived value is drawn by a number of factors. What we have our eyes set on at any given time is part of it. In tough economic times, you have to be more flexible and budget-friendly too. Your customers want to feel they are investing their money, not wasting it. Listen up, video game people: not everyone has a virtually endless supply of disposable income.

If the video game industry wants to see increased gamer loyalty, they need to show their loyalties to us video game geeks first. It’s quite simple, really. If you follow the trends, the biggest money-makers are the games that offer tons of replay value, user-driven and user-generated content, long-term support, and tons of perks/rewards for the committed gamer. Why are the video game companies missing these simple lessons? Is it greed or just stupidity?

Total Engagement: How Customization And Immersion Makes The Video Game YOURS

With Brink officially releasing in a few hours in markets around the world, it seems opportune that I get into the matter of total engagement in video games. The most remarkable of video games are fun no matter how much you play them. That’s rare. I always go off on the importance of high replay value and immersion but what does that mean?

The top video games of today are either really easy to get into or offer complete immersion. I don’t really see an in-between but it’s possible to execute on both goals. Part of video game success is the prevelance of online components. Some may disagree but focusing on the online experience is the future of the industry. Sure, some people only play offline and you can’t forget them, but the rest of us like the feeling of continuity and community that online features give us.

Call of Duty: Black Ops is supposedly the best-selling console video game of all time. They have new content every week by way of DLC (Downloadable Content) and new contracts. It’s an active, competitive online community too. Throw in deep character customization and a slew of gameplay modes and you have endless replay value. As formulaic and broken as the game may be, you can’t help but to borrow some pages from the Call of Duty playbook.

Bethesda has taken note of the good and the bad of the over-done FPS genre. Brink promises to be a rare story-driven experience with features that integrate seamlessly and allow players to make the experience theirs. Your characters look the way you want them and everyone can employ their preferred tactics and gameplay styles. I believe Brink will be the epitome of immersion.

As if that weren’t enough, Brink is poised to get rid of the elitist element. Theoritcally, a newbie will be able to jump into the game and compete with seasoned FPS veterans. In this manner, Bethesda is hoping Brink will open up the world of shooters to a wider market. Intuitive, contextual “smart” controls along with clearly-defined in-game objectives will prevent or at least lessen scenarios where jaded gamers scream, “Hey, you effin newbie.. WTF are you doing? Stop being gay.”

Will Brink pull off what few other video games have? I hope so. This will be a success story to set new precedence in the video game industry. Imagine a First Person Shooter that is welcoming to even the most casual of players but offers enough depth for hardcore gamer geeks? Before now, that seemed like a contradiction but it’s been done before, just not with enough mass appeal to make it relevant.

As such, I really feel that redefining what casual gaming is about is step one for the video game industry’s recovery. Decades ago, Atari and Nintendo brought video games to the masses and we all won. We can all still be WINNERS!

How The State Of The Video Game Industry And The Economy Of Gaming Connect

If the video games had more market penetration and less game development studios shut down, things would be more competitive and fair. Publishers would budge on pricing and fees, passing the savings on to the consumer. Innovation would be at the forefront of game development because game developers would see they need something special to stand out.

As things currently stand, the survivors of economic strife and bombing video game sales are still following fleeting trends and employing gimmicks. We video game geeks want real substance. Give us a pure single-player or multiplayer player experience. Make the experience authentic, compelling, and remarkable. Weave worlds we can immerse ourselves in and escape to.

While you can’t get around the growing number of kids playing mature online games (even though, technically, they shouldn’t even have the video games to begin with), us more grown-up gamers are the main ones keeping the industry going. As such, it only makes sense to only release the most polished and thought-out products. As we grow older, we naturally get more picky. Even with extra money to burn, no one wants to blow hard-earned cash on cheap thrills and temporary gratification.

Business analysts may see prices have increased due to shrinking customer bases. Don’t you think it makes sense to lower prices to increase your reach? Call me crazy but I would think it’d make more sense to have my products in more homes so they become more pervasive. That’s free marketing right there! Free up some of that squandered money to bundle price flexibilty and added value into every video game release.

This is not rocket science and perhaps I’ve over-analyzed the whole thing.. But the urgency is great. Whether the next generation of gaming consoles start coming out in 2013 or 2015, there damn well better be some changes to how things are done. I’d like to add that I’d like to see more of what Microsoft has done with indie developers on XBox Arcade. Making it easier for small-time game developers and creatives to put out content on your platform adds value to your overall experience and makes everyone happy.

I’ll close by saying I am super-excited about Brink and it’ll tide me over for the next installments of the Assassin’s Creed and Mass Effect series. Hopefully, the video game industry gets their stuff together in the meantime. w3rd.

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10 thoughts on “The Video Game Industry: Economy Of Gaming And The State Of Video Games

  1. Well said i just hate when a game is rushed and we have to pay for it in the long run in the form of DLCs. I would like to see the games at the $30-40 like Culdcept Saga was. It makes sense lower prices = more sold = Bigger profit that’s marketing 101 lets get it together people and stop being greedy yes you have mouths to feed about so do we. All in all well said and though out post it only took me since it was posted to finally finish reading it ;]. Now lets play some Gear of War Tres.

    • Right on!

      You would think that, if they have tons of DLCs planned like Bioware does with the Mass Effect series, they’d make the entry price lower. At least Bioware games are lengthy and have tons of replay value so it’s a little different. I find that gamers are getting bored with FPS games faster than usual. I can’t wait to play Brink; alas, there’s work to be done first so it’s just sitting pretty…

      Culdcept Saga.. Now there’s a game I’d love to get back into. The online play was buggy but four-way battles were awesome sauce. Speaking of online TCGs, check out Tyrant on Kongregate. I hear it’s good – and FREE (to play)!

      Gears of War 3 was fun last night. I definitely find the Lancer easier to use than the Retro Lancer. The Lancer doesn’t have that crackhead recoil. Brin’ GoW3, and lots of work.. I see sleepless nights ahead… O_O

  2. Hey, Don P. Hooper, author of Coomacka Island, awesome voice actor, and esteemed “son of Xavier”, where are ya? I totally thought about you and our previous conversations. I agree that PC gaming has an elitist and exclusive feel to it and always has.. But console gaming isn’t necessarily much cheaper or inviting, either.

    I’d like to see some real video game geek discussions going. As such, I’m reaching out to some of our best commentors via e-mail. Hope to see more familiar faces soon! 8)

  3. And this is why I still have a (now broken) PS2 and about four games (and I won’t tell you what they are and you can’t make me).

    I hate marketing, especially when it comes to video games and the like. -_____-;; But that may be due to the fact that I neither have the time nor the money to afford them.

    Then again, with as much money as I have spent on car repairs (sad, considering most of the repairs have been done by me) and dog repairs…er…vet bills….I could have a TV bigger than my wall, every gaming console under the sun, and lots of video games.

    Lame.

    Extra lame because I haven’t been in the video game world for so long that I’m feeling seriously nostalgic and can do nothing about it. I hate being a grown up with a kid (<–dog, not human) and three jobs.

    I need to catch up on my geek…. maybe next time I am unable to sleep…

    • I can relate!

      I’ve had periods where I disappeared from online games for months or even a year at a time. Life happens. I find it’s not so much the affordability but, rather, figuring where else that money can go.

      Cars can be such money pits no doubt. I’m a pretty handy guy but most of the stuff that breaks I rather have a pro do it.. Then they’re accountable! Transmission work.. You can have it (are you for hire?) – LOL! I’ll stick to fixing computers and electronics. That stuff breaks enough.

      Argh.. You just bummed me out a bit. When I stop to think of the money pits in my life, transportation is up there! -_-

      Back to video games, if the gaming companies redirected money into the right things, we, as the consumer, could have the savings passed on to us. Do less interrupt advertising and focus on quality over quantity. The marketplace is filled with so many stinky games.. The biggest money pit is buying into the myriad of terrible new releases out there.

      Hmmm.. Cheap gaming.. How about free gaming? I’ve been meaning to try out some free online games my clanmates have recommended. One is Dark Orbit. I hear Tyrant on Kongregate.com is fun and it looks like a solid TCG, from what I’ve seen. I like strategy and role-playing games. It’s the nerd in me.

      What’s wrong with your PS2? You fix my car and I’ll fix your PS2, maybe? ;o)

      • The PS2 stops reading/won’t read disks randomly. I put movies in it to fall asleep to….and ….. now it says CAN NO REED DEESK (with the accent and everything.)

        Transmitions are a b—–witch. I can’t fix them, sorry. =[ I can MAKE the parts. I can also program the machines that make the parts (and will subsequently be fired for doing so), but I can’t fix them. Yeah, I’m that lame.

      • ROFL @ “The Accent” + recurring use of “b—–witch”

        Ooooohhh.. Given your line of work, both the problem and fix should be apparent: you’ve got pet dander/hair on the lens and need to carefully clean it up. The first generations of PS2 weren’t very resilient when it came to dust and other “natural” contaminants so I’m guessing that’s the issue.

        Now, where can someone get one such machine? I just need a torque converter and a solenoid box. E-Z. Seriously, even if I had the parts, I know enough to know to stay away from transmissions work. It’s like one of those jigsaw puzzles with over 10,000 pieces: you may think it’s fun at first but, when you realize you got to put all those pieces away, you’re cursing your friend for buying it for you as a “gift” (damn you)!

        Don’t worry: you still rock in my eyes. You’re part of a rare breed of geeks with super powers, definitely up there with Danny Brown and Dino Dogan, just to name a couple. Your comments and tweets are always a worthwhile read, which is quite the feat, if I say so (and I do)! =oD

        Fun Fact: “Lame” and “fame” rhyme, which would indicate there is a fine line between the two, mayhaps?

  4. Pingback: Research Posting. « i101gordoncl

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