09
August
2011
Where is the Game industry going to ?
The video games industry has become a major player in the entertainment sector. Its market is the one that evolves the most compared to the film or music industries.
It’s also an industry that constantly undergoes major changes.
For ten years prior to 2008, console games represented the strongest segment of the video games industry, generating USD 25 billions of revenue, when online and mobile sectors were topping at USD15 billions.
In 2010, the console market is still worth around USD 25 billions but online and mobile have reached the same level.
In 2014, PWC estimates that the console games market will generate revenues around USD 30 billions, while online and mobile will reach USD 50 billions.
It’s also an industry that constantly undergoes major changes.
For ten years prior to 2008, console games represented the strongest segment of the video games industry, generating USD 25 billions of revenue, when online and mobile sectors were topping at USD15 billions.
In 2010, the console market is still worth around USD 25 billions but online and mobile have reached the same level.
In 2014, PWC estimates that the console games market will generate revenues around USD 30 billions, while online and mobile will reach USD 50 billions.
This situation has a big impact on how video games are produced, and we can see several major trends appearing.
The first trend is visible in major publishers. They are focusing their efforts into the console market, making AAA games only, major hits with big licences. They are developing much fewer games, but better ones, and for a lot more money.
But they do not want to be kept away from the lucrative online and mobile markets, yet they are struggling to adapt internally, resulting in many mergings and acquisitions (such as EA buying playfish for USD 400 million).
The online market has never been so competitive, nor publishers’ risks so high. So we will see a lot of consolidations in the future.
Another trend affects major investors, a lot of funds have been created or expended trough big raising of money. They are willing to invest massively in video games, but they are thinking like Venture Capitalists and they look mainly at portfolio companies with big exit strategies.
They do not think in term of project, like film industry investors do.
This leads to a strange situation where there’s a lot of investors, a huge number of companies looking for investment, but very few deals being made as the supply is looking for something different than the demand is offering - and vice-versa.
A third trend is appearing slowly along with the availability of good middleware for lower cost. First Flash then Unity 3D and Shiva have made it possible for very small teams with little or no money to develop games. There is now a huge number of small, independent developers saturating the online and mobile markets with their games. A lot of those games are good, but some are not. The ratio of bad games to good ones and the impossibility for those developers to advertise or market their games make them totally invisible to the general public. For 60,000 games in the app store, there’s only one Angy Birds, and we had to wait for it to be an immense commercial success before seeing any form of advertisement for it...
This situation is leaving us with a taste of dissatisfaction, as it’s nearly impossible to find some funding for a good project that is neither a major blockbuster or a mini game...
But with all the major actors running to different ends of the market it also leaves a lot of room for those of us with the will for doing quality games sharing the techniques used by independent developers.
Video games are mostly driven by innovation and creativity, once a game is developed and is a real success, you can’t just copy it to make another success... Nobody is trying to do another Angry Birds or GTA or Call of Duty... Two games can be of the same genre and both achieve critical success, like Gear of Wars and Call of Duty for instance, but it’s their differences that make them good, not what they have in common.
Independent developers need, if not money, then support from partners to allow them to focus on their creativity, to allow them to develop ideas into complete games and not just playable prototypes and to allow them to get visibility through deal with other media.
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