State of the Video Game Union 2011/12

Maul here, back with the annual tradition, a look at the state of our beloved industry.

 

They already have your children...

How do we fare? Well, last year, you’ll recall that a great deal of my article was dealing with the shit-storm of studio closings and lost jobs that were going on, so we’re a fair sight better than that. The year has still been a turbulent one, as the industry deals with technology morphing and economic hardship, but some fantastic games got released in spite of it all.

More than anything, though, I think I’ll remember 2011 as the year that Angry Birds became the highest selling game of all time.

 

 

 

 

 

If it weren't for that whole 'Freedom of Religion lets a Church's law override civil law' thing recently, I'd say you were having a good year, Supremes.

Oh, and the Supreme Court ruled in Brown v. Entertainment Merchants Association that video games were a form of protected speech. Boom.

But, back to Angry Birds. If you add up all the versions of the game, they total over 500 Million purchases across all consoles. The record-setting 6.5 Million opening day sales of Modern Warfare 3 were easily matched on the day after Christmas, as every new iPhone, iPad, iKitchenSink, and whatever-else-can-play-apps owners decided to immediately purchase the game. This trend will likely continue across all those devices, and to some degree on the PS3, PSV, and PC. By comparison, every version of Street Fighter II combined, all the Supers and Turbos and Hyper editions, have sold a combined 14 million copies.

So, what does that mean, exactly?

For starters, it means growth. MW3, Angry Birds, Battlefield 3, and all the other top selling games of the year were only able to reach those massive numbers of theirs, compared to SFIIs much more modest tally, is because of a wider-reach and acceptance of the Video Game market. There are just more people playing games than ever before, and the industry continues to be recognized as something more than a hobby for kids and nerds. The PS2 really began changing this image back when it ruled the roost, and the 360 has continued to take it mainstream. In fact, 360 sales spiked again this holiday season (by about 29% over last holiday), despite how late we are in the system’s cycle, thanks to good sale prices and marketing pushes from Microsoft, coupled with strong holiday titles. The economy, which killed game sales last year, is a bit better, but not MUCH better, so for so many games to be selling so much better across the market, a total increase of about $7 Billion by some estimates, there has to be increased interest.

*Edit: An interesting note about this $7 billion increase, because it comes after the LA Times reported that, as of October 2011, the industry was down $1 billion from 2010. I don’t doubt that their numbers were pretty well researched, so to me, that shows that all the good releases were dropped in Q4… Also, there are conflicting numbers all over the place. Some studies report a solid increase over 2010, others report as much as a 21% decrease in game sales. I know all the systems had some big sellers this year, so I’m going to report as though the modest increase numbers are correct. 2010 was a shitty year, so it seems to my casual math that 2011 has been better.

And, yes, there is increased interest, but not necessarily in the form most gamers might be thinking. The second thing that the Angry Birds hysteria signals is change. Most market analysts will tell you that, despite the increased numbers on the top-tier games, the biggest growth spurring sector of gaming is mobile digital content. Last year, we devoted a good amount of observation time to the fact that many of SquareEnix’s games took multiple years of development, and hundreds of millions of dollars, to make a tiny profit. I’ll be the first to say, thank you, SquareEnix for making those games, things like Deus Ex and their co-release of Dead Island. Ultimately though, those games are made for niche audiences, and with game production costs being as high as they are, companies are looking at what has broad appeal. Nintendo knows this. Their production of the Wii was meant to do just that (though they probably didn’t need the gimmick of the motion control to do so. If they’d just made their own Cell Phone brand, like Virgin Mobile, and had it play Gameboy games, they’d probably have evolved into a contender in that front too). EA is one of the shrewdest businesses in gaming, and they’re branching out from publishing just big-sports and big-shooters to digital subscription games and digital content downloads. EA expects downloadable content to be their biggest money-maker in the coming year.

This chart, via Lazytechguys.org, shows the estimated % of revenue that came from downloadable content this year. These figures were done by the NPD Group and Flurry Analytics, who also do the ESA's sales estimates for them. They kinda know what they're talkin' about.

Its hard to say where exactly this will take the industry, but of course, I’m going to take my guess. In previous years, I’ve been right, even if my time-frame was a bit ahead of when changes actually came.

First off, worry not traditionalists, gaming as you know it is not going to vanish. However, you may see the games you know and love become smaller, more limited releases, or possibly even absorbed into another format. This is particularly true of portables. The 3DS was just releasing as of the last State of the Union, and its doing fair at the moment, having sold a bit over 4 million units as of this posting. Of course, it took a major price-cut, and the release of yet another Zelda re-release and a Super Mario 3 re-tooling to get any attention. The major decider in that market is going to be the Playstation Vita. The Vita’s initial reception in Japan has been pretty terrible, with a 78% sales drop in its second week, and only 500 thousand units sold over the holiday season and into the new year. But, if the US market embraces it, the Big 3 (Sony, Microsoft, and Nintendo, of course) may still see that their names can act as a barrier to hold off the tides of change. If the PSV is not embraced, and Sony is tempted to bow out, then it will indeed solidify the idea that tablets and mobile phones are killing the need for a game-only portable device.

What portables and mobile digital devices don’t do, however, is high end games on a big home theater system. Its that premium experience, the game developed for the tecnophile in all of us, that wants their eyes to bleed from the graphics, and their jumblies warbled by the bass. That is something that the consoles will always be there to offer. The PC has offered the same, or better, experiences in the past, but gamers have spoken again and again, the mass market prefers a streamlined controller and a standardized OS, without mucking about in all the compatibility issues the PC market deals with. For now, if you want a big game, you’re going to the Big 3, and no doubt about it. I’m not going to delve into console wars, because frankly I think all 3 developers have a pretty good foothold right now, and it will be pretty far off into the launches of the next gen before one of them could even make an error critical enough to Jeopardize that.

The immediate confrontation comes to developers. The massive wave of studio closures last year, and the smaller but still devastating losses this year,  Kaos studios (HomeFront), Team Bondi (LA Noire), and three of Sony’s studios in Denver, Tuscon, and Seattle, among others, continues to demonstrate that with the level of technology as high as it is, with as much of it as we demand from our games, and the cost to implement it, smaller studios will have little to no chance of delivering high caliber games to audiences. Assuming a studio is able to put together the funds to put together a great game one time, if that game under-performs, the studio is toast. If it does well, unless it does massively well, they’re likely to get bought out by one of the major established publishers, like EA or Disney. If they deliver a game there that does profit, but not enough to meet shareholder demands, again they will be axed. The market is, and I say this all the time, mimicking Hollywood so closely right now its terrifying. Its developing into a situation where high costs make it so that only a handful of major publishers will continue to thrive. If anyone else starts to rise up, they get bought out. Indy studios are forced to make their creations on the cheap, for less advanced systems. All of our A-game stuff will be put out by the few big-timers. Of course, since profit is their bottom-line, and the cost of production and marketing so high, we will be treated to less and less true innovation, and more and more franchise reboots and sequels.

One day, these titles will encompass all games... wait, scratch Guitar Hero, replace that with Assassins Creed or something.

How many of your purchases this year fit that bill?

Recently, Shane brought up a good question in his article, with the advent of all this new tech, can the gaming industry keep up with the advances when the next generation of systems, and the relative speculation about their capabilities, seems so far behind everything that’s coming out? Well, of course, they could keep up, but the problem is also concerns the monstrous expense… its a whole other article in-and-of itself, but the console world has always had to maintain this fine line between high-end tech and affordability. I was at CES, there was some impressive shit, and gaming wasn’t really even a speck on that show’s ass… part of it was because the crowd really wasn’t there for gaming so much as to find and develop new intellectual properties, but also because gaming doesn’t advance technology, it rides the wave of it. Nintendo has been the exception to that rule, recently, with its innovations in motion control and 3D without glasses, both of which were topped by other companies this year, such as LG and their 55” 3D, no-glasses television. But, in the end, I think its safe to say that with just enough innovation, console gamers will continue to come around and play, even if the next system isn’t necessarily the cutting-edge.

So, will consoles ever be absorbed into general tech? Eaten by PCs?… well, yes honestly. Microsoft and Sony have been making some steps towards the all-in-one for ages now. One day they’ll get their shit together enough to actually accomplish that goal. It won’t happen in the next generation, though; but with technology changing the way it does, maybe in 10 years it will.

30 years ago, if you wanted to play video games, you had to leave your house and pump quarters into a six-foot tall box. Convenience, and the drop in tech prices brought games home, and we’ve been refining them ever since. Convenience, and the drop in tech prices, at least in small mobile devices, promise to change the industry again. The average gamer is now 37 years old. We’re skewing older and with more female gamers year by year… how long before our mode of games looks as archaic as the coin-ops look to us now?

/speculative rant

Resources:

http://www.joystiq.com/2011/07/05/report-game-industry-worth-74-billion-in-2011/

http://www.engadget.com/2012/01/13/video-game-sales-drop-21-percent-in-us-as-kids-remember-theres/

http://massively.joystiq.com/2011/03/31/sony-online-entertainment-confirms-layoffs-studio-closings/

http://venturebeat.com/2011/12/28/playstation-vita-sales-drop/

http://kotaku.com/5857400/call-of-duty-modern-warfare-3-shatters-all-sales-records-surprises-no-one

http://en.wikipedia.org/wiki/Street_Fighter_II#cite_note-gamest68-13

http://en.wikipedia.org/wiki/Angry_Birds

http://theweeklyblend.com/wordpress/?p=2107

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/11/video-game-sales-on-track-for-no-growth-in-2011.html

http://www.theesa.com/facts/pdfs/ESA_EF_2011.pdf

  • Mark Ross

    “Jumblies warbled”… That phrase ALONE warbles my jumblies.

    • http://www.facebook.com/dustin.hall1 Dustin Hall

      That was my favorite moment when writing this thing. Thank you. My moment in history…