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Death to the Games Industry, Part I

by Greg Costikyan, 30 August 2005 9:00 am Filed under: greg costikyan, feature, greg costikyan, issue_8, manifesto, money behind games Dungeons & Dollars - RSS 2.0 123456 Next Comments [10] "The machinery of gaming has run amok... An industry that was once the most innovative and exciting artistic field on the planet has become a morass of drudgery and imitation... It is time for revolution!" "Designer X" in the Scratchware Manifesto

When "Designer X" wrote those words back in 2000, the industry, to the degree that it took any note whatsoever, dismissed them as irrelevant ravings. Jessica Mulligan wrote that the Scratchware Manifesto was "naive in the extreme," and obviously written by an industry outsider - and was quite surprised to learn that I was Designer X. Of course, things have only gotten worse since 2000, and the industry - or at least, developers - have started to agree. Two years ago, speaking at a conference in the UK, Warren Spector said "The publishers have to die, or we are all doomed" - to cheers. And this year, at GDC, I ranted on the problem - and received a standing ovation. What is the problem? And is there any way to address it? The Problem As recently as 1992, the typical development budget for a PC game was as little as $200,000. Today, if you want a title that will be taken seriously by the retailers - an A-level title - your minimum buy-in is $5m, and $10m for a triple-A title is common. With the next generation of console hardware, the talk is of $20m budgets - not as something that will be unusual, but typical. On a theoretical basis, the rise in development costs is driven directly by Moore's Law. As hardware becomes capable of displaying better-detailed graphics and higher polygon counts, it becomes mandatory to provide them. If you do not, your competitors will - and your games will look inferior by comparison to directly competitive product. In the accompanying graph, you'll see a huge rise in the '90s; that was driven by the adoption of CD-ROMs. Before CDROMs became common, games had to be delivered on floppies - and even if you did a game with several floppies in the box, your application size was still measured in single-digit megabytes. CD-ROMs provide more than 600 MB - and once you had the capability of providing that much data, doing so became mandatory. You had to generate enough assets to fill the disc.

Now one might argue. They had to rewrite a lot of code. The tools don't get better fast enough. say. and are a lot more concerned about branding than anything else. But if that's so. In principle. each engine is designed for specific purposes. It's the gameplay. Spector says he's not at all sure that the development of Deus Ex actually benefited from using Unreal . not solves. good. Sequels and licenses.that's too risky. creativity . art assets (not programming) are the main cost driver. but in gaming. and Deus Ex was an FPS/RPG hybrid. a Doom level took one man-day to build. a doubling in polygon count means a doubling in the amount of time an artist needs to spend generating the model . we have no indie aesthetic.Today. Gamers themselves are partly to blame: Indie rock fans may prefer somewhat muddy sound over some lushly-orchestrated. but is mainly designed to impress the marketing dweebs with the graphics. increasing processing power also allows better development tools. And the case for buying middleware is rarely open and shut. it kind of sucks? It's not the glitz. the publisher does not greenlight it because they play it and say "what a great game!" The developer may not even have a playable demo . But the nature of the market and distribution channel is even more to blame. you find yourself spending a lot of programming time trying to solve the problems. . such a huge hit? And why do the critics basically agree that Doom III well. the problem. the market demands more detailed 3D models .and a doubling in cost. no group of people (of any size at least) who prize independent vision and creativity over production values. indie film fans may prefer quirky. As machines become capable of rendering more detailed 3D models in real time. Glitz. is what sells the publisher. that the improvement in graphical quality improves the gameplay experience so much that the cost is worthwhile.but what he will have is a demo reel. A Doom III level takes two or more man-weeks. but empirical evidence bears it out. For that matter. half of the people sitting in on that greenlight meeting are probably marketing suits who think they're in a packaged goods industry. Back in the day.you might get a product to market faster by licensing the Unreal engine. and if you want to do a game that differs a lot from what the code was written to support. Unreal was built as an FPS engine. Glitz Over Gameplay The problem is that once something becomes technically feasible. Middleware doesn't solve the problem. When a developer goes to a publisher to pitch a title. All things being equal. low-budget titles over big-budget special FX extravaganzas. either .after all. the market demands it. But the reality is that it ameliorates. more polygons means more cost. Faster machines can push more polygons. That's the theory. producer-massaged score. of course.but you're still faced with building all the content.and models are hand-created by artists using tools such as 3D Studio Max and Maya. a non-interactive visual pitch that may work to get some sense of gameplay across. not gameplay. than by building your own 3D renderer from scratch . which helps speed the process. why was Doom so rapturously received.

plenty of people make decent.And glitz. as far as the market is concerned. In the games industry. The industry is full of best-selling. they look at the materials provided by the sales guy. Can you say "Driver 3?" I knew you could. good + not pretty = fuhggedaboutit. and the story is the same. I want you to think about this. If you don't have it. they'll never make as much as Stephen King or 50 Cent. all you need to do is blow through your inventory before word of mouth catches up with you. and they need the shelf-space for the next piece of over-hyped crap.but it won't get you shelf space. Online play? Check. before either music or hardcover books get returned (and even six weeks for paperbacks). they only have facings for 200. in many cases. there's the industry's attachment to "feature list" marketing. And in both industries. though . 80% of all game sales occur in the first two weeks that a game is available. If you haven't achieved sales velocity. Compressed sales is vital to . Thousands of games get released each year. Dozens of people have worked for.several months. if you don't have it. how much money the publisher will spend on product placement and stocking fees (what the industry calls "market development funding. you won't get distribution. In other words. In other words. Step into a typical game store . but they reach a market. buster. lousy games. three years to bring a game to fruition .they're not going to get rich. Step into a typical bookstore. an actual gamer but you don't even get a chance to get to them if you don't have the graphic right stuff. Retailers don't have the time to play every title that comes across their desk and. someday. typically. It's the bargain bin for you. You can often tell a game has nothing new to offer just by reading the backcover text: If it's basically a list of features and numbers (five of this and a hundred of that). graphic glitz is the first barrier you must surmount. the actual quality of the game will matter to someone . gameplay may affect ultimate sales . They look at a video. HDTV support? Check.even a small mall location . Dozens of levels? Check.and you will be lucky to find 200 titles. you won't get greenlit. You have two weeks. pretty + good would be nice . a product has time to build word of mouth and an audience . In film and publishing. And that decision is ultimately based on concerns like branding. they don't play games anyway. you get one shot. possibly tens of thousands.a reviewer.poor gameplay and great graphics will work just fine. middle class livings by catering to niche audiences . The reverse isn't true. The Narrowness of the Retail Channel Step into a typical record store .but neither the publishers nor the retailers have an incentive to care. In other words: Pretty + bad = financially successful. typically. you know they've really got nothing to say.and two weeks is all they get. Of course." or MDFs) . you are dead. And finally. not gameplay. they make a decision. is what sells the retailer. a little bit. of different titles in the racks. Maybe.and there will be thousands.and whether it looks pretty or not. way down the road.

There is no room for creativity or quirky vision. the growth of the population. Go buy yourself a copy of Freedom Force vs. the disparity is so great that you can treat the growth in sales as a linear curve. 80% of all sales are in the first two weeks . In other words.. by the way. In other words. The publishers make up the losses on the few games that hit. Fifteen years from now. Too bad about the marketing. and now there are several every year. exactly .staying on the shelves.rather.and 30 years from now. we can anticipate soaring growth for decades to come. when you get down to it. Fifteen years ago. In other words: There is no room in this industry for niche product. The Third Reich.and while technically both are exponential curves (at least until the global population levels off). If you can find it. surely all is for the best. Not because more people have become gamers.and. Oh. and the growth in cost as an exponential one.) So the growth in game sales is driven by two factors: The growing portion of the population that was exposed to games when young . because people's leisure time activities tend to be set in their teenage years.and if the publisher has botched the marketing. it doesn't matter how good the game is. the games industry is the fastest-growing entertainment industry on the globe and unit sales increase year by year. But what we're talking about. almost nobody over 20 (and almost nobody not male) played games.everyone. And what's the upshot of that? The result is that the average game (not the industry as a whole) loses more and more money. (And. say. And if you believe. There was a time that a million-seller was considered extraordinary. we won't have idiot senators attacking games any more . will know how dumb that is. the growth in processing power. almost nobody over 35 plays games. they are. and they pursue the same activities as they get older.. of course. Compare that to Moore's Law: 100% growth in processing power over 18 months. is enormously faster than the growth in the population of gamers . . the demographics of game players will match the demographics of the population as a whole. in this best of all possible worlds? Why is it that sales are up? The answer is very simple: Demography. 50 will be the cut-off . is growth on the order of 7-10% annually. Thirty-five year-olds play games because they've been playing them since they were teens. These days. It's hit big. which drives the cost of game development. by the way. regardless of age. a much larger percentage of the population as a whole plays games. Michael Pachter at Wedbush Morgan. Nice game. or don't try. But Sales are Up! Yes.

This is why Sumner Redstone has been building up Midway's studios. Today. in this uncertain world. and anyway make money off the bets of others via the platform royalty. you need size to survive.or as close as they can come to one. anyone?). That's why it's prudent to diversify. they have deep pockets and a diverse portfolio. And they know it. because you're tying your fortunes to a single company. Goodbye Eidos. You only want home runs. been a conscious corporate strategy for EA. They need to spread their portfolio risk over more titles. The latter three are mainly in the hardware business (and Nintendo is not immune Revolution could easily go the way of Dreamcast). . because it means you have fewer and fewer potential publishers to pitch to. most diverse portfolio of anyone. to invest in a lot of different financial vehicles with different risk profiles. Similarly. EA has the broadest.Implications for Publishers The field becomes more and more hit-driven. And it works." if you invest in a single stock. As a result. That's why you get sequel after sequel. EA is stable for a different reason: It is big. for more than a decade. Ten million dollars is a lot of money to risk. Midway needs to get big. Ten years ago. because they're the ones who keep raising the budgets and the costs. low odds gamble . you're lucky if you have six. you can afford to produce only a handful of titles every year . And those home runs have to cover the losses on everything else.is that a problem? It is if you're a developer.and if the ball lands on 32. a means of squeezing out less capitalized competitors. Goodbye Acclaim. Everyone else has to stretch to keep up. Goodbye Interplay. And they're the villains in this piece. and the small lose out . They'll do okay. More than double the revenues of Activision. But if you go a year or two without a hit . There is no mid-list. being a small publisher is like making a high-stakes. Sony. So the big get bigger. its closest competitor. It's what the finance folks call "portfolio risk. Microsoft. This is why there are only four stable publishers in the field .those increasing budgets breed conservatism. you can make big money.it's like betting all your chips on number 32. you're doing something very risky.maybe Goodbye Rockstar. Raising the development bar has. And when you pitch them .EA. you had a couple of dozen plausible places to take a game. That's why any crap media license gets a game (Dukes of Hazzard. The publishers are averse to risking it on anything they don't view as a sure thing . And tomorrow .you are screwed. and Nintendo. They need a bigger spread of product. The promotional spend by the movie studio is viewed as a way of generating interest in the game without additional cost to the game publisher. or get out of the game. As a small publisher.

though .The publishers would like all games to be like sports games. they look for ways to save money. He said.not for good games. Development in lower-cost places like Eastern Europe and Asia is on the rise. I was at the Games & Mobile Conference (a small one.an RTS. of course. Publishers would love all games to work the same way . particularly for lower-budget titles and games for handhelds.forget it.which has the problem that all games start to look the same. "There's no point in publishing a game unless there's a brand attached to it. it's very hard to negotiate a developer royalty over 15% today. Bing Gordon's comment at the meeting where publishing was approved was: "Well. They're basically buying the same game over and over. said something I could not believe he'd said in public (and that made me want to throttle the living daylights out of him.and they're trying to make it happen.at GDC last year.and the little drones will go out and buy the new version every year. but it'll get Will off our backs. "We are always looking for something new and innovative.then they know how to sell it. when Edmond Sanctis. And everything has to be a brand. maybe there's a reason Acclaim is dead." . then COO of Acclaim. it'll only sell a hundred thousand copies. From what I've heard (and this is definitely hearsay). He said. like try to offer a whole new gameplay experience." I'd like to believe that . With sports games." Do you buy games for the brand? Or the gameplay? Of course. You will not sell a publisher on a title unless the marketing weasels know how to pitch it to the retail channel. Tom is one of the good guys. but the players are wearing different jerseys and have slightly different behind-the-scenes data. EA tried to kill The Sims many times before it was finally released. driving. They still want an RTS. sports . If it fits into an existing. an RPG. action adventure. an FPS. of course). all you have to do is improve the graphics incrementally and throw in the new player stats .God forbid you should do something really innovative. Does anyone seriously think anyone other than Will Wright could have gotten EA to publish a game like The Sims? And actually. VP and General Manager at EA . That's why they look for franchises . And there's increasing use of middleware . in New York) two years ago. Pressures on developer margins are also intense.he runs their external developer program . because they share the same engine.a little something to differentiate your RTS from every other RTS on the market. It Sucks to be a Developer The implications for developers are even more dire. But if you're doing something novel .but of course EA's product mix belies it. Another quote that made me sit up and take notice was from Tom Frisina. but in essence what he is really saying is that they want checkbox innovation . The publishers (other than maybe EA) aren't immune to cost pressures. established game category .

Happens all the time. But business realities trump passion every time. you may not even get to gold master. Developers live from contract to contract . they're sitting pretty. in fact.and if they don't land the next contract. have a party to celebrate . and buy its own independence . barring a miracle. And no. It's happened to me. and they're in the catbird seat when it comes to negotiating leverage. and incrementally innovative at best. get to gold master. Does this mean that developers self-censor.today.no lack of them. Back in the day. the only thing you can get funded is something that's based on a license or part of a franchise (can you say "Coasters of Might and Magic?").and file for unemployment. as an independent developer in the games industry. In fact. a company like id could generate a surprise hit. Publishers are increasingly willing to kill projects midway .but from a business perspective. you need unit sales of well over a million.We're only talking about the best-selling PC title of all fucking time. does it? And we've only talked about the imitation aspect . to recoup that advance. . unless you cook the books. there's no point in throwing good money after bad. Thus. rake in the royalties." the odds of getting anything innovative published today are nonexistent. because the publishers want to make damn sure that every dollar they spend winds up in assets on the disk. you will not make a profit on the funding alone. it sucks worse. they aren't reliant on publisher funding because they have the resources to fund their own development. The truth is that unless your last name is "Wright" or "Miyamoto. And your entire $5m budget (or whatever) is recoupable against your royalties. And since you are utterly reliant on them for both money and access to market.I'm going to bring up that Scratchware Manifesto quote again: "An industry that was once the most innovative and exciting artistic field on the planet has become a morass of drudgery and imitation" Doesn't sound so naïve now. they're out of business. If you are relying on publisher funding. and I'm hardly alone: Work like a dog. Basically. you're just fucked.you can talk to EA_Spouse about the drudgery. not even bothering to bring their best ideas to publishers because they know they don't have a prayer of getting sold? You bet your ass. There are a lot of very bright and creative people in this field . they have the leverage to ensure that it does. In other words. you will never see a dime beyond your initial funding.or even after going gold.typically more like 7% of the actual consumer dollar). So being a developer is creatively frustrating . you are highly unlikely to achieve a royalty rate of more than 15% (which is based on wholesale price less MDF .and if they don't have confidence in the game. In fact. The cost of advertising and promotion can double the total cost . they own two franchises.

Not to mention advergaming. . more likely than not. action-adventure. and perhaps an equivalent number of people who. Today. Every one of these game styles has its passionate fans. flight sims. the figure $8b gets bandied about for the games industry. that's an undercount. You'll sign it away just to get published. and on and on. but quite likely $200m+ at retail). When I was a teenager.both because royalty rates even for established developers are under pressure. Goodbye Microprose. is to develop enough of a rep that a publisher buys you out. together. TCGs and the like . computer wargames. And every one of them has been invented in the last 30 years. casual downloadable games ($50-$100m. LARPs. hunting games. I was exposed to games as a teen. If Doom were to happen today. Goodbye Westwood. Goodbye Kesmai.no hard data available. mobile games ($100m+ domestically this year. freeforms.. but actually. tabletop RPG. ARGs. And instead of a handful of people who consider themselves hardcore gamers. and the board wargame. grossed under $100m at retail. but I'd believe close to $1b). Your only possible win.com or RealArcade. or the arcade game coin drop (I'd guess still over $500m). In those days. Why This is Bad I'm one of the rare gamers over 35. a hardcore gamer before there was such a thing as a home computer. $1b+ worldwide). cardgames. driving games. not only are business conditions harsh for developers . and as far as the publishers are concerned. US alone. the id-equivalent wouldn't own it . and also because you don't get to own your own IP. And the two industries. That's because. sports games. "big urban" games. the hobby games market (RPGs. we have tens of millions. that's nonnegotiable. And if id got obstreperous. and the advertising spend on sites like Pogo. shoot-em-up. which I played enthusiastically as a child. the conventional board and cardgame market (Hasbro doesn't break out the numbers.. unlike most people my age. were passionately involved with conventional boardgames.we have dozens. there were two sorts of games in this country: conventional board and cardgames. there were perhaps a few tens of thousands of hardcore board wargamers. and wargames . platformer. And then. the publisher guts you. depending on who you believe). I predate D&D. And the last 30 years have seen huge growth in gaming. in fact. And instead of just three types of games . Goodbye Origin.conventional boardgames.) I was a wargamer. RTS. (Yes. In other words. RPG.the publisher would. text adventures.But it's virtually impossible for that to happen today . 4X games. they'd just have the next version developed by someone else. god games.but there is no upside. trading card games . It doesn't include subscription fees for MMOs (on track for $1b+. graphic adventures. like Sid Sackson and Phil Orbanes. this year). MMO. dancing games.

not all. GTA and The Sims are spawning their own genres. oddball. and the way to grow the market is to create new experiences ." In other words. And we need to keep exploring it. And that path to market not only allows creative people to support themselves in a modest way . or we're going to get stale. successful game style means finding a local maximum in the space of all possible games . We've gone from three genres to dozens in a few short decades. places where some combination of mechanics produce compelling gameplay .There is a correlation here. in that probability-space. innovative. We're only 30 years into the gaming revolution. creative work. that did something novel. Doom created the FPS genre. They have a path to market for quirky. there are lots of possible variations on the theme. and that's a medium that's 300 years old. expanding the overall size of the market. The publishers would have you believe that "we know what works. But here and there. and new genres. but a lot are games that came out of left-field. you find that a high proportion . virgin continent. Most of the games in that game-space will be uninteresting. you can implement it. Warcraft and Command & Conquer created the RTS. Think of the space of all possible games. repetitive field limited to a handful of genres with no real opportunity for growth. are local peaks. too. But film. that all of the local maxima possible for "the video game" have already been discovered. Finding a new. but we've charted only the merest coastline of a vast. but that's false. The nightmare scenario for gaming is that we become like comics in the 60s and 70s . The hardware guys would have you believe that there's a direct correlation between hardware capability and the size of the market.a niche. it's happening to mainstream film right now. not for cool hardware. too . The growth in the games industry has been spurred by an enormous ferment of creativity. Yes. Innovative. Additionally.it also provides a way for the larger conventional market to discover new talent.they don't have names yet. If you look at the biggest hits in the field.not to release game seven in a franchise. if you can specify it. in all cases you can point to precursors that had some of the elements of these games Wolfenstein for the FPS. people buy games for the gameplay experience. It provides a lower cost way to experiment . All creative media get stale. But this is insane. games are an enormously flexible form: They've been created with every technology from the Neolithic to the modern. at times. And software is an enormously flexible medium.and around that peak. compelling novels are published every year. Each new successful game style spawns its own audience of fans. Sim City created the sim/tycoon genre.and a new audience.and that very experimentation reinvigorates the larger field. but call them the simulated world and the virtual dollhouse. Little Computer People for The Sims .but in all cases. music and comics have something the game industry doesn't have: They have parallel distribution channels for independently created product. these games combined things in a new way. It might .

creator control of intellectual property.even be starting to happen: Video game sales in Japan have been declining for years. He has written about the game industry for publications including the New York Times. or we are all doomed. publishers are struggling to match their 2004 revenues this year. We must blow up this business model. Read Death to the Games Industry. What do we want? What would be ideal? A market that serves creative vision instead of suppressing it. all we will be doing for the rest of eternity is making nicer road textures and better-lit car models for games with the same basic gameplay as Pole Position. not millions. we have to get out of this trap. and even in the US. for the sake of gamers who want to experience something new and cool. At present. for the sake of our souls. of course . Salon. Spector is right. he works for Nokia Research Center's Multimedia Technologies lab as a games researcher. An audience that prizes gameplay over glitz. for the sake of developers who want to do more than the same-old same-old. as developers. http://www.com/articles/view/issues/issue_8/50-Death-to-the-GamesIndustry-Part-I . and Game Developer magazine. Greg Costikyan has designed more than 30 commercially published games in various genres and platforms. And. but on a much more modest one: profitability with sales of a few tens of thousands of units. because creators deserve to own their own work. If we don't. Part II in the next issue of The Escapist.escapistmagazine. We Have to Blow This Up For the sake of the industry.not necessarily or even ideally on the same scale as the conventional market. A business that allows niche product to be commercially successful .