AAA Video Games Aren’t Profitable and How to Change That

Just Cause 3Christofer Sundberg, the founder and creator of Avalanche Studios, recently delivered some unsettling news: Big AAA video games don’t generate much profit if any at all. He said, “Very few traditional $60 games make any money, and what used to make sense doesn’t any more. Publishers and developers very rarely see a return of investment from a 5-8 hour long game.” This is scary, for publishers, game developers, and gamers alike. If you combine this reality with more costly development for the new generation of consoles, it seems the landscape of gaming is going to look very different 5 years from now.

Adapt or Die

I think one of the leading causes behind big name titles making less and less money is the disconnect between publishers and developers. I talked about this when I discussed lack of content and how marketing gets disconnected from the development. Sundberg seems to agree with my take and had this to say: “The publishers are nervous because they have to project a game being a massive hit three years into the future and the developers are frustrated because they need to be flexible to every move the publishers make”. You see the disconnect? And this situation is cyclical because the strained development hurts the quality of the games which hurts sales which makes publishers more trepidatious which makes the next release schedule more strained. Wash, rinse, repeat, die.

Now, it’s easy to sit back and say, “Just have better communication and more understanding” without actually solving the problem. However, profitability is what motivates publishers, so they need to find the weak points in synergy and cohesion, and make the appropriate and necessary changes. This isn’t going to look the same in every development and publisher relationship, so strengths and weaknesses need assessed and addressed rather than continuing to throw large sums of money and deadlines at the problem. I have an idea on how this might look in practice.

Smaller Deliverables

With the increase and ease of downloadable games, there is both a rise in players choosing digital versions of games as well as more indie titles hitting the market. Bigger games can and should leverage this in their favor. Imagine if you broke a big AAA game into 4 parts, and planned to launch one part in each quarter of the year. We will call these parts, Q1, Q2, Q3, and Q4. Now, instead of having to launch and deliver a massive piece of software that needs to be both playable and reliable, you can launch a portion of it and use the remaining months of that quarter to tweak and patch problems. Division of labor would obviously have to allow some of your staff to focus on quality control of Q1, while the rest of the staff prepared Q2 for launch. This is one example of how my ideas about agile development could be implemented, because you are making your game more agile in the way it is developed, delivered, and maintained. This would allow developers to adequately test and build, but would also empower publishers to spend less on marketing upfront and so far in advance.

Why would this different approach help with the marketing budget? 1) Because the lower price point on a big AAA title would be an easier sell (think of how many more people would be willing to try out a game if they could buy a small piece for $20). 2) The subsequent reviews written by magazines and other outlets could serve as “free press” for the next installments. 3) You can space out and adjust marketing spending based on how well the game is selling. Did the Q1 launch fall short? Have contingencies and promotions in place to help the Q2 launch sell a bit better (bundle Q1 with Q2 might do the trick). What if Q1 exceeds expectations? Save some of the marketing money and wait to see how well Q2 rides the success of the first. You are also spreading out risk as budgets are less strained by having a steady pace of work rather than cramming it all in to ensure a full game can launch on a pre-set deadline. And there is always the option to make content in the middle cheaper. Retailers do this all the time with DVD season sets. They make Season 2 really alluring with a low sticker price, because they you have to buy Season 1 and Season 3. Hook, line, sinker.

You can actually see this idea in practice with how Destiny has launched. Bungie launched a game that has been consistently criticized for how small it is, and have since released one of numerous pieces of story that will slowly add to the world and experience. In Destiny you have a somewhat small but incredibly stable game. It looks marvelous, plays tight, but has only delivered a small amount of content. The stability and size of the game are intrinsically linked because keeping the game small helped control quality. If you make this your standard but adequately set player expectations and charge less for the initial installment, you just might turn the tide in the favor of a game that otherwise would’ve been a massive marketing push and a rocky launch with minimal profit.

Adjust Expectations

As gamers we need to have understanding and appropriate expectations because the technology has vastly improved which means creation and innovation take longer. So if the world of big AAA games changes shape and delivery pace, but gives us a more enjoyable experience while providing more profit to the companies behind the games, everyone wins. I for one think that a big change is a welcome thing. Nobody enjoys waiting to finally purchase a complete game, only to have the content seem meager in comparison to the time waited and bothersome bugs sour the seemingly short lived experience. And if companies aren’t making much profit, then we all need to turn our sails and ride the new currents instead of pushing against the oncoming storm. I would much rather pay $20 each quarter or $30 every six months for a solid game as it continues to add and improve itself than drop $60 on something that feels incomplete and can be quickly run through and cast aside. If games become more like epic TV shows, with long running stories and seasons of release, gamers should gladly jump on board. As long as we get Breaking Bad and not repackaged sitcoms.

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