February 11, 2009

Weathering the Storm: Videogames and the Economic Crunch
by Steven Hopper

A look at what the video-game industry may do in the tough years to come.

Even in the face of the current economical crunch, many analysts considered the video-game industry to be untouchable. However, the recent woes of several big name publishers like Sony and Square-Enix (whose shares were revealed to be at a six-year low last week) as well as the closure of several talented development studios seem to indicate otherwise, to say nothing of recent outlets within the video-game journalism field getting the axe as well.

Still, however bleak the situation may be, the video-game industry has outlasted dire economic forecasts before, only to emerge even stronger on the other end. However, while the video-game industry is quite resilient on the whole, what is the ultimate cost and what implications does it have?

Games like Mirror's Edge were creative and original IPs, but performed below expectations commercially.

For starters, I think we’ll begin to see more of a shift to the Wii from several different big-name publishers. The Wii is a runaway success that is currently in more homes than the PS3 and Xbox 360 despite being the last one to the market (arriving a year after the Xbox 360).

Additionally, the system is quite cheap to make games for, not requiring nearly the high budgets of its high-def competitors. However, Wii development is not without its caveats. Currently, Nintendo’s first-party efforts are outselling third-party games by a huge margin, largely due to the fact that a sizable chunk of third-party games on the system aren’t terribly great (read: downright shovelware).

Not to say that there aren’t some truly standout third-party games on the Wii, as there are a lot. But it seems that for every unique and compelling third-party title, there are about five weak titles that don’t represent what the system is truly capable of. Hopefully as focus shifts towards the system, publishers will be cognizant of quality and refrain from simply trying to cash-in on the easy-to-develop-for system and create compelling experiences on the level of Nintendo’s first-party titles.

Games like No More Heroes show how third-party development can be done well on the Wii.

Secondly, we’ll be seeing that more publishers will be leery to develop brand-new IPs across systems. Creating a new IP can be a risky and costly endeavor, as established franchises are quite the big business and can generally sell on name alone, while new IPs don’t have such a luxury.

Case in point, EA took some risks last fall, with several brand new multi-million dollar titles. While these games (like Mirror’s Edge and Dead Space) were solid titles, they ultimately didn’t meet sales expectations, leading to financial problems for the big publisher. Meanwhile, several franchise titles, like Gears of War 2 and Guitar Hero World Tour, far outsold any new IP game that launched last fall.

Ultimately, while the situation looks pretty harsh economically and the videogame industry is taking a hit, the industry is bound to whether the storm. However, we can remain hopeful that the overall quality and level of standard stays intact for the entertainment medium that we love.

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