The Suits of Gaming or why having a business degree isn't always a good thing.

I used to be a contributor for a now defunct gaming news site. This site was created, and run, with a specific business model which was used for a sports news site that was bigger, and obviously more favoured, by the parent company of this network of sites. The business is one we gamers would recognize as geared towards the casuals, the non-core gamers, and designed to maximize hits for ad revenue. It's basically nothing new. Before I came on board for that site, I asked the question about if contributors would ever be forced into "hit mongering" articles. I, as a core gamer, am not a fan of the slideshow articles where lists are made to maximize page views and I made it clear I didn't want any part of that. The answer I was given was "no, we don't give out assignments" which was not at all the truth.

About a month into writing for the site, the hit mongering tactics began and everyone was forced to do a top 5 slideshow list. I fought hard against this, making it public knowledge that I detested this kind of gaming journalism. In the end, if I wanted to keep the job I had to comply. The interesting fact of this though is that I wasn't the only one against this, and the issue was brought up behind the scenes. I would come to learn that the attitude of the "corporate leadership" was "slideshows work for the sports site, so they'll work for the gaming news site too."

"Why would anyone think this" you might ask? The answer is simple. The owners of the site had no first hand knowledge about the industry, or gamers in general. All they knew about gaming was one Call of Duty game (MW2) and that sports fans loved the slideshow lists. These were businessmen that had not done their due diligence. They had no genuine interest in the industry, no knowledge about the interests of the audience they needed to appeal to, and only had money on their mind. No matter how many times they would be told that gamers hate the typical hit mongering and sensationalism of current gaming journalism, all they could see were traffic statistics and how that would convert to ad based revenue. This kind of mentality extends to the publishers as well, all the way to the Big 3 platform developers.

While watching the latest Sessler's Something, Adam brought up an interesting fact that caused a flashback for me. Someone had asked him about what his opinion is on the Wii U's current condition and he brought up that Nintendo, as a publicly traded company, has fewer stock holders than Microsoft or Activision and that these stock holders are guilty of insular thinking, believing that what worked for them with the Wii would work for them with the Wii U. I then thought of companies like Activision and EA and thought to myself "they are just as guilty of poor decisions as Nintendo is."

The suits and stockholders of EA or Activision aren't gamers. They have no interest in games, or gamers, and only care about money. This mentality is the driving force behind the decisions we all rally against this gen. Online passes, day one DLC, on-disc DLC, and now microtransactions and the possibility of always-on DRM appearing on consoles. All of these actions are designed to reap the maximum possible profit regardless of how it may alienate the userbase.

If there is a decline in the quality of gaming, if there is a "crash" imminent, it's because of the suits who don't know what they are doing but can market it well, and the casuals who are impulse buyers and don't think of the future repercussions. Just as sports fans are a very different type of fan to a gamer, so to are casual gamers very different types of fans to core gamers. In order to be successful and well respected, the best action you can take is to be dynamic in your approach. It is impossible to make everyone happy, but it is very possible to make a lot of people happy.

Personally speaking, I think it's tacky to get involved in a business you have no interest in on a deep level. If all you care about is money, be a silent partner. One should always know the market they are selling to.

The second I heard that the suits who wanted to push these hit mongering slideshows said that the only reason any of us could be opposed to it is because we're "journalists" and can't see how much money could be made from the non-core gamers, that's when I saw that same mentality in so many different publishers and developers this gen.

Owning a business degree simply means you stuck through post-secondary schooling, it doesn't necessarily mean you're smart or intuitive. Being a CEO just means you've worked hard for a long time and were recognized for your work, it doesn't mean you can predict what people want or like. These things also do not entitle you to completely ignoring the truth in favour of doing things via your favourite money making schemes.

This entire blog, of course, can be countered by the success of games like Call of Duty. A franchise much maligned by countless core gamers for its refusal to change and grow. How can I say that these suits don't know what they are doing if they are making millions off of one franchise alone? Quite simple really. Call of Duty caters to a specific demographic more than to the core gamer. That being the impulse buyers, the foolish parents, essentially the ignorant. These people don't care if Call of Duty is resold as the exact same game with every iteration, all they care about is the next new Call of Duty. Can anyone say that a business truly understands the market if their sole success is selling to, to use a term I hate using, sheep? Or is it that they're following Nintendo's mentality of insular thinking but somehow manage to get away with it?

All I know is, the more ignorant suits get involved with how the industry moves forward, the more anti-consumer tactics are employed, the more game quality is dumbed down, and the more problems for the core gamers that have always been the blood and backbone of the industry arise.

[lex-1020]

This blog brings up a very good point, although I have to disagree on a few points.

"Being a CEO just means you've worked hard for a long time and were recognized for your work, it doesn't mean you can predict what people want or like."

This is my main point of disagreement, and agreement. A lot of the times a CEO isn't appointed because of their hard work. They are appointed because of their money, connections, or degrees. A lot of times CEOs have never worked in the company that they are becoming CEO for. Take for instance when I worked at Pizza Hut. We changed CEOs all the time, and you could always look up their information, most of the time they had never worked for Pizza Hut before.
This just goes to prove your point though. Most of these companies are not gamers and all they know is money. They know xy&z make money and so they are going to do it.

[DragonKnight]

Well, I was speaking more generally. I mean if you look at someone like Kaz Hirai or Peter Moore, their positions are due to hard work in the industry. Though I agree that that isn't necessarily the norm.

[ravinash]

Usually how it works is someone who is really into gaming and a tech wiz creates a product that really takes off.
Over time that person develop the game or product but then has to expand.
To make running the company and projects more manageable they have to bring in more management or start working under a publishing company.
That's when the money people get involved and see the success of the original product and then either tries to repeat the exact same thing like they do with COD or they try to change it to the main stream like Dead space.
Product goes down the drain and the original gaming wiz who created it gets delusional and then leaves the company.
Money people then run company into the ground.

[SilentNegotiator]

It's true about any industry...if you're disconnected from the industry you're working in, you won't have the proper knowledge to make good business decisions.

Gaming industry heads have a lot to learn. There's more to it than just creating more ways to charge people. Dead Space 3 rumors are already going around saying that EA is displeased with the sales/revenue. Things like season passes, DLC, microtransactions, etc aren't enough to make a successful business with happy, repeat customers.

[DragonKnight]

"happy, repeat customers."

That, I believe, is one of the most important key points to good business. Sometimes, in order to benefit in the long run, you have to make the decisions that please the consumer more than they please the shareholders. A few companies understand that, most don't.

[sjaakiejj]

"This mentality is the driving force behind the decisions we all rally against this gen. Online passes, day one DLC, on-disc DLC, and now microtransactions and the possibility of always-on DRM appearing on consoles. All of these actions are designed to reap the maximum possible profit regardless of how it may alienate the userbase. "

That's an incorrect assumption. Whilst you've taken a few points into your argument, you've carefully ignored some others. Look at home game development budgets have gone up in the past 10 years, then look at how many units a game with the average budget sold. You'll notice that budgets have gone up significantly, game prices have only gone up by $10,- and the games haven't sold much more than they did 10 years ago on average.

When taking these numbers into account, you'll notice that, for the average game, pure game sales are _not_ enough to regain the budget. Hence, Microtransactions, DLC and Online Passes. The alternative is jacking up the price of games by some $20,-. Which would you prefer? I'll take Microtransactions and DLC over $80,- games.

[DragonKnight]

You see, you haven't disproven what I said. I clearly stated that the suits care only about money, and that mentality drives them to do anything to maximize profit regardless of how the userbase feels. It's also a misconception that development today is more expensive than any other time. For one, development has ALWAYS been expensive. Probably more so when having to use cartridges as they were always more expensive and why games were more expensive during the days of the SNES than they are now.

The idea that the HD gaming era of consoles makes development costs higher is incorrect. It ignores the fact that PC gaming has been HD for far longer than consoles and yet doesn't suffer from the budget problems and higher costs of console gaming. Costs are up because spending is poor. I've mentioned this before, but look at Skullgirls. The developers wanted $150K just to add 1 new character. Why? Because they had to pay for marketing, certification (thank you MS and Sony for charging 10K just to put an update on your console) the outsourcing of so many assets (art, animation, etc) voice acting. Essentially, the costs associated with development could be drastically cut down in many areas. If you don't believe me, just look at Microsoft's $500 million dollar Kinect advertisement budget. They didn't need to spend that much money on a marketing plan for a peripheral device and you can guarantee that they made plans to recoup that money by making gamers foot the bill in the end. It's the same principle as politicians and charging taxpayers for everything from legitimate issues to their own gas bill.

And then there are the companies who DON'T have the mentality that MTs and DLC will save them or gain them massive profit. What would you say to these companies who put out quality games, and don't charge $80?

It's naive to think that MTs and DLC are necessary for profit when it's clearly just greed.

[sjaakiejj]

"It's also a misconception that development today is more expensive than any other time. "

It's not:
http://images1.wikia.nocook...

And that was just at the start of this gen.

"The idea that the HD gaming era of consoles makes development costs higher is incorrect."
The assumption that resolution changes development costs is incorrect. Resolution is an integer number specified in the OpenGL or DirectX API. It can be changed in one minute.

It's the higher amount of detail on 3D models, programming complexity, animation, and sheer production values that have made costs go through the roof.

Look at this list here: http://digitalbattle.com/20...

What's the common pattern here? That's right, all of them but one are current-gen titles. Playstation 2/Xbox were a LOT cheaper to develop for.

Whilst yes, Marketing costs a lot of money, the price of that hasn't changed much in the last 10 years, so it's not an interesting statistic to look at. Instead, we need to look at statistics that have changed to explain certain business decisions. Price of games 10 years ago? $50 to $60 if you bought them new on a console. Price of games now? Up to $65.

So really, the price has only changed by 5 dollars, where as the budget of high profile games has increased by 5, most of them even more. Applying simple maths here should get you a fairly straightforward picture of what it costs to develop a game, and what it takes to break even.

We can see how much a publisher gets on average on each sold game:
http://latimesblogs.latimes...

Add marketing on top of the average game budget, and you'll find that the average AAA title needs to sell at least 1 million copies to break even, usually more. That's a number that a lot of games never reach. Now consider that EA usually develops games with budgets above average, such as Dead Space 3, and you'll understand why Microtransactions actually help keep the price of games down.

Don't forget that most games that release fail to make a profit, hence why bigger titles such as Call of Duty, Battlefield and Mass Effect are used as cash cows.

[DragonKnight]

"It's not."

It is. Adjust those numbers for inflation, change the marketing styles, there are many ways to prove that it is a misconception if we had access to how money was spent.

"It's the higher amount of detail on 3D models, programming complexity, animation, and sheer production values that have made costs go through the roof."

And that is irrelevant in PC gaming? With PC gaming you can do so much more than resolution, and it is done as well. You're telling me that improved A.I., physics engines, etc. don't cost the PC development scene extra money in man hours, equipment, etc? Sorry, but PC gaming is more than just higher resolutions. PC gaming has done what is currently being done with consoles for a lot longer than consoles. You can't just ignore the fact that PC development budgets don't paint the same bleak future that console development budgets do.

"What's the common pattern here? That's right, all of them but one are current-gen titles. Playstation 2/Xbox were a LOT cheaper to develop for."

Do you know what I see in that list? A lot of marketing and a lot of outsourcing. It's easy to say "this game cost 50 million dollars to make" because it's a blanket cost assessment. In actual DEVELOPMENT money it's not more expensive now than last gen for example. Including marketing, and outsourcing, and certification fees in the total cost is misleading as marketing and certification have nothing to do with what went into the actual development of the game. What did the studio pay for in salary, equipment, that's the kind of thing that goes into development. Marketing is something that goes into selling, outsourcing is a completely unnecessary cost as is certification (albeit one that is forced).

"Price of games 10 years ago? $50 to $60 if you bought them new on a console. Price of games now? Up to $65."

And prices of SNES games were as high as $90. Are you saying SNES games were more expensive to make? And the cost of games hasn't gone up to $65 as a norm. The norm has been $60 for over 10 years now. Sony is predicting that games will be cheaper this gen. If games are cheaper, explain the necessity of MTs since obviously the costs of making these next gen games would have to go down in order for the price to go down as well yes?

"We can see how much a publisher gets on average on each sold game:"

I can't comment on that as your source is OnLive. They don't publish or develop games, they are merely a cloud service that streams games.

"Now consider that EA usually develops games with budgets above average, such as Dead Space 3, and you'll understand why Microtransactions actually help keep the price of games down."

They don't though. See, you're ignoring things like history and a different platform. Gaming has survived for decades without microtransaction. It could be argued that the possibility of transactions has only appeared thanks to the 360 and that's why they weren't around, but there were many ways to make extra money from games, including price hikes which didn't happen. PC gaming has had microtransactions forever, chiefly for Free to Play games where you can see their necessity. Microtransactions are about pure profiteering and greed. They don't keep the costs of anything down, they simply create another form of revenue for publishers to make more money from.

"Don't forget that most games that release fail to make a profit..."

Source? Studios don't typically release their profit earnings.

[sjaakiejj]

"Source?"

I'll ask you the same for everything you just said, considering I'm the only one who provided sources at all. Good luck ;)

[DragonKnight]

You didn't provide any real sources. You provided an image that can be photoshopped, an article that didn't source it's own numbers, and an OnLive source that has no credibility. What I stated is simple and pretty observable. Blanket inclusions in costs doesn't mean development costs have gone up, and if you don't believe me about the Skullgirls dev, simply look them up on kickstarter. They break down the cost for the fans who were questioning it.

In the end, all you've succeeded in doing is posting your opinion that microtransactions keep the costs of games down, but they don't and Jack Tretton said he expects the cost of games go down, at least where the PS4 is concerned. That you can read for yourself here.

http://www.eurogamer.net/ar...

[sjaakiejj]

The image was a slide from GDC which can easily be found online through a google search, the digitalbattle numbers can easily be validated, and OnLive is a credible source, since a CEO of a company (who, I might add, is very well respected in the industry) doesn't just pull numbers out of his arse.

1) Inflation doesn't strike from one year on the next, nor does it rise sufficiently much to explain the difference in development costs

2) I never said detail didn't make a difference to PC games, but budgets for AAA PC Games are just as high as those for consoles.

3) Marketing and outsourcing? How about some sources for that. Those are development budgets, marketing is generally handled by the publisher, not the developer. Otherwise Halo would've had a budget much higher than it does. Outsourcing generally is a cost-saving measure, it wouldn't make sense to do it if it made everything more expensive.

4) Gaming has survived without Microtransactions by higher price points and lower budgets. The environment of publishing and developing games has changed so much over the past 10 years that you cannot use a historical lack of microtransactions as an argument against them - that's the point I was making.

You state they are the result of profiteering and greed, yet you provide no concrete arguments or sources to back it up. It feels as if you really want blindly hate any company that uses Microtransactions, without even wanting to consider why they exist in the first place. Companies are a business first and foremost, and therefor they need to make a profit. With current budgets, sales and game prices, that's simply not possible without other sources of income.

[SageHonor]

This is what I say.

Pay attention to economics/business ethics etc or read books on it so you can understand how banks and businesses generally operate

Improve your writing skills by... well writing. Or reading.

Takes some kind of art/tech class such as animation, 3d modeling, programming, etc.

Connect and talk with gamers, journalist, only with people that know what they are talking about really so you can have a mature conversation. Or how about reading your forums to see what the general vibe is like and what is being talked about the most.

Honestly, if more heads interfaced with the developers then alot of these problems wouldn't exist.

And boom... You have a good amount of knowledge. That's just my take. I believe video game heads should simply

[Deadpool616]

So in short, do everything Capcom of Japan doesn't do.

[SageHonor]

Exactly! XD

[HonestDragon]

Suits and stockholders do not care for the industry period. They only care about money and using cheap tactics to make that money. They have no passion for the industry. They would rather cater to the bigger audiences and create more ways to generate revenue.

That's why action has replaced horror. That's why DLC is so common. That's why games are being shipped out haphazardly. That's why there are so many problems with online only games.

When corporate gets involved, then the quality of a game goes downhill. You can easily look at Capcom, EA, and Activision as culprits of using various tactics that no gamer likes. If developers and publishers want to clean up their act and get on the public's good side, then they need to think of the consumer instead of the suit.

[rainslacker]

It's funny you bring up this corporate mentality. If you look at one of the most successful companies of recent years, Apple, you will see that they had someone come in and run it with a love of what he was doing. Sure the suits wanted to make money, but the controlling factor behind their success was Steve Jobs, and his enthusiasm sold Apple products to a lot of people.

They definitely had some great marketing and stuff, but the idea of Apple is what people buy, not the forced business focus-tested ideas that many business majors rely on to play it safe.