Comments on: The death of single-A titles will challenge retail more than the rise of casual http://www.gamesbrief.com/2010/07/the-death-of-single-a-titles-will-challenge-retail-more-than-the-rise-of-casual/ The Business of Games Thu, 09 Feb 2012 08:28:44 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Phil Gaude http://www.gamesbrief.com/2010/07/the-death-of-single-a-titles-will-challenge-retail-more-than-the-rise-of-casual/comment-page-1/#comment-7334 Phil Gaude Fri, 30 Jul 2010 19:49:54 +0000 http://www.gamesbrief.com/2010/07/the-death-of-single-a-titles-will-challenge-retail-more-than-the-rise-of-casual/#comment-7334 I agree with Chris, what's happening is that the middle market has dried up in all categories. And this is not new: I have witnessed it firsthand around 2002-2004 in the adventure games market. Middle-sized games sales would be too low to get a return on investment, leaving only high profile titles like Syberia and indie games. Middle-tier publishers mostly died, and game studios followed shortly after. Slowly but surely, this phenomenon has occurred in all gaming market segment. I can see two explanation to this: distribution cost and player’s expectations.<br><br>First, for a boxed product, manufacturing and distribution costs are independent of the retail price. When a publisher sell a AAA game at 59.99$, he’s earning roughly 20$ per unit. When he’s selling a 19.99$ game, he’s earning a few dollars per unit. In my opinion, this is the first major reason for the middle-tier dry-up. It is extremely difficult to make a sustainable return on investment in a boxed product unless you are selling north of 40$ at launch.<br><br>Second, most players have expectation about the size and the quality of games. These expectations are getting higher and higher each year, driven by the high profile AAA titles. It’s not easy to enjoy watching TV on a 19” CRT TV once you get used to a 42” flat-screen TV, and this behavior is the same when playing games.<br><br>Now, the rise of alternate gaming devices and gaming channels (iPhone, iPad, Facebook) is changing the situation. Distribution cost is going way down, and you have the “TV versus movie theater” effect. One would not accept a TV series production value in a big-screen movie, but it’s OK in the living room. So as a player, you will accept a smaller game on your iPad than you would accept on your game console. I agree with Chris, what's happening is that the middle market has dried up in all categories. And this is not new: I have witnessed it firsthand around 2002-2004 in the adventure games market. Middle-sized games sales would be too low to get a return on investment, leaving only high profile titles like Syberia and indie games. Middle-tier publishers mostly died, and game studios followed shortly after. Slowly but surely, this phenomenon has occurred in all gaming market segment. I can see two explanation to this: distribution cost and player’s expectations.

First, for a boxed product, manufacturing and distribution costs are independent of the retail price. When a publisher sell a AAA game at 59.99$, he’s earning roughly 20$ per unit. When he’s selling a 19.99$ game, he’s earning a few dollars per unit. In my opinion, this is the first major reason for the middle-tier dry-up. It is extremely difficult to make a sustainable return on investment in a boxed product unless you are selling north of 40$ at launch.

Second, most players have expectation about the size and the quality of games. These expectations are getting higher and higher each year, driven by the high profile AAA titles. It’s not easy to enjoy watching TV on a 19” CRT TV once you get used to a 42” flat-screen TV, and this behavior is the same when playing games.

Now, the rise of alternate gaming devices and gaming channels (iPhone, iPad, Facebook) is changing the situation. Distribution cost is going way down, and you have the “TV versus movie theater” effect. One would not accept a TV series production value in a big-screen movie, but it’s OK in the living room. So as a player, you will accept a smaller game on your iPad than you would accept on your game console.

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