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Ten doomed businesses: how accurate were my predictions?

By on October 18, 2012

Two years ago, in an article that generated much flak and for which I had to write an explanation of my reasons for writing it, I wrote down ten games businesses or ideas that were doomed. Two years on, it seems like a good time to assess how well I did. The scores are in.

The failures: 5/10 are dead

Five businesses are gone or very badly damaged:

  • GAME Group went bust. A number of stores were bought from the administrators for a low price, but shareholders were wiped out and creditors suffered substantial losses.
  • 38 Studios went bust. There has been no rescue, and many recriminations.
  • OnLive was acquired in a deal that saw existing shareholders and many creditors wiped out while nearly all the employees lost their jobs. The value of that emergency transaction was $4.8 million. Compared to the hype of inflated expectations for OnLive – and particularly given the amount the company raised and the $380 million paid by Sony for rival Gaikai – I count that as a failure.
  • Call of Duty subscriptions were initially very succesful, with over [2 million] people paying [$50] for an annual subscription to the Call of Duty Elite service. Activision has, however, announced the end of the service, largely I believe because they have realised that subscriptions are not a great business model in an age of micro (and not so micro) transactions and DLC.
  • Milo was canned by Microsoft. This one is a bit of a cheat, because I thought he was doomed for ages, but he was canned after I had written the first draft of the post, but before I published it. In fact, he was one of the inspirations for the post, so I kept him in.

The not-sures: 4/10 are still striving

  • Codemasters: No longer a force in global publishing, Codemasters appears to be repositioning itself as a pre-eminent maker of racing games. That is a good strategy (although companies like Eutechnyx are being braver in exploring new business models with the likes of Auto Club Revolution). For me, the jury is still out on Codemasters.
  • Miniclip: The timing of the shift of power from Flash-based online portals to developers launching on Facebook and mobile was particularly bad for Miniclip. As I said in the original post: “Miniclip will probably survive, but the likelihood of an exit for hundreds of millions of dollars is vanishingly small.” Despite their shifts towards mobile and tablets, I suspect that is still true.
  • Virgin Gaming: investors and financiers love the idea that people want to bet on their skill at a game, since it is what investors and financiers do for a living. I believe that they are wrong, or that they are not right enough to make a very large business from this idea. Virgin Gaming has announced 1 million registered customers (although we all know that registered customers is a pretty useless statistic, and what we want to know is active customers. I stand by my view from two years ago.
  • CCP: I don’t really believe that CCP is in trouble: I just believe that Dust 415 – representing a new business model, on a new platform, in a new genre – is insanely risky. It might work. I hope it works. I would dearly love it to work. But investors need to know just how crazy risky this proposition is. So I warned them.

The just plain wrongs: 1/10 is incredibly successful

  • Trion Worlds: I confess I rolled the dice on this one. Launching a new MMO is statistically unlikely to succeed. See 38 Studios above, or the troubles at The Secret World, or how The Old Republic has had a troubled birth. Trion Worlds wrong-footed me. Rift has been a major success. Congratulations to all the team. I was wrong.

The purpose of the post was to call out investments that were incredibly high risk, so that investors were not wrong-footed, as they had been by the failure of RealTime Worlds after the launch of APB. It was also an exercise in crystal ball gazing. I would say that, two years on, I have been spot on with 5 predictions, wrong with one and four are still in the balance. I think that is a pretty good track record. What do you think?

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • http://twitter.com/st4rdog st4rdog

    What do you think about Red 5 Studios? A lot of money thrown around, and the game doesn’t seem that interesting, but it is F2P.

  • Imigo

    CCP do like taking their “Fearless” line to the limit. People told them that what they wanted to do with EVE couldn’t be done and look at it now.