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[avatar299]

I can explain Microsoft and Sony; Sony has just recently become profitable after their initial huge investment on the PS3. They also incurred losses upfront on the PS2. Microsoft has been profitable for quite some time, despite the RROD fiasco, but their results are obfuscated by the fact that the financial data is lumped into their entertainment division, which contains many different groups not associated with videogames.

Okay we'll live under the assumption that secretly Sony and MS are doing amazingly well.

Hasn't EA been acquiring development studios which is contributing to their temporary losses? It's not like their software isn't selling, last I checked.

And aren't those events relative recent. EA has been slumping all gen.

Activision is yet another company that focuses heavily on PS360 development, and I'm sure the vast majority of their profits come from these platforms and not the Wii.

Tons of licensed games, huge success on the wii with GH and other casual games. Activision are not the guys i would be trumpeting as HD stalwarts. That's even worse than the konami card.

Your suggestion that developers that didn't hop on the Wii bandwagon are losing is just completely untrue. That's not to say that they could potentially be doing more on the Wii, but to paint this gloomy picture about them for supposedly shafting the Wii is inaccurate.

The chart doesn't lie. The companies with big profits are those who embraced casual games. The companies that came out swinging with HD and big budgets are not. You haven't explained Midway or Atari.

And apparently Sega and Namco aren't doing so hot either. I bet Namco can't wait for to announce some more tales games for the Wii, DS and PS2 and Sega's already printing Mario and Sonic 2 discs.

 

[Opiate]

I don't think you should use Sega as an example of HD focus, Avatar. Their biggest hits this generation have been on the Wii, and they're still losing money.

It's possible, if not likely, that this is because their HD projects (The Club, Condemned and Valkyrie Profile have all done relatively poorly) are dragging down their profits from the Wii, but that isn't entirely clear and shouldn't be argued without further information.

 

[PantherLotus]

I'd also like to point out that both MS and Sony have been losing money at a lesser rate and look to be in the black next year.

 

[Opiate]

Just so we're all on the same page, I put the list of profit/loss game pubs and their main focus next to it, using these:

Casual (& kids) | Handhelds | All | Next-Gen

Where do each get the majority of their profits? (70%+)

Profit
Nintendo: Casual | Handhelds
Disney: Casual
Konami: Next-Gen
Activision: All
Vivendi: PC.
Ubisoft: All
Sq-Enix: Handhelds | Next-Gen
Namco: Next-Gen
Capcom: Handhelds | Next-Gen
Codemasters: Next-Gen

Loss
D3: Handhelds
Take2: Next-Gen
THQ: Casual | All
Sega: Casual | All
Atari: Next-Gen
Midway: Next-Gen
SCi: Casual | Next-Gen
EA: All | Next-Gen
MS: Next-Gen
Sony: Next-Gen

This is about as fair a list as I could come up with. Avatar is wrong, it isn't a simple formula -- but Private Hoffman, you have to see some correlation here. It isn't an absolute rule by any means, but it certainly appears that the companies that tend to focus more on the PS3 and 360 also tend to be more likely to struggle financially. I'm sure Konami is more than happy, but I'd bet Atari, Midway, SCi/Eidos, EA, MS, Sony, and Take 2 are not.

D3 did not lose money, by the way, Panther.

 

[saunderez]

And aren't those events relative recent. EA has been slumping all gen.

R&D costs at the start of every generation are huge. For all developers. Once a company has released a few games and refined their processes the cost of development goes down. This is the point you seem to be missing entirely. EAs problems are compounded by the fact they've spent a lot of money acquiring other developers as well as trying to shake the *EAVIL* image they acquired over the course of the last generation. Next financial year they'll do fine mainly due to these investments.

Apart from the companies that repeatedly pump out shit most of the companies that posted losses this year will post profits next year.

 

[PantherLotus]

I just hope that list doesn't justify "let's make casual kids games!" and instead means that the market always corrects itself when shit gets overpriced.

 

[avatar299]

I don't think you should use Sega as an example of HD focus, Avatar. Their biggest hits this generation have been on the Wii, and they're still losing money.

It's possible, if not likely, that this is because their HD projects (The Club, Condemned and Valkyrie Profile have all done relatively poorly) are dragging down their profits from the Wii, but that isn't entirely clear and shouldn't be argued without further information.

Their biggest, and arguably only interesting hit has been on the wii/DS. Everything else has been average to disappointing.

 

[ThatObviousUser]

Wonder how many Mario Galaxies you could make for the price of one Alone in the Dark... two? three?

 

[Private Hoffman]

No, this is not how M&A works (in most cases). The cost of acquisitions is balanced equally and exactly by a compensatory increase in corporate assets. EA is just flat out losing money.

Perhaps you're right; but how is EA losing money?

Madden still sells tons and Rock Band has done decently.

Then you did not read last quarter's financials: The Wii and 360 had the highest revenue for Activision. We can assume they've spent a lot less money on the Wii, and therefore logically, they've made more profit there. Recently, at least. However, Activision does prove one thing: what works on the Wii (Guitar Hero) can also work on the PS3 and 360 in some cases, so saying "put it on the Wii!" isn't even right. Perhaps "put it on the Wii in addition to the PS3 and 360!" Is fair.

http://biz.yahoo.com/prnews/080731/lath104.html?.v=101

PS3 15%
Xbox 360 22%
Wii 22%
PS2 19%

It seems like Activision is doing equally well on a lot of consoles for this past quarter. Though, when speaking of Activision I was mainly talking about the enormous sales of Cod4, which is one of their premier next-gen titles.

Seems guitar hero does really well on all platforms, which is what is reflected in the latest quarter. But guitar hero is easily transferable to all platforms, and this isn't the case for some games (such as CoD where the Wii would be lacking since graphics play and important role).

This is quite true, Private: anyone who suggests some simple formula like "Wii = win, PS3/360 = fail" is just baiting. However, I think we can both agree that there is something wrong in the industry, and that things need to change. The combined profits of all the companies listed here (besides Nintendo) are -566 million dollars. You can't have an entire industry hemorrhaging money like that -- the industry (again, outside of Nintendo) is either stagnant or even in retraction.

I'm not sure if this industry does need a change, to be honest. The industry has always been fickle. There's always been winners and losers. It's an industry based on entertainment, and given the uncertainty it is easy to fail especially when developing new IPs...this has always been the case. I'd argue that things are more stable now than they have been in the past as the videogame industry has grown.

 

[Opiate]

R&D costs at the start of every generation are huge. For all developers. Once a company has released a few games and refined their processes the cost of development goes down.

This is not correct. Logically this may seem valid, but whatever cost reductions are realized through engine streamlining are more than overcome by increasing costs due to increasing complexity and graphical fidelity.

R&D costs for Electronic Arts*:

FY04: $511 million R&D costs, $577 million total profit
FY05: $633m R&D, $504m profit
FY06: $758m R&D, $236m profit
FY07: $1041m R&D, $76m profit
FY08: $1120m R&D, $-454m loss**

R&D costs do not go down; they certainly take their biggest jump during a generational leap, but they go up and up all the time. It does not stop.




*This is a long report: the relevant materials are on page 100.
**I added this total from EA's most recent FR because it was not available at the time of the earlier report.

 

[avatar299]

This is about as fair a list as I could come up with. Avatar is wrong, it isn't a simple formula -- but Private Hoffman, you have to see some correlation here. It isn't an absolute rule by any means, but it certainly appears that the companies that tend to focus more on the PS3 and 360 also tend to be more likely to struggle financially. I'm sure Konami is more than happy, but I'd bet Atari, Midway, SCi/Eidos, EA, MS, Sony, and Take 2 are not.

D3 did not lose money, by the way, Panther.

I didn't say the formula was simple. I said those who expanded succeeded and those who didn't are slagging, and panther's list isn't really proving me wrong there.

R&D costs at the start of every generation are huge. For all developers. Once a company has released a few games and refined their processes the cost of development goes down. This is the point you seem to be missing entirely. EAs problems are compounded by the fact they've spent a lot of money acquiring other developers as well as trying to shake the *EAVIL* image they acquired over the course of the last generation. Next financial year they'll do fine mainly due to these investments.

Apart from the companies that repeatedly pump out shit most of the companies that posted losses this year will post profits next year.

R&D is a solid expense.EA didn't meet their profit expectations. The damn CEO pretty much came out and said they haven't expanded to the casual crowd and to the wii userbase quick enough. I really don't see how R&D factors into this.

 

[legend166]

The dumb thing about this argument is this:

Whenever someone says "You know, I think budgets are too high" everyone goes "lol what are you casual nintendo sucks and is ruining the industry why do you hate gaming?"

You can make hardcore games with smaller budgets. They did it all of last gen.

 

[Metal Gear?!]

Mercenaries 2 is getting a PS2 version and you know it doesn't look anywhere as beautiful but it's a pretty cool idea. If developers can continue to make DS and PSP versions of games they can certainly make PS2 and Wii versions.

 

[Opiate]

I'm not sure if this industry does need a change, to be honest. The industry has always been fickle. There's always been winners and losers. It's an industry based on entertainment, and given the uncertainty it is easy to fail especially when developing new IPs...this has always been the case. I'd argue that things are more stable now than they have been in the past as the videogame industry has grown.

I'm with you on a lot of what you've posted in this thread, Private, but this is just blind or stubborn.

The industry (minus Nintendo) is losing hundreds of millions of dollars. That is not the sign of a healthy industry, and it definitely isn't the sign of a growing industry.

The absolute most optimistic viewpoint one could take is that this is a stagnant, saturated market. If you look at a major multimedia industry and see that it's losing hundreds millions of dollars in a year, and you do not think there is a need for change, then I don't think this conversation can continue, as that's a clear point.

 

[PantherLotus]

To all of you:

Please lets not make sweeping generalizations about what engenders profit vs. loss when regarding graphics capabilities of the hardware software appears on.


Examples
Nintendo is making profit from casual games, hardcore games, their hardware, and their peripherals. They had an excellent strategy (if unsatisfying to myself) about to approach this generation. They went after a different market and won them.

Konami is making interesting choices between handhelds and next gen. Speaking of which...I don't think this P/L sheet includes MGS4, which will represent over 50% of next year's P/L sheet. They spent a TON of money on that game.

Activision and Ubisoft are both churning out as many games as possible, and like monkeys throwing shit at a wall, something has to stick. Ubi has made major efforts in next gen and the casual side alike. Still, clever strategy that seems to be paying off.

Atari/Midway/SCi -- they all make shit games, and they focus on next-gen. Not a good combo folks. Horrendous strategy.

Sega -- they make shit games, and seem to be making more and more efforts on the Wii lately. Not enough information to tell if their strategy is working, but their next-gen games certainly aren't.

EA -- of the big pubs, they had the most to gain -- and lose -- from next-gen. So far, it looks like they bet wrong, and they've admitted as much. They will be moving major resources into Wii development. If anybody wants to make the case for next-gen loses you money, this is it. Still, EA has developed a tremendous number of IP/engines that can be reused throughout the generation and as they surely sequelize these next-gen efforts, they will make that money back. But by that time the will also have increased their Wii efforts 10-fold, so it will be hard to tell which will determine their future success without pouring over their books.

MS/Sony -- simply can't be used as examples, because they are taking losses on their hardware.



Next please.

 

[ThatObviousUser]

The dumb thing about this argument is this:

Whenever someone says "You know, I think budgets are too high" everyone goes "lol what are you casual nintendo sucks and is ruining the industry why do you hate gaming?"

You can make hardcore games with smaller budgets. They did it all of last gen.

Yup, hence my post. If a Wii game could by and large win the majority of GOTY awards last year at a fraction of the price of the other contenders, shouldn't we want developers to go that route? Gamers win by getting great "hardcore" experiences and developers win by, well, not losing money hand-over-fist.

 

[Private Hoffman]

I'm with you on a lot of what you've posted in this thread, Private, but this is just blind or stubborn.

The industry (minus Nintendo) is losing hundreds of millions of dollars. That is not the sign of a healthy industry, and it definitely isn't the sign of a growing industry.

The absolute most optimistic viewpoint one could take is that this is a stagnant, saturated market. If you look at a major multimedia industry and see that it's losing hundreds millions of dollars in a year, and you do not think there is a need for change, then I don't think this conversation can continue, as that's a fairly clear point.

I don't see how you could make a blanket statement like that when the chart suggests otherwise. It suggests that there are winners and losers. Winners being those that are making a profit, losers are those that are not. And in that chart, there are more winners than losers. Sony and Microsoft's losses have been significant, but they are just now coming into their own and are profitable (don't trust Microsoft's numbers, they don't tell the whole picture because videogames are lumped into their entertainment division). Their losses are hardware related as well.

Sure, Nintendo is off the charts in terms of their record numbers, but Nintendo is in a different position from most third parties in that they have traditional franchise titles that sell to a hardcore fanbase as well as hardware sales from the DS and Wii that are certainly netting them some significant gains. Certainly great for Nintendo, but it's not as though third parties are capable of being in the same position. That's why the knee jerk reaction of "jump on the Nintendo bandwagon, third parties!" isn't necessarily accurate. Nintendo products are a gold mine for Nintendo, but many companies have a hard time breaking into their territory.

 

[Opiate]

Their biggest, and arguably only interesting hit has been on the wii/DS. Everything else has been average to disappointing.

That's my point though, isn't it? I'd argue that Sega is largely Wii/DS focused, or, at the very least, significantly less HD focused than a company like Konami.

And they're losing money. You can insist that this is a coincidence (And that it's their HD projects that are pulling them down), but we just don't have that information. I could claim that Take 2 would have made money if Bully Wii and Table Tennis Wii hadn't bombed, and I'd probably be correct, as their losses were minor already. In their case, I could say "they only lost money because their Wii projects bombed," which seems to be what you're doing for Sega.

 

[avatar299]

Yup, hence my post. If a Wii game could by and large win the majority of GOTY awards last year at a fraction of the price of the other contenders, shouldn't we want developers to go that route? Gamers win by getting great "hardcore" experiences and developers win by, well, not losing money hand-over-fist.

Let's not forget they could price the game lowers. Wii games, last i checked don't have the next-gen tax

 

[avatar299]

That's my point though, isn't it? I'd argue that Sega is largely Wii/DS focused, or, at the very least, significantly less HD focused than a company like Konami.

And they're losing money. You can insist that this is a coincidence (And that it's their HD projects that are pulling them down), but we just don't have that information. I could claim that Take 2 would have made money if Bully Wii and Table Tennis Wii hadn't bombed, and I'd probably be correct, as their losses were minor already. In their case, I could say "they only lost money because their Wii projects bombed," which seems to be what you're doing for Sega.

I'm not saying the HD games are pulling them down, but I think SMATO has to factor in here somewhat. If that game wasn't around, wouldn't the loss be much larger?

I'm perfectly okay with not factoring Sega in due to lack of information, but personally looking at the games released, quantity and quality, I think the Wii/DS/PS2 combo still works better for them than the HD combo

 

[Opiate]

I don't see how you could make a blanket statement like that when the chart suggests otherwise. It suggests that there are winners and losers. Winners being those that are making a profit, losers are those that are not.

It does not suggest otherwise, Private, that's the point. This is just stubbornness. How can you possibly look at this chart and say this? It suggests the industry is, on the whole, losing hundreds of millions of dollars. That is the bottom line. That is the point.

In a healthy industry, the big winners not only outnumber the losers, but outprofit them; a healthy industry would be making hundreds of millions if not billions of dollars (which the industry was doing just 5 years ago. 5 years ago, EA alone was producing more profit than all third parties combined are now, and Take 2 was earning ~100 Million in profit).

We're looking at the whole picture here, Private. Not just the winners, not just the losers, but the winners and losers together. That is how you analyze an industry; otherwise, you could always just pick out the still-profitable companies in any industry, and say "see? This industry is healthy!" In the video game industry, together, third party companies are losing hundreds of millions of dollars.

Let me repeat this one last time, for emphasis: outside of Nintendo, the industry lost hundreds of millions of dollars. That is the definition of retraction -- these companies, on the whole, now have less money to work with than they did a year before. If the losses continue (As they did this quarter, please check here), then the industry will have even less money to work with next year than they did this year, and so forth.

 

[Private Hoffman]

Opiate, are you looking at this chart?

I see many more dev studios making money than those that are not, and many of the big losers are due to hardware issues (Sony/Microsoft) that are JUST NOW becoming profitable, so you should see their numbers in the black going forward.

 

[Opiate]

Opiate, are you looking at this chart?

I am. Clearly you are not, as combined, those companies (outside of Nintendo) are losing hundreds of millions of dollars. I'm not sure how many times I'll need to repeat that.

 

[wazoo]

I don't see how you could make a blanket statement like that when the chart suggests otherwise. It suggests that there are winners and losers. Winners being those that are making a profit, losers are those that are not. And in that chart, there are more winners than losers.

The industry as a whole - minus Nintendo - is losing money, that was his point.

Sony and Microsoft's losses have been significant, but they are just now coming into their own and are profitable (don't trust Microsoft's numbers, they don't tell the whole picture because videogames are lumped into their entertainment division). Their losses are hardware related as well.

And how much money will they need to earn in the next years - assuming they will stop bleeding money ?? Where will you go, when some hardware manufacturers will drop out because it is not worth it anymore (and next gen, the investments will not go down most likely). At some time, you need to recoup your loss, thus earning much more money you lost early in the generation.

Sure, Nintendo is off the charts in terms of their record numbers, but Nintendo is in a different position from most third parties in that they have traditional franchise titles that sell to a hardcore fanbase as well as hardware sales from the DS and Wii that are certainly netting them some significant gains. Certainly great for Nintendo, but it's not as though third parties are capable of being in the same position. That's why the knee jerk reaction of "jump on the Nintendo bandwagon, third parties!" isn't necessarily accurate. Nintendo products are a gold mine for Nintendo, but many companies have a hard time breaking into their territory.

Nintendo is earning money from both software and hardware. Hardware sales are useless, but multi million sellers are pretty inspiring for 3rd parties. And those are selling to much more than its core base. GC was a console directed to Nintendo core base, Wii is already selling more software, so this is not a problem of core base too. DS is even bigger.

 

[Private Hoffman]

I am. Clearly you are not, as combined, those companies (outside of Nintendo) are losing hundreds of millions of dollars. The end.

Why are you excluding Nintendo, but are not excluding Microsoft/Sony?

Disregarding hardware manufacturers, the studios themselves have lost 956 million, yet those turning a profit have made 2,223 million, for a net of +1,267 million.

As we have seen with Sony's holiday quarter last year, and their recent quarter, they are likely out of the red for the time being and will be on the road to consistent profitability. I wouldn't be worrying about the biggest losers (Microsoft and Sony), since their losses are mostly hardware related and are front loaded for the start of the generation.

I'm mostly concerned at EA, and I'm still curious as to why their posting such large losses. Most other studios, however, are doing pretty damn well. I just don't see the picture as gloomy as you're making it out to be.

 

[Opiate]

I need to go to bed, so I'll say a few more things before I do. Private Hoffman, you've made good points in this thread and I hope I don't seem hostile. I also think there is room for growth for both the PS3 and 360, but I think things need to change.

When analyzing an entire industry (in this case, "traditional" or "HD" gaming), you cannot just look at the Winners and say "see? The industry is doing fine!" just as you cannot look exclusively at the losers and proclaim that the industry is dying. You need to look at everyone.

And combined, the companies involved in HD gaming are losing hundreds of millions of dollars. If you think Sony and Microsoft will make strides in profits in the next year, that's fine; we'll wait and see. I think that's likely. On the other hand, I've made no mention of removing Disney Interactive, even though they're clearly almost entirely in the DS/Wii camp; if we're going to start altering things (Sony and MS will do better!) then we should take out Disney too, and then we're right back where we started, because they are easily the most profitable company here outside of Nintendo itself.

Looking again at this quarter's financials, third parties are still struggling. This is very strong evidence that there is need for change within this particular industry. Not that there isn't room for growth; just not much growth under the current production model.

 

[Private Hoffman]

I need to go to bed, so I'll say a few more things before I do. Private Hoffman, you've made good points in this thread and I hope I don't seem hostile. I also think there is room for growth for both the PS3 and 360, but I think things need to change.

When analyzing an entire industry (in this case, HD gaming), you cannot just look at the Winners and say "see? The industry is doing fine!" just as you cannot look exclusively at the losers and proclaim that the industry is dying. You need to look at everyone.

And combined, the companies involved in HD gaming are losing hundreds of millions of dollars. If you think Sony and Microsoft will make strides in profits in the next year, that's fine; we'll wait and see. I think that's likely. On the other hand, I've made no mention of removing Disney Interactive, even though they're clearly almost entirely in the DS/Wii camp; if we're going to start altering things (Sony and MS will do better!) then we should take out Disney too, and then we're right back where we started, because they are easily the most profitable company here outside of Nintendo itself.

Looking again at this quarter's financials, third parties are still struggling. This is very strong evidence that there is need for change within this particular industry. Not that there isn't room for growth; just not much growth under the current production model.

No hostility at all Just discussion.

I just disagree. I don't think the industry is in bad shape.

Even disregarding Microsoft, Nintendo, Disney, and Sony, the industry has made $1521, and when taking into account losses has yielded a collective 'profit' of 565 million.

My main point is this: the darkest spots in the red are clearly Microsoft and Sony.

1. Microsoft's numbers are obfuscated by the Entertainment division. They've been profitable in their videogame department rather consistently, which is a good turning point for Microsoft since the Xbox 1 had very little of that.

2. Sony has incurred very large losses with their PS3 hardware, but they are turning the tide. They recently posted a profit in their videogame division for a non-holiday month, which is a very good sign of the tide changing.

Next year, that chart should look very different. You won't necessarily have the huge losses by Microsoft/Sony, and the industry as a whole will look much better. As I suggested earlier, the major area of concern that I see going forward is EA; how are they losing so much money? That is my question and I still don't have an answer.

 

[Pachael]

I don't think you should use Sega as an example of HD focus, Avatar. Their biggest hits this generation have been on the Wii, and they're still losing money.

It's possible, if not likely, that this is because their HD projects (The Club, Condemned and Valkyrie Profile have all done relatively poorly) are dragging down their profits from the Wii, but that isn't entirely clear and shouldn't be argued without further information.

Just to make it clear, 'Valkyrie Profile' is all Square-Enix. I suspect you're talking about 'Senjou no Valkyria/Valkyria Chronicles', which is all Sega. I'd also add VF5 and Sonic the Hedgehog (PS3/360).

That aside, I remember that profit graph - many of these publishers have a certain 'casual base' which is difficult to take apart without further analysis, such as Disney, who's probably almost 100% casual and family friendly (Games on movie properties for instance).

I think the market as a whole has changed, and the companies with a good sense (Nintendo, Disney, Activision) for that casual base has been making money - which is why the other publishers who aren't making as much profits following in their footsteps. (Ubisoft, EA, Take 2)

 

[Neo C.]

Opiate, are you looking at this chart?

http://www.edge-online.com/files/profit_or_loss.gif

I see many more dev studios making money than those that are not, and many of the big losers are due to hardware issues (Sony/Microsoft) that are JUST NOW becoming profitable, so you should see their numbers in the black going forward.

Just making a small profit when you have have revenues of several billion $ isn't really investor-friendly.
If you are an investor, I'm pretty sure you won't be happy to see a rate of profit in low one digit number.

 

[Son of Godzilla]

Just making a small profit when you have have revenues of several billion $ isn't really investor-friendly.
If you are an investor, I'm pretty sure you won't be happy to see a rate of profit in low one digit number.

:lol

 

[saunderez]

Just making a small profit when you have have revenues of several billion $ isn't really investor-friendly.
If you are an investor, I'm pretty sure you won't be happy to see a rate of profit in low one digit number.

It's only 1 digit when you take away all the zeros.....

 

[Neo C.]

It's only 1 digit when you take away all the zeros.....

Rate of profit is a percentage. It's r = (surplus-value)/(capital invested)

 

[legend166]

1. Microsoft's numbers are obfuscated by the Entertainment division. They've been profitable in their videogame department rather consistently, which is a good turning point for Microsoft since the Xbox 1 had very little of that.

I've seen you say this many times, but I've yet to see any proof.

Where they would be losing that money? The Zune? That's selling pretty well from what I've heard, and it's not like it would be selling at a loss.

 

[tahrikmili]

I love change-resistant idiots.

 

[Chû Totoro]

Of course, the funniest thing about this is that it's coming from Game Developer magazine, where every other page is an ad for new technologies and engines. In fact, the page on the immediate right of this editorial is an ad for NaturalMotion, which apparently didn't add anything to GTA IV.

:|

I'm not agree with everything they're saying but at least your last point proves that they have intergrity and that is something very rare in video game press nowadays.

I think that power shouldn't only be used to have wow graphs but also to bring us awesome experience (physics, details, sound...)

With very simple graphics and a lot of power you could do very good things.

 

[Sadist]

I think the OP is overexaggerating with the conclusion and some people just blindly followed.

Anyway, a lot of people won't believe that the industry is in a bad shape, but when Sega makes a loss of € 625 million and Bandai-Namo predicts a loss in profits despite titles like DBZ Burst Limit and now Soul Calibur IV selling well, that's not very encouraging. Konami made a handsome profit, but ffs, they needed it if you look at the rest of the figures.

 

[Aaron]

Sega put out a lot of games that they failed to market and didn't have a wide appeal. Next gen had nothing to do with it. I don't know the deal with Bamco, but Burst Limit has Atari's name on it.

 

[djtiesto]

Why couldn't we stay with NES. It had everything. Ergonomical controllers, classy design, cartridges, fun games, graphics, sound.

I still to this day ask why we couldn't have stayed with the SNES...

 

[Haunted]

Examples
Nintendo is making profit from casual games, hardcore games, their hardware, and their peripherals. They had an excellent strategy (if unsatisfying to myself) about to approach this generation. They went after a different market and won them.

Konami is making interesting choices between handhelds and next gen. Speaking of which...I don't think this P/L sheet includes MGS4, which will represent over 50% of next year's P/L sheet. They spent a TON of money on that game.

Activision and Ubisoft are both churning out as many games as possible, and like monkeys throwing shit at a wall, something has to stick. Ubi has made major efforts in next gen and the casual side alike. Still, clever strategy that seems to be paying off.

Atari/Midway/SCi -- they all make shit games, and they focus on next-gen. Not a good combo folks. Horrendous strategy.

Sega -- they make shit games, and seem to be making more and more efforts on the Wii lately. Not enough information to tell if their strategy is working, but their next-gen games certainly aren't.

EA -- of the big pubs, they had the most to gain -- and lose -- from next-gen. So far, it looks like they bet wrong, and they've admitted as much. They will be moving major resources into Wii development. If anybody wants to make the case for next-gen loses you money, this is it. Still, EA has developed a tremendous number of IP/engines that can be reused throughout the generation and as they surely sequelize these next-gen efforts, they will make that money back. But by that time the will also have increased their Wii efforts 10-fold, so it will be hard to tell which will determine their future success without pouring over their books.

MS/Sony -- simply can't be used as examples, because they are taking losses on their hardware.

Good post.

To all of you:

Please lets not make sweeping generalizations about what engenders profit vs. loss when regarding graphics capabilities of the hardware software appears on.


Next please.

But this is the reason why you've got your tag. :lol

 

[The Blue Jihad]

Well yeah, and that was Sony's gamble.

This will probably be extremely off-topic, but here goes:

Sony decided that hardware power would be the best way to deliver the most compelling experiences this generation.

Microsoft likewise, with their own choices of hardware.

Nintendo chose another idea, thinking a different control method would be best.

I think that's a fair assessment of all three (minor points aside, such as how Microsoft focused on an online experience with Live, how Sony fostered indie development on PSN, etc.). And each one of them has their merits. Beefing hardware means better visuals, obviously. But also audio, physics, AI, scale. There are tons of examples of each of these, from Gears of War to MGS4. Introducing innovative controls also helps. The Wii is much more accessible, because there isn't some 24-button controller to master. It allows for several new gameplay innovations. It downplays graphics.

But what does it matter? Bad developers are bad developers. Lazy developers are lazy. You can give them a PS3 devkit and they can make an ugly mess. You can can give them a Wii devkit and they'll churn out a WWII borefest with a waggle gimmick tacked on.

Good developers will always make good games. Great developers will always make great games. Innovative developers will always make innovative games. Katamari Damacy used something that was in ever since PS1. And it was one of the most innovative games of last generation. Shadow of the Colossus managed to look amazing while pulling off a gargantuan scale, in environment and enemies. And it was running on the weakest console of them all. What I'm trying to say is that hardware makers can only make improvements that they think will help developers make great games. It's up to them to do it.

Innovation is the buzzword these days. Has the Wii fostered a lot of it? Undeniably. But it also has a lot of "me-toos" running at the back trying to latch onto the craze and churning out pathetic crap. Has the Playstation 3/360 fostered a lot of gr4phx-whoring vapid shit? For sure. But it has also brought to many some of the best experiences this generation.

Wii doesn't "kill gaming". PS3/360 doesn't "kill gaming". It's what developers make and what we buy (which influences the former) that determines that. If shit developers don't close down and their shit games sell well and good developers don't have incentive to put effort and heart into their stuff, then we're all fucked.

This.

 

[JJConrad]

Activision and Ubisoft are both churning out as many games as possible, and like monkeys throwing shit at a wall, something has to stick. Ubi has made major efforts in next gen and the casual side alike. Still, clever strategy that seems to be paying off.

Activision is definitely the best example of how to company should be handling this generation. They've put great effort into getting their across all 3 consoles and have benifitted greatly from it.

I would have to list Ubisoft as making their profits from the casual market. IIRC, their Imagine and other casual lineup saw an increase of nearly 150 million in profits and accounted for almost all of their growth last year.

 

[Vinci]

Konami made a handsome profit, but ffs, they needed it if you look at the rest of the figures.

Seriously. I think people are undervaluing how big of a gamble Konami made on MGS4. They took a huge risk. Yes, it paid off - but it was ballsy as hell.

My biggest worry in this industry is EA. They're doing a lot right for a change, and yet they're still losing money. And that can't continue. Considering the number of developers that EA controls, losing money isn't an option; it should be scary as hell for a lot of us, and here's hoping they can turn it around.

 

[Baryn]

For me this generation has boiled down to:

1. The Next Valve Game
2. The Next Team ICO Game

Any other good title, for any console, is merely fortunate.

 

[andycapps]

Seriously. I think people are undervaluing how big of a gamble Konami made on MGS4. They took a huge risk. Yes, it paid off - but it was ballsy as hell.

My biggest worry in this industry is EA. They're doing a lot right for a change, and yet they're still losing money. And that can't continue. Considering the number of developers that EA controls, losing money isn't an option; it should be scary as hell for a lot of us, and here's hoping they can turn it around.

Good post, ditto on Konami and EA. EA is starting to put out better sports games (not that I care for them but millions of people do) and putting effort into developing original IP. I hope they get things turned around.

I think what a lot of people including EA are/were worried about is that the Wii would be a fad. They were worried if they put all their teams on Wii development that the Wii audience would only buy Nintendo games because of the Gamecube statistics. But now that the tie ratios are looking pretty good for 3rd parties, they've got to move some teams over (granted, probably leaving the best teams on 360/PS3) and get out more shovelware so they can make money on it. I have a Wii, but the only 3rd party game I've bought for it is Rayman Raving Rabbits for my wife, and it's not really my thing either. Outside of Nintendo releases and a few 3rd party releases, I really don't see much reason to buy any games for it. It's pretty much only used as a party system when people come over, and most people just want to play Wii Sports anyway.

 

[Forsete]

Thank you Jesus most people aren't like that guy, or else we would be stuck in the stone age.

"Lul wut? Horse and carriage is still more popular than the automobile, the automobil sucks!"

 

[Threi]

I didn't want to post in this thread (again), but there seems to be a recurring strawman being thrown out that is starting to annoy me.

The gap between a Wii and PS360 is not equivalent to the gap between the PS2 and...say...the Intellivison. It is not equivalent to the gap between the horse and the automobile. Roughly speaking it is only ONE generation power-wise. The same gap seen between consoles and PC's for YEARS. The extra horsepower (and this "FINALLY TRUE HD" - what are PC games? Chopped liver?) bullshit is not some fucking thing of the future.

The point of the article is that there is a line regarding the amount of tech people demand in their consoles. Of course it varies from person to person, but don't act like you don't have a "line" and that more and more and more and more has no negative repercussions?

Would all of you be willing to put down $1000+ for your consoles? Sony could have made the PS3 more expensive. They could have put in even more useless shit. Would you pay the premium for it? A $1000+ console could do so much more than a $500+ console right? You would be getting the TRUE next-gen experience right? If not, then see the point that people (which seems to be a majority) aren't willing to put down $300+ for their consoles. Just because a bunch of you have a purchasing "line" much higher than the mainstream public doesn't mean that the purchasing "line" doesn't exist.

It just bugs me to see so-called enthusiasts look down on the mainstream public when they aren't even on the top of the freaking food chain.

"$2000 PC LOL WHO THE HELL WOULD BUY THAT?! :lol"

Based on the stance you people take it should be YOU buying those $2000 PC's.

You people should be looking down on PS360 games for being inferior to the almighty Crysis.

You should be trolling the PS360's limited ability to produce proper graphics, physics, and multitasking abilities.

But nooo, dissing the people on the rung below you while ignoring people on the rung above you is perfectly acceptable.

 

[ghostlyjoe]

I didn't want to post in this thread (again), but there seems to be a recurring strawman being thrown out that is starting to annoy me.

The gap between a Wii and PS360 is not equivalent to the gap between the PS2 and...say...the Intellivison. It is not equivalent to the gap between the horse and the automobile. Roughly speaking it is only ONE generation power-wise. The same gap seen between consoles and PC's for YEARS. The extra horsepower (and this "FINALLY TRUE HD" - what are PC games? Chopped liver?) bullshit is not some fucking thing of the future.

The point of the article is that there is a line regarding the amount of tech people demand in their consoles. Of course it varies from person to person, but don't act like you don't have a "line" and that more and more and more and more has no negative repercussions?

Would all of you be willing to put down $1000+ for your consoles? Sony could have made the PS3 more expensive. They could have put in even more useless shit. Would you pay the premium for it? A $1000+ console could do so much more than a $500+ console right? You would be getting the TRUE next-gen experience right? If not, then see the point that people (which seems to be a majority) aren't willing to put down $300+ for their consoles. Just because a bunch of you have a purchasing "line" much higher than the mainstream public doesn't mean that the purchasing "line" doesn't exist.

It just bugs me to see so-called enthusiasts look down on the mainstream public when they aren't even on the top of the freaking food chain.

"$2000 PC LOL WHO THE HELL WOULD BUY THAT?! :lol"

Based on the stance you people take it should be YOU buying those $2000 PC's.

You people should be looking down on PS360 games for being inferior to the almighty Crysis.

You should be trolling the PS360's limited ability to produce proper graphics, physics, and multitasking abilities.

But nooo, dissing the people on the rung below you while ignoring people on the rung above you is perfectly acceptable.

HAHAHAHA! That's hilarious. Nice post.

 

[Kapsama]

Just out of curiosity, who do you believe "should" be making money? It seems like you just rationalized away half the industry in an "of course they're losing money" way.
This is not how the industry looked 5 years ago, by the way. Five years ago, Electronic Arts alone was making more than all third parties were combined last year. Take Two had annual profits of ~100 Million as of 2003.

For long term growth, you need profits. The industry (minus Nintendo) is effectively in a state of stagnation, or perhaps even retraction (again, minus Nintendo).

I don't determine who should be making money I just realize that the companies losing money are the usual suspects. Not only that, EA had quarters in which they lost money even before Next gen started, they've been in a rut for a while not. I also distinctly remember that quite a few third parties lost money when the PS2 was released as they were adjusting to new more powerful hardware.

That's just a bunch of crap, and a flagrant misreading. That is not the overall worth of company, but their profit, so even if the company had been losing money before, they had a fair chance of making a profit this past year. They didn't.

The chart is clear

It's rather clear what that chart represents. Regarding the misreading maybe you should read my comments again? They address your concerns.

Companies that didn't invest in the wii lost. Companies that completely ignore the casual market have seen their profits slow, or they saw a loss.

Yes I'm sure that's it. It was the Wii version of Tony Hawk that propelled Activision to their position, not Call of Duty 4 being the best selling game last year and not Guitar Hero 2+3 selling like crazy on ALL platforms. No no.

The industry as a whole - minus Nintendo - is losing money, that was his point.

And if you minus Sony and Microsoft, who are losing money not from software but hardware, the industry is NOT losing money.

 

[Neo C.]

It's just I honestly feel it'll be a shame if we don't see spectacular games like MGS4 anymore. I'd like to think there's room for both. But for some, it seems increasingly like it's "us or them". Which is sad, because that mindset is really narrow-minded and pathetic.

Ewww, it isn't like the PS4 would be worse than the PS3, wouldn't it? Computer development is still going forward, and I'm pretty sure there will be games with even higher budget than fucking GTA4, which should be around 100 million $.

Though it would be definitely better when the whole industry can lower the average dev. costs a bit. It isn't healthy for small developer houses to bet all their ressources on one single project.

 

[OG_Original Gamer]

I get the impression this editorial isn't serious, it reads like a GAF graphics discussion.