It seems like the gaming industry, at least the traditional console-driven industry, is rapidly approaching some sort of inflection point. Xbox is bringing more of their games to other platforms, amid consistent speculation they may be stepping back from the console business, and PlayStation is hinting they may pursue a more aggressive PC release schedule even as PS5 sales continue to outpace the PS4. Meanwhile, one publisher after another announces deep layoffs and cancellations.
It can be hard to square what’s going on, as games are still selling well, and there are certainly many factors at play, but perhaps the biggest problem facing the industry right now is the rapidly-rising cost of development. While the leap to the current generation may not have felt that transformative, it been hugely expensive – for example, the recently released Spider-Man 2 cost over $300 million to make, triple the $100 million its 2018 predecessor cost. This is what has PlayStation sweating – their products are selling as well as ever, but their profit margins are the lowest in a decade. It’s these ballooning costs that are going to lead to changes, whether players like them or not.
In a new interview with The Verge, former PlayStation Studios boss Shawn Layden touches on the subject of rising developing costs, admitting exclusivity becomes an “Achilles’ heel” at a certain point…
“When your costs for a game exceed $200 million, exclusivity is your Achilles’ heel. It reduces your addressable market. Particularly when you’re in the world of live service gaming or free-to-play. Another platform is just another way of opening the funnel, getting more people in. In a free-to-play world, as we know, 95% percent of those people will never spend a nickel. The business is all about conversion. You have to improve your odds by cracking the funnel open. Helldivers 2 has shown that for PlayStation, coming out on PC at the same time. Again, you get that funnel wider. You get more people in.
For single-player games it’s not the same exigency. But if you’re spending $250 million, you want to be able to sell it to as many people as possible, even if it’s just 10% more. The global installed base for consoles–if you go back to the PS1 and everything else stacked up there, wherever in time you look at it, the cumulative consoles out there never gets over 250 million. It just doesn’t.”
While bringing your game to more platforms can help offset high development costs, it also comes with the drawback of hurting the cachet of your exclusive platform. Ultimately, perhaps the better and more efficient solution is to get costs down. Layden is also in favor of this, calling for return to “AA” gaming and the kind of varied, quirky slate Sony used to publish.
“I’m afraid that we’ve bought into the triple-A, 80 hours of gameplay, 50 gigabytes of game, and if we can’t reach that then we can’t do anything. I’m hoping for a return of double-A gaming. I’m all for that.
I look back at the PS2 era, and there was so much variety. You had God of War and Assassin’s Creed. But you also had Loco Roco and SingStar and Dance Dance Revolution. You had this entire spectrum of entertainment opportunities. At $7-12 million a throw, why not make a bet and see what happens? Katamari Damacy, for Christ’s sake, you couldn’t get that built today because you can’t even explain what it is. But now, when every bet is triple-digit millions, risk tolerance is super low. You end up with copycats and sequels and not much more.”
It should be mentioned, amongst all the hand-wringing about the future of consoles, one name isn’t often brought up as a topic of concern – Nintendo. Why? Well, again, there’s multiple reasons, but a big one is they decided to step back from the technological rat race with the Wii and haven’t turned back since. People complain about the Switch’s dated hardware specs, but they’re what allows Nintendo to deliver such a steady flow of varied, exclusive titles without breaking the bank. It’s taken nearly two decades for Xbox and PlayStation to catch on, but they might be having their own Wii moments soon enough.
How do you think the industry ought to deal with exploding game budgets? Fewer exclusives? More modestly-sized creatively unique games? Some combination of the two?
