Squeezed Middle
Life as a second-tier publisher is no longer tenable.
Published as part of our sister-site GamesIndustry.biz's widely-read weekly newsletter, the GamesIndustry.biz Editorial, is a weekly dissection of an issue weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to GI.biz newsletter subscribers.
It's become an oft-repeated mantra - the mid-range of gaming is on the way out. Squeezed between the top tier of million-selling blockbusters and the surging success of low-priced online, mobile and indie games, the future for any title that dares to charge a top-end price for mid-range content seems extremely bleak.
Publishers have reacted to this new reality with a variety of different strategies. Activision's well-documented approach has been to withdraw entirely from any aspect of its business which doesn't deliver blockbuster results, abandoning the low- and mid-range entirely. Electronic Arts and other major publishers have taken a more balanced approach, focusing resources on building high-end franchises while simultaneously exploring the potential of more niche low-cost games as well as mobile and social markets.
That's the top end of publishing, though. Companies like Activision, EA, Ubisoft, Take-Two, Square Enix and their ilk have huge blockbuster titles on which they can rely even while the market is in flux. Their business models require huge adaptations thanks to the sweeping changes in the market, but franchises like Call of Duty, Madden, Assassin's Creed, Grand Theft Auto and Final Fantasy are ports in the storm, guaranteed top sellers regardless of market conditions - for now, at least.
Other publishers, however, are not in such a lucky position. Two classes of company find themselves in seriously troubled waters right now - those publishers who have largely survived off mid-range titles and licensed IP over the past decade, and new companies attempting to break into a full-priced console game market which increasingly high barriers to entry.
"The actual impact of critical reaction to a game on its sales remains a matter for debate."
A pertinent example of the extreme risks involved in the former of those positions can be seen in THQ's launch this week of Homefront, a military FPS title on which the company appears, on some levels, to have "bet the farm". The firm's management would probably reject that characterisation - the stock market, which hammered THQ share prices in the wake of mixed reviews for the game, clearly begs to differ.
As it stands, it's tough to say whether Homefront is going to hit THQ's targets for the title or not. Despite the heavy emphasis which most publishers place on Metacritic scores, even determining developer bonuses based on certain score thresholds, the actual impact of critical reaction to a game on its sales remains a matter for debate. In spite of the weak scores, 375,000 copies shifted on day one, and the full-year sales target may yet be met.
However, there's little doubt but that THQ's top brass would sleep a lot easier if the game was cruising safely in the higher echelons of Metacritic - and so, it seems, would the firm's shareholders. Weak reviews may not have harmed day-one sales, but if they're a pointer to ongoing poor word of mouth, then the combination may sink the game's ongoing appeal at retail. Worse, a poor critical and public reception could ensure that the IP fizzles and dies after one game, where what a publisher like THQ really wants is a top-tier franchise.
The problem here is one of balancing risk. If you want serious blockbuster title, you're faced with much higher bars to entry than ever before - so you have to be prepared to spend a lot of money. However, once that kind of money is on the line, it's extremely hard to avoid an intense dose of risk-aversion, which casts aside any kind of sweeping originality in favour of copying successful formulae and trying to claw onto any passing cultural zeitgeist.
Thus you end up with a game like Homefront - which, for all its production values and the undoubted talent of the team behind it, falls into the role of being a camp follower for Call of Duty, a position which undoubtedly limits its potential as a break-out franchise. This is exactly the problem which mid-range publishers face at this point - top-tier title development and marketing budgets are so high that it seems suicidal to back anything original, but without doing so, it's nigh-on impossible to establish a meaningful franchise and start properly playing in the big leagues. Catch-22.
This isn't to say that THQ won't get anywhere with Homefront - although so openly inviting constant comparisons with Call of Duty is unlikely to do the game any favours either critically or commercially in the long run. As an illustration of the problems faced by companies big enough to fund large titles, but not big enough to comfortably absorb the loss from a big title flopping completely, though, it's a good illustrative case.
Of course, the creative issue at the heart of this problem - that of cloning successful titles as an antidote to risk - is decades old. Every successful title generates clones, and while they're usually creatively bereft, some of them even make a genuine contribution to gaming. The evolution of the medium, after all, usually happens not through revolutionary leaps forward but rather through the accumulation of new ideas, better presentation and technological progress applied to well-understood existing genres.
"Either learn the ropes of an emergent platform and capitalise on that niche, or aim for the top with big-hitting, high-budget titles."
The difference now lies in the sheer level of risk at play. The huge decline in THQ's stock price this week shows just how heavily the company has bet on this individual title. Development costs have skyrocketed, but so too have marketing costs for any game that wants to notch up serious retail sales. If you're a major publisher with a catalogue of million-sellers, you can handle this. If you've spent the past decade getting by on a solid portfolio that's largely made up of second-tier games, though, the numbers are now looking very, very frightening indeed.
So, wherefore the mid-range publisher? Like the top-ranked firms, the answers we're seeing so far are varied. THQ's approach is clear - having spent years working (largely successfully) to dispense with the negative, shovelware image which was once attached to the firm, it's now not content to be consigned to a rapidly shrinking mid-range publishing role. It's going to invest and aim for the top - but whether that can really work while it lacks the courage to let its big products step out from the shadows of last year's blockbusters is a major question. This is a company which has reformed itself massively in recent years, however, and its determination to reach the top may well overcome this hurdle, too.
For other firms, as the budgets involved spiral ever upwards, the window of opportunity is closing - and many are choosing to move sideways instead. Mobile and social gaming offer fresh pastures, albeit heavily contested ones. Portable platforms, including the upcoming 3DS, offer the chance to stay in the game without engaging with huge HD console budgets. Perhaps most exciting for former mid-range publishers, however, is the resurgence of the PC - a platform long written off due to piracy, which now appears to be coming into its own again thanks to digital distribution platforms and a proliferation of new price points and business models.
One thing is certain - the days of the second-tier publishers are numbered. It's only a matter of a few years before those firms will have made a choice - either learn the ropes of an emergent platform and capitalise on that niche, or aim for the top with big-hitting, high-budget titles whose success will propel you amongst the big boys. Some will succeed - THQ, hopefully, among them. Some, however, will die trying. As yet it's hard to guess which will be which.
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Comments (60) Latest comment 1 year ago
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Yeah I agree. Smaller publishers can not buy good reviews.
Recent example would be EA's DA2 which recieved an undoubtedly paid review almost a month before release.
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Cliffy B's claim that "only AAA games matter" is as stupid as he is.
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The thing about middle tier games is that you go into them expecting little and are pleasantly surprised when they are decent. As a result, you enjoy more and mentally uprate the game. The so called AAA games have a much harder time trying to impress and you spend more time looking for what is wrong. You downrate in your mind.
At the end of the day, if Alpha Protocol was sat on the shelf with ME2 and DA2, it'd be the latter I walk home with.
You can actually feel the quality from the higher grade titles, where the other games slightly cheapy roots show through.
Alpha Zprotocol has still made it into my collection now, I find the technical mess a bit off-putting, but for the 10 or so, it is going to be worth a blast at some point im sure...
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I developed a habit with AAA games that the less it is hyped probably the better it will be. When you have the hype train running and they promise you the world it's just like voting campaings you know they are lying.(or at least you should know).
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Deadly Premonition is a perfect example of a mid-range game priced correctly, and it did superbly because of that and good word of mouth. It would've flopped at full price, but more people were willing to take a risk at £20.
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It is still possible to be a mid range publisher but you have to pick your battles.
1) Specialise in an area and become known for it. Codemasters are a good example of this they iterate on different driving games each year, using the same engine and refining on it. As such they have built up a reputation in this area and there is a fairly large group of people who they can rely on each time to buy a game
2) Unfortnately, the issue of the stock market isn't going to go away. Any company who spent this much and didn't review well would get thumped for failure. Imagine how much activisions share price would fall if the game only score 70%. Again using Codies as an example they are privately owned so this issue would matter less
3) IN theory it should be cheaper to develop for a console than 5 years ago. If a companies cost are spiralling on a platform that has been out this long then there is a problem as lessons haven't been learnt
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Even the likes of COD are struggling to come up with new takes on the big, dumb military shooter. BLOPs was effectively a highlight reel of the past few games - snow level, snipe-y level, stealthy level, on-rails level etc etc. These are the established norms, and they are a diminishing return. If these big boys are struggling then a half baked facsimile like Homefront is going to come up short every day of the week.
It's brutal, but nowhere does it say that everyone has the right to follow the big blockbuster model. It's survival of the fittest at its most pure; either come up with something ground breaking or consider a new line of business. Critical tastes have matured, and with them consumer tastes slowly follow - an evolution essential for gaming to be taken seriously by the wider public. Aside from a small (albeit dedicated) core who will still take a punt on a rough-round-the-edges-but-quite-fun-if-you-persevere title, the ever growing vast majority of the games playing market are only interested in quality, be that at 59p on the App store or £39.99 at GAME. There's little room for half arsed product; brutal but ultimately for the best long term.
My 2p.
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Instead of asking the full €59 for Homefront they could charge €39.
And this is perfectly feasible with only distribution these days.
If you make a middle range game, just don't release it in normal stores but just on Steam, Good Old games and Xbox live.
Since you have NO cost for pressing DVD's, distribution, etc. they could charge a lot less and still make a profit.
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Like the film industry, indie stuff will still be made but none of that will ever compete with the big "studios" in terms of sales or brand recognition. It will also be almost exclusively made on PC, leaving console owners with a very limited range of genres.
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1) The market is over saturated with games (except perhaps the summer). Unless you have a tonne of disposable income you are unlikely to buy more than one or two full price game per month, if that.
2) Consumers have become desensitized to the oft misleading advertising and PR assaults of the industry.
3) Conversely, Metacritic has been elevated to the status of some kind of weird religious mystic; capable of panning a game before it even gets out the door.
4) Publishers aren’t doing enough to push later sales, through flexible wholesale pricing models for example. Instead, they’re pushing new IPs out every month at the expense of their back catalogue.
5) Sequels such as MW2, Dead Space 2, etc all now feature brand spanking new games engines for every iteration. In the old days a sequel was like Half Life: Opposing Force or KoTOR II; A new story using the same engine and assets, with a few additions and tweaks. Now, any savings are squandered on pointless additional development costs.
6) Further, the industry has conditioned gamers (and critics) to scream blue murder if the bar for graphics isn’t raised every year. That is now coming back to bite them in the ass.
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Make good games, you get a good reputation.
Make crap, you go bust.
SIMPLES
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Game quality has suffered this gen a lot more than in previous console generations, a lot of it has to do with the fact that even if developer manages to make original and good game, there's a good chance it'll go compleatly ignored in favour of a brand name titel even if that brand name titel is bad/avarage.
Singleplayer quality this gen is secondary or compleatly irrelevant to games succes, people have suddenly started caring more about multiplayer than singleplayer, this is especialy true with FPS games.
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Homefront is a classic example of a publisher trying to create a franchise but cocking it up at retail. You want people to play your game and look forward to the sequel, like EA did with Dead Space. 2nd hand sales and heavy discounting ensured that that game got in as many players hands as possible.
With a full price release THQ have missed out on many potential players at launch, coincidentally the time-frame when a multiplayer title needs to gain critical mass. To complete the cock up, they are using an online pass which will prevent most 2nd hand users experiencing what is arguably the focus of the game.
Not clever when trying to create a franchise and while it is sad for the devs, THQ deserve a battering for their short-sightedness.
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Homefront was supposed to bring something new: an emotionally engaging story with a seriouse look at the horrors of war. That's what was supposed to be it's big selling point. When it failed to deliver on that, it might aswell not have been made.
Having a multiplayer that's "just as good" as CoD doesn't matter when everybody and thier dog is already playing CoD. Offer something new or don't bother.
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As an aside, it's weird how in movies a director has a story and thinks 'how can I communicate, yet compact this long story in as short a time as possible', whereas most game developers seem to think 'how can I extend this short story to as long as possible'.
That of course has to do with trying to win back the development costs (once you have the core engine, it's relatively cheap to add extra levels), so that would actually be more of a reason to create smaller scale games (when it comes to engine fluff). At lower prices too, but I'm not too bothered about the price because I never pay much more than 45 euroes from online shops anymore. Sadly sales of games such as Enslaved show that we as a public are not yet ready for it.
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We already have that - the indie scene.
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My country doesn't have XBL indie
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The middle tier publishers are doing the completely wrong thing by cutting their lower-margin games and trying to push a few high tier games as they don't have the means to compete with the big boys while leaving the lower margin markets that as a result become less and less risky. Real risk is going into a genre that you need to implement perfectly to compete, a set piece shooter with bad set pieces often gets called out on its boring cover shooting despite not doing that much worse than the big boys, the set pieces simply distract from the monotony of the core gameplay.
Many genres are now considered dead that were very low on risk. E.g. the sidescrolling platformer is a very easy genre, the core gameplay can stand by itself without set pieces and doesn't have many complex elements. Get the basics down and you've got 90% of the job done, then you just need to realize that you didn't just create a tiny niche game (the big hitters in the sidescrolling platformer genre sell in the double digit millions!) and that it doesn't take much to stand out from the limited competition there. Just stay away from the damn set pieces!
Seriously, Nintendo isn't the only company that can make huge amounts of money from financially low to middle tier games.
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"We need a CoD of our own." "Yes, that's a great idea, get the men to work! Meeting over."
Fact is, sitting down and deciding you want to make an AAA title is a little different from actually making one, let alone making one first try with a new IP. It can happen (Gears, Halo), and sometimes it takes a few tries to get the ball rolling (Killzone). However, declaring that "Life as a second-tier publisher is no longer tenable" is complete crap. It is untenable if you have sky-high expectations for a game which is decidedly middle of the road, but that's what you get for not tempering desire with reality.
By way of comparison, here's what happens when you don't get wrapped up with this AAA mentality and you're a 2nd tier, if that, publisher: [link url=http://www.gamingtarget.com/article.php?artid=11271
]http://www.gamingtarget.com/article.php?...[/link]
Good returns on fair expectations.
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If these stupid passes must exist, that seems like the best way to do it. Better than EA's little known 'trial' for Project Ten Dorrah games.
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So yeah, charge what the games worth, not what everyone else is doing.
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But it's not what I meant; I meant an extra pillar in between the mini-game and the summer action blockbuster: pretty much full fledged games, but more intimate in scope and story.
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On several occasions I have actually bought a new copy of a game after initially renting it although admittedly when it has dropped in price on Amazon.co.uk or Play.com.
I'm blowed if I'm going to fork out £8 for an online pass to access a tacked on multiplayer.
If I do bother with Homefront it will be when it is going for around £20 which given the reviews /word of mouth will be in about 2 weeks.
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Going HD in 2005-2006 was obviously just a little too soon for those mid range developers. If the industry had waited an extra 2-3 years when things were more affordable and HDTV penetration was more widespread, then I doubt that we'd be seeing so many of them struggle.
Even the behemoths that are EA and Activision have posted massive losses at some point during the generation, so what hope does anybody else have.
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From a personal point of view, I do think we could do with an generational jump in console technology as I think developers are stuggling to get much more out of the current Xbox.
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If your game's worth $30 don't charge $50.
There is still loads of room for mid tier games - someone always innovates to fill the void.
Also, why aren't people talking about the massive discrepancy in review scores?!
Thing is when something original does come along - FarCry2, open world, realistic mechanics etc - majority of gamers didn't like it. (I know I'll get crucified for mentioning FC2 favorably)
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Does it mean a greta game? Not alweays. Does it mean pushing the boundries narratively, graphically or mechanically? Nope.
Does it mean it just costa lot of money to make and was marketed a fuck ton? Ah, thats it.
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That's a start. There's a reason why downloadable games are experiencing success. Their value is clearly shown.
Why is every disc-based game the maximum price? No variance at all. Publishers shouldn't be so afraid to undercut their competitors. I don't think consumers will see it as a lack of confidence in the quality of the games, but more as a gesture to invite people to buy those games.
For the new times... we need a new sales model. It would be horrible to only have CliffyB's 'AAA' developers and downloadable titles.
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I had a look at metacritic but it looks like it might have a limit on how many words you can submit and gamefaq another site seems overcomplicated.
To be more on topic , i tend to agree what is written here but i think they should try sell at profit, im thinking of koei atm and how there are not alot of copies of there games because if they make too many that could be bad for them.
That's a slightly different issue and will still buy nis and koei games , just harder to get a hold of.
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You're on one. Can't be ar**d to do your own research?
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Having worked in Game as depressingly long as I have, I've noticed this trend loads of times. The average gamer (Not us lot, who frequent this site daily) is pretty much clueless as to how well any game has been scored in reviews. Nor, most of the time, do they give a shit.
So where as we might scoff at the 9/10 sticker currently plastered on Homefront, due to it coming from that highly reputable source Zoo. The average gamer really doesn't care, Zoo, Edge or Cosmo, all that 9/10 seems to do, is at a quick glance guarantee them a great time with their purchase.
Ohh, and Homefront has pretty much sold out on 360, company wide. I don't think THQ have that much to worry about in the short term.
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Amazing graphics, Astounding Budget, Astronomical Price.
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Just kind of wondering how we can judge with other genres. Is this solely a budget defining thing? Seems a bit wrong to charge £40 for a crap game just because it went overbudget but it seems a bit unfair to say well the developer is in the top echelon so they're okay to charge the maximum amount regardless of the game.
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Even so, just competing on price is not a great strategy, 50% price != 50% revenue because the relationship is not linear, and is self-reinforcing in places.
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Sorry dude. Just read my post in the cold light of day and it was a little bit aggressive to say the least. That's stella and red wine mixed for you! Some great reader reviews on here and there is an ongoing competition each week for the best.
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I do think there is a mid-price middle ground for creative developers. They just have to find ways to deliver great gaming experience with a limited budget, which is quite possible. The game must stand out with other qualities than overproduced Hollywood cinematics and aggressive marketing campaigns. With Homefront, THQ got this completely wrong IMO. Not only did they try to join the highly dangerous big-budget club by challenging big boss Activision, but they did so by delivering a game that doesn't stand out in any way. It would have to be something more than CoD, or something else. But it isn't.
We'll see. I always dislike the big bullies and have sympathy for the underdogs (unfortunately, underdogs are usually underperformers), and I hope THQ gets off with a slap on the wrist. I greatly respect them for publishing a game like Stacking, which I actually find boring to play, but very likable nonetheless.
It's funny because my first experiences with THQ were in SNES days, when THQ was the publisher of the worst crap you could buy. For full price, of course. Can't get that impression entirely out of my head.
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My point was that these are the kind of risks that developers need to take - to make something that stands out - and that the simple 'follow the leader' model is a diminishing return.
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