Published as part of our sister-site GamesIndustry.biz' widely-read weekly newsletter, the GamesIndustry.biz Editorial is a weekly dissection of one of the issues 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.
Ask almost any journalist or commentator what the story of the games business in the past few years has been, and you'll probably get the same stock response: it's all about breaking into the mainstream. It's about the rise of the Casual Gamer, this mythical mass-market beast unleashed by the dark genius of Nintendo's Wii and DS, whose successes other companies are now rushing to emulate. It's a fairly straightforward narrative, and like any good story there's a grain of truth at the heart of it, but as an assessment of what's actually happened in games of late it's sorely lacking in insight, which makes it all the more disappointing that it's such a widespread view of the market.
What's really happened isn't so much a tale of cracking the mass-market (your granny may have bought a Wii, but the console's installed base is still less than half that achieved by the PS2) as it is a tale of companies learning about the value of specialisation. It's a story that starts in an industry dominated by publishers who view themselves as jacks of all trades, capable of straddling every genre and target market in the business - because after all, the consumers are all gamers at the end of the day. The mid-section of this narrative is about companies learning that actually, the only way to keep those profit margins high is to learn what their strengths are and focus on those areas - and about companies who can't make that transition gradually falling by the wayside.
And the third act? I suspect that this story ends in a few years' time with a landscape largely made up of highly specialised companies, each focused on a relatively tight market segment. Some of them will be huge companies aiming their efforts at a tight but very large segment, and some will successfully span several different sectors with highly differentiated subdivisions and sub-brands. Some will be modern publishers who have learned to focus; some will be developers who have learned that such tight focus can actually remove the need to work with a dedicated publisher if you can build the right skillset.
The evidence of this transition in progress can be seen fairly readily in the behaviour of the industry over the past couple of years. Perhaps the most dramatic example is, of course, Electronic Arts, whose entire restructuring plan can, on some levels, be summed up as an attempt to give the giant publisher a laser-sharp focus on a small number of key areas which it can dominate, rather than simply being one among many in a wider variety of industry sectors. There's more to it than that, of course, but it's beyond question that John Riccitiello's EA is proving much more circumspect about picking its battles than Larry Probst's EA, which was willing to wade into any arena that presented itself, no matter how ill-equipped it may have been for the challenge.
Staying at the top of the market, Activision, too, has made it clear that it's keen to pick its battles with care. The company has been blunt - perhaps too blunt - about its ambition to launch nothing that isn't a $100 million franchise, representing a clear attempt to remove the publisher entirely from the middle ground and turn it into a brand that only launches slick, expensive, core gamer titles.
Admittedly, the ambition to make this transition and the reality are rather different things - not only does a publisher ignore smaller titles and new IP at vast risk of letting the next breakout hit slip through its fingers, but a firm with Activision's ambitions in this regard needs better quality control and product assessment processes than the company presently demonstrates. Modern Warfare 2 hides a multitude of sins, but not everyone has forgotten that Activision's two other major Q4 2009 titles were a slow burning cult success (in the case of DJ Hero) and an outright embarrassing flop (Tony Hawk: Ride), rather than commercial triumphs.
Then there's Ubisoft, which this week made clear that it's planning to tone down its efforts in the casual market and focus on what it's been really good at recently - high-quality titles for the core market. It's not that the casual market is doing badly - far from it - but that the people making money there are specialists, not daytripping core game publishers. Ubisoft has done better than most in the sector, but even it cannot really compete with companies whose raison d'etre is to reach this market segment.
For a perfect example of this specialisation at work, look at the top 10 games of 2009 in the UK, a chart conveniently unveiled by GfK ChartTrack this week. The top 10 has two Activision titles in it - both Call of Duty games, hardcore first-person shooters prized for their online multiplayer. It has two EA games in it - both FIFA titles, from the unrivalled EA Sports catalogue, which dominates the sports markets on both sides of the Atlantic. There's one Ubisoft title in there, core gamer favourite Assassin's Creed II. The other half of the top 10 is all about Nintendo, with five casual or family-friendly games making up the rest of the chart.