Next-gen development to be prohibitively expensive? EA predicts doom for its competitors
"It makes the healthy trees stronger, but burns away the weeds..."
Electronic Arts, one of the industry’s biggest players, has today voiced its concern about how the introduction of the next generation consoles could have a negative impact on the world of video-gaming. In an interview with BBC news, it was suggested that PS3 and Xbox 2 games could be nearly 200% more expensive to produce than current-generation software.
No doubt with a smug grin concealed behind a fascia of non-emotive corporate professionalism, Jeff Brown (Vice President of EA Corporate Communications) made the following analogy, “We look at the transition like a forest fire. It makes the healthy trees stronger, but burns away the weeds.” In this definition, ‘healthy’ clearly equates to ‘wealthy’. And with EA’s estimated market value floating at around the $15 billion mark, the publishing giants will be greatly looking forward to becoming an even ‘stronger tree’ in the years to come.
However, from a consumer perspective, this erosion of choice can’t be a good thing. Smaller developers may be forced into the position of either folding, or selling out to a ‘healthier part of the forest’. While there’s nothing inherently wrong with a smaller studio being rescued by larger corporations, that process will bring the output of those outfits under the control of more aggressive capitalist organisations.
By its own admission, EA is happy to keep pumping out sequels and franchises, with Brown saying, “The franchise strategy is good for the company, investors and consumers as this is a hit-driven industry.” As it expands on this strategy, it will be bringing other companies along for the ride, preying on their financial desperation: “The demand for content means that even big companies like EA have to go to smaller developers.” The eventual result would, of course, be fewer original IP’s and a market saturated by ‘gaming-by-numbers’ titles.
This slightly apocalyptic prediction of the future state of the industry could, however, be tainted by more than a hint of self-interest. Electronic Arts knows that it could ride through such a storm, whilst others would sink, and it would surely be keen to declare its strong position to potential investors and anyone else who will listen.
If these escalated production costs are to be believed, then the introduction of the next round of hardware could indeed spell trouble for some. Even companies as large as Eidos and Midway have already been rumoured as potential victims in this possible acquisition-rush. And as long as companies like EA keep pressing in the same direction, the problem could get worse. Even if small companies can bear the initial 200% development costs, they will still end up paying out to the likes of EA in order to make use of development platforms like Renderware.
It seems to be a simple case of the rich get richer, whilst the poor simply get crushed like ants and/or dressed up like monkeys and forced to dance for the entertainment of the rich. That is the way that capitalism works and when all’s said and done, this is proof that the games industry is entering a new phase of economic maturity.
No doubt with a smug grin concealed behind a fascia of non-emotive corporate professionalism, Jeff Brown (Vice President of EA Corporate Communications) made the following analogy, “We look at the transition like a forest fire. It makes the healthy trees stronger, but burns away the weeds.” In this definition, ‘healthy’ clearly equates to ‘wealthy’. And with EA’s estimated market value floating at around the $15 billion mark, the publishing giants will be greatly looking forward to becoming an even ‘stronger tree’ in the years to come.
However, from a consumer perspective, this erosion of choice can’t be a good thing. Smaller developers may be forced into the position of either folding, or selling out to a ‘healthier part of the forest’. While there’s nothing inherently wrong with a smaller studio being rescued by larger corporations, that process will bring the output of those outfits under the control of more aggressive capitalist organisations.
By its own admission, EA is happy to keep pumping out sequels and franchises, with Brown saying, “The franchise strategy is good for the company, investors and consumers as this is a hit-driven industry.” As it expands on this strategy, it will be bringing other companies along for the ride, preying on their financial desperation: “The demand for content means that even big companies like EA have to go to smaller developers.” The eventual result would, of course, be fewer original IP’s and a market saturated by ‘gaming-by-numbers’ titles.
This slightly apocalyptic prediction of the future state of the industry could, however, be tainted by more than a hint of self-interest. Electronic Arts knows that it could ride through such a storm, whilst others would sink, and it would surely be keen to declare its strong position to potential investors and anyone else who will listen.
If these escalated production costs are to be believed, then the introduction of the next round of hardware could indeed spell trouble for some. Even companies as large as Eidos and Midway have already been rumoured as potential victims in this possible acquisition-rush. And as long as companies like EA keep pressing in the same direction, the problem could get worse. Even if small companies can bear the initial 200% development costs, they will still end up paying out to the likes of EA in order to make use of development platforms like Renderware.
It seems to be a simple case of the rich get richer, whilst the poor simply get crushed like ants and/or dressed up like monkeys and forced to dance for the entertainment of the rich. That is the way that capitalism works and when all’s said and done, this is proof that the games industry is entering a new phase of economic maturity.
Companies:
Electronic Arts
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Comments
NiktheGreek 26 Aug 2004 15:27
1/5
This sort of stuff is obviously never good - I personally hate the idea of gaming becoming like the music or film industries, dominated by a handful of major publishers. However, in recent years we haven't just seen smaller companies closing - 3DO went bankrupt, Eidos has been subject to buyout rumours, and Acclaim looks to be disappearing down the tubes. Even a company such as Criterion, which has had a very successful middleware package, has gone to nestle with EA for financial security.
Under this vision, EA, Ubisoft, Sega and the like would be the big fish constantly competing and eating up the tiny developers. Could it simply be a matter of time before Amuze or Sports Interactive are bought whole by Sega? As sad as it is to say, EA's vision of the gaming future is looking pretty accurate.
With this sort of horizon looming, does Sega's forthcoming integration with the larger, more profitable Sammy look so bad now?
As far as I see it, we're probably going to be looking to bedroom coders for innovation in the future - the ones who are doing it for free, and as such don't face financial worries. That will really be the only way they can produce games that they want to make, rather than ones their shareholders/bosses think would be profitable.
Under this vision, EA, Ubisoft, Sega and the like would be the big fish constantly competing and eating up the tiny developers. Could it simply be a matter of time before Amuze or Sports Interactive are bought whole by Sega? As sad as it is to say, EA's vision of the gaming future is looking pretty accurate.
With this sort of horizon looming, does Sega's forthcoming integration with the larger, more profitable Sammy look so bad now?
As far as I see it, we're probably going to be looking to bedroom coders for innovation in the future - the ones who are doing it for free, and as such don't face financial worries. That will really be the only way they can produce games that they want to make, rather than ones their shareholders/bosses think would be profitable.
Joji 26 Aug 2004 16:13
2/5
I agree with you for real on the return to bedroom coding part Nik. The only way that we can really stop the Death Star like corporate empire like EA from taking over the planet is to breed a second generation of bedroom/living room coders and games designers. I would hate to see the day that games become like movie and music, where cookie cutter bull is pumped out with zero talent and originality.
One of the biggest mistakes the games industry outside of japan (well in the u.k and euro anyway) has made is not really investing in schools and college courses enough in order to encourage coding and game design at home. In japan they have schools that teach all the basics etc, and this is one of the main reason why japanese games and developers are really good, because they give something back by planting seeds for tomorrows gaming orchard. We have to have to do the same or suffer in the flood of big corps crap. We mustn't wait til we are up to our necks in it to act.
The power of the net and various technologies are now at our advantage. We have more talented people out there doing mods and such, so perhaps that would be a good place to start. EA etc are the Empire, we are the Rebels and we must not give up the fight. As for next gen development being expensive, I'd take EA claims with a pinch of salt, and wait to hear what MS, Sony and Nintendo have to say on it.
One of the biggest mistakes the games industry outside of japan (well in the u.k and euro anyway) has made is not really investing in schools and college courses enough in order to encourage coding and game design at home. In japan they have schools that teach all the basics etc, and this is one of the main reason why japanese games and developers are really good, because they give something back by planting seeds for tomorrows gaming orchard. We have to have to do the same or suffer in the flood of big corps crap. We mustn't wait til we are up to our necks in it to act.
The power of the net and various technologies are now at our advantage. We have more talented people out there doing mods and such, so perhaps that would be a good place to start. EA etc are the Empire, we are the Rebels and we must not give up the fight. As for next gen development being expensive, I'd take EA claims with a pinch of salt, and wait to hear what MS, Sony and Nintendo have to say on it.
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Mecha Ghandi 26 Aug 2004 17:22
3/5
NiktheGreek wrote:
>This sort of stuff is obviously never good - I
>personally hate the idea of gaming becoming like
>the music or film industries, dominated by a
>handful of major publishers.
Fair point, but with games it does have its plus side too. Musicians, and to a lesser extent film makers, can put stuff out there with relatively little cost if they so desire. There's always stuff in the charts that has been created in someone's bedroom... and alot of 'independent' labels are now subsidiaries of major multi-nationals.
If next-gen games are gonna cost a shedload to make because of all the fresh technology involved, the only option is to go with the big boys. (or accept less technically advanced games)
"As far as I see it, we're probably going
>to be looking to bedroom coders for innovation in
>the future - the ones who are doing it for free,
>and as such don't face financial worries. That
>will really be the only way they can produce
>games that they want to make, rather than ones
>their shareholders/bosses think would be
>profitable."
True, but I think the likes of EA will poach such talent as soon as they can anyway. By gathering together ex-employees from smaller developers, as well as up'n'comers, the bigger companies should be able to make better games. Indeed, Burnout 3 and FIFA '05 look to be the best in the series... It's just that these are fairly formulaic sequels, when perhaps something more innovative could have been squeezed in.
Although when the big fish go snapping up good licenses and then just canning them, that's a real shame. I'm talking specifically of the Lamborgini racing title that EA acquired, dismantled and discarded. Tsk!
But back to the matter at hand...
I don't reckon the development costs will be completely unbearable anyway. Sony and Microsoft have been planning their consoles for ages, and they're both fully aware of the importance of varied third party development. I think they'd rather prop up talented developers than let the entire industry implode.
Ultimately, this is just some 'communications' high-flyer talking up EA. Which is his job, so fair enough!
>This sort of stuff is obviously never good - I
>personally hate the idea of gaming becoming like
>the music or film industries, dominated by a
>handful of major publishers.
Fair point, but with games it does have its plus side too. Musicians, and to a lesser extent film makers, can put stuff out there with relatively little cost if they so desire. There's always stuff in the charts that has been created in someone's bedroom... and alot of 'independent' labels are now subsidiaries of major multi-nationals.
If next-gen games are gonna cost a shedload to make because of all the fresh technology involved, the only option is to go with the big boys. (or accept less technically advanced games)
"As far as I see it, we're probably going
>to be looking to bedroom coders for innovation in
>the future - the ones who are doing it for free,
>and as such don't face financial worries. That
>will really be the only way they can produce
>games that they want to make, rather than ones
>their shareholders/bosses think would be
>profitable."
True, but I think the likes of EA will poach such talent as soon as they can anyway. By gathering together ex-employees from smaller developers, as well as up'n'comers, the bigger companies should be able to make better games. Indeed, Burnout 3 and FIFA '05 look to be the best in the series... It's just that these are fairly formulaic sequels, when perhaps something more innovative could have been squeezed in.
Although when the big fish go snapping up good licenses and then just canning them, that's a real shame. I'm talking specifically of the Lamborgini racing title that EA acquired, dismantled and discarded. Tsk!
But back to the matter at hand...
I don't reckon the development costs will be completely unbearable anyway. Sony and Microsoft have been planning their consoles for ages, and they're both fully aware of the importance of varied third party development. I think they'd rather prop up talented developers than let the entire industry implode.
Ultimately, this is just some 'communications' high-flyer talking up EA. Which is his job, so fair enough!
DoctorDee 26 Aug 2004 18:23
4/5
Mecha Ghandi wrote:
>True, but I think the likes of EA will poach such
>talent as soon as they can anyway. By gathering
>together ex-employees from smaller developers, as
>well as up'n'comers, the bigger companies should
>be able to make better games.
You'd think so, wouldn't you? But I'm not sure that that is the case. Better games come from (I posit) the flexibility of smaller companies, and their preparedness to take risks.
EA, as a listed company, is legally and honour bound to try and delver "value" to its shareholders. THis means they will use the following logic. If we make 100 boring re-runs of safe games, and sequels, will we make more or less money than if we make 100 bold and innovative games, 48 of which fail miserably? Clearly, the answer is less... so they go the way of tedious, middle managment - decision by spreadsheet.
No matter how many people they headhunt from smaller companies, the "Executive vice president in charge of development" will always be a Harvard man, who has had a life-long love of games ever since he played Tomb Raider five, and thinks that games is a really exiting (i.e. profitable) "sector" to be in right now.
Games, should be made by gamers for gamers. Once you show any proficiency in Excel you should be forced to go work in chartered accountancy.
>True, but I think the likes of EA will poach such
>talent as soon as they can anyway. By gathering
>together ex-employees from smaller developers, as
>well as up'n'comers, the bigger companies should
>be able to make better games.
You'd think so, wouldn't you? But I'm not sure that that is the case. Better games come from (I posit) the flexibility of smaller companies, and their preparedness to take risks.
EA, as a listed company, is legally and honour bound to try and delver "value" to its shareholders. THis means they will use the following logic. If we make 100 boring re-runs of safe games, and sequels, will we make more or less money than if we make 100 bold and innovative games, 48 of which fail miserably? Clearly, the answer is less... so they go the way of tedious, middle managment - decision by spreadsheet.
No matter how many people they headhunt from smaller companies, the "Executive vice president in charge of development" will always be a Harvard man, who has had a life-long love of games ever since he played Tomb Raider five, and thinks that games is a really exiting (i.e. profitable) "sector" to be in right now.
Games, should be made by gamers for gamers. Once you show any proficiency in Excel you should be forced to go work in chartered accountancy.
Ditto 27 Aug 2004 14:00
5/5
Will the really creative people who have a motivation to create innovative games want to go and work for a company such as EA where profit is everything?
Surely they will head to the large business that is offering the most potential for innovation?
Nintendo and others have proved that to an extent it is possible to be huge, profitable and innovative.
Surely they will head to the large business that is offering the most potential for innovation?
Nintendo and others have proved that to an extent it is possible to be huge, profitable and innovative.