Now That You're Done Firing Everyone...

Kollega

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CustomMagnum said:
- once again, snip -
Alright alright alright, i lost this one.

But of course i'm very heavily biased, because i think that instead of walking moneybags the sphere of entertainment and art should be controlled by, you know, entertainers and artists. But then again, i'm such an idealist. I think that civilization as a whole didn't made enough progress as we enter the 21st century. Sure, many people are nice, but there can never be too many of nice people.
 

Samurai Goomba

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Surprisingly, I couldn't agree more with your points. One thing, though: expecting good management tactics from EA is like putting a quarter on your head and assuming that will work as good as an umbrella at keeping rain off you.

If I had to guess, I'd assume that all the hiring and buying other companies is about appearances. You publicly make a show of buying a studio, then quietly lay off a bunch of your own guys. If this is done right, you've increased consumer and investor confidence while offsetting some of the costs of the buyout you couldn't afford before (which all those other people working for you). If it works, more people will buy both your products and games under the assumption the company is doing great and there will be continued support for those products you offer online for.

That's in theory. In practice it's a slimy thing to do and probably won't work because this industry relies a lot more on actual sales (in a tough economy) than on big-wig stock brokers buying your company shares.
 

UtopiaV1

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These people can't be rich for no reason, there HAS to be a reason why they're in charge of multi-billion dollar companies and we're not...

Oh, that's right, they're FATHERS were...
 

Jory

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BlindChance said:
Shamus, you forgot one.

With the money you save from spending less on graphics, hire a few writers. Good ones. Not Orson Scott Card. They cost less than technically astounding graphics, yet you'd be surprised how much they improve sales. Just ask Bioware.
Exactly. I totally agree.

This article makes a lot of good points. I haven't paid £40 for a game in absolutely ages.
 

RvLeshrac

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Oct 2, 2008
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I would like to point out that Prey was a pretty poor seller. For four years, it has been a poor seller.

Then, when it goes on sale for $5 on Steam, the ENTIRE NON-PHYSICAL INVENTORY OF CD KEYS sells out. In just a few hours. Now, imagine if they'd done that for four years.
 

beddo

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Shamus Young said:
Experienced Points: Now That You're Done Firing Everyone...

Shamus Young gives some handy pointers for saving your game company from financial disaster.

Read Full Article
Concerning pricing; the demand for games is more complex than you suggest. The deman is not just elastic; it's likely that dropping the price by half would lead to double the sales. This is why games companies don't do it. Do you think that MW2 would have sold double had it been half price!?
 

beddo

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scifidownbeat said:
Optional: Hire a good lawyer to help you create a contract that is signed by every employee of your company. You can put whatever you want in it so long as you legally include the right to seize any and all profits your company makes (the lawyer can help you word this ambiguously) despite any payment arrangements with employees. Hold onto this lawyer in the future.
If it's a private company that you funded yourself then you have this right anyway. It's only if you have partners, investors or the company is public that you would have to share the profits. Also, they give people what they want, big voice names sell and marketing works. Want to blame someone? Blame the consumer!
 

beddo

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scifidownbeat said:
beddo said:
scifidownbeat said:
Optional: Hire a good lawyer to help you create a contract that is signed by every employee of your company. You can put whatever you want in it so long as you legally include the right to seize any and all profits your company makes (the lawyer can help you word this ambiguously) despite any payment arrangements with employees. Hold onto this lawyer in the future.
If it's a private company that you funded yourself then you have this right anyway. It's only if you have partners, investors or the company is public that you would have to share the profits. Also, they give people what they want, big voice names sell and marketing works. Want to blame someone? Blame the consumer!
If you're right then we just might have ourselves a plan here.
Barriers to entry are to high I'm afraid, unless you have the cash needed to start a games company, looking for at least $2m dollars.
 

Ericb

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From a financial standpoint, it's possible that EA and other companies have made less then stupid moves. Just a thought to keep my mind open, though in this case I don't really think so.

Because this, combined with the fact that a lot of the actual game development staff don't get any credit [http://kotaku.com/5427863/they-worked-on-the-game-you-played-but-didnt-get-credit-%5Bupdate%5D] for their work, shows that this is a demented industry which treats the very reason of its existance with disdain and disregard.

Someone in the back pages commented about blaming the consumers for a lot of the ways that the industry acts. As far as how creative AAA games have been last year, I definitely do.

Shamus's advice about the graphics race is great and everybody, especially the modern graphics junkies, should read his article [http://www.escapistmagazine.com/articles/view/columns/experienced-points/6069-Death-to-Good-Graphics] about it.
 

toapat

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Jhereg42 said:
Another thing I think contributed to a lot of failing studios over the last two years was the absolute glut of MMO offerings. It seemed that after the success of WoW everybody was trying to get in on the subscription model. I understand why, ActiBlizz can basically run their entire business on the WoW revenues alone, but I think the biggest problem that the other MMOs ran into was that there were just too darn many of them trying to grab the other potential MMO players out their that they starved each other.
Blizzard will be able to fund their next 3 decades with the profits of SC2
 

Playbahnosh

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Treblaine said:
Hit the nail on the head with cheap games, I think THAT is why they are selling so well.

Take the Christmas Sale that Steam had recently, I can only speak for my own experiences but I WENT CRAZY!! Seriously, I looked back over my receipts and I spent over TWO HUNDRED POUNDS STERLING on games, more than I had spent in the past 3 years combined on Steam!

I hope Steam considers their amazing sale a success.
I have to agree with Treblaine here. The Steam Holiday Sale was an absolute blast! I mean, I bought 5 games in the course of 4 days, and I normally buy that many games in a year.

Seriously, 90% off?! When I saw the price tags, I thought either Valve gone insane or I did. They sold whole fucking game packages with 75% and 90% OFF tags, that's ridiculous! Buying games for $4 instead of $40? They were practically giving them away fo gods' sake! It's like rummaging through the bargain bin, but it's actually full of good games. Hell, I know people who wouldn't buy games if their lives depended on it, and they also bought a bunch of games on that Steam Holiday Sale. There were long time gamers I know, (25-30 year olds), who bought their first ever games now. All that in a world, when you can torrent the shit outta any game for free. Fuck copy protections and DRMS! You wanna fight piracy? That's the way to do it. Period.

Also, I wouldn't be surprised if they made 90% more money with that "90% OFF" sale. I'll be very interested in the numbers if and when they publish the results of that stunt.

Treblaine said:
It sucks that it takes more balls to reduce the price point than to fire thousands of your own employees.
Exactly. EA is the prime example of how not to do it. Raising the prices ever higher, applying even more restrictive copy protections and DRMs, and then they go around whining like a ***** about how people won't buy their unimaginative and overrated shit, then firing people who actually did something for the company. It's madness!

Valve fo prezident!
 

BloodSquirrel

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Shamus Young said:
Lower your prices.

Really. Just try it. Put a new game out for $30 instead of $60 and see if you don't sell enough units to make up the difference. You are not the only industry with money troubles. Things are tough all over. Lots of people are broke. Wouldn't it be better to sell customers your game at half price than to sell them nothing at all for the full price?

You keep getting excited about how much money casual games are making. You know an amazing fact about casual games? They're cheap. Maybe you should try imitating that before you go nuts spending enough money to make Modern Warfare 2 six times over in order to get your hands on a casual games company.
This is why they're CEOs making millions of dollars and you're not.

In order for selling games at half the price to work, you have to sell over twice as many copies (distribution and packaging still cost money). Gamers would have to spend more money overall for companies to make as much.

Not everybody is going to buy twice as many games just because they can with the same amount of money. I, for one, wouldn't have the time to play twice the number of games I'm playing now. I know a few MW2 gamers who basically play nothing else. You're not going to get more money out of those people by halving game prices. Meanwhile, the rise of collector's additions and DLC shows that even at $60, they're still leaving money on the table. On the other end, a lot of people not willing to pay $60 will be buying the game used even if it's $30 new, so lowering your prices isn't going to get you a sale there.

The current system is far, far smarter. It's basically tiered pricing: for people willing to sped $100, there's the collector's edition and DLC. For those only willing to spend $60, there's the normal release at launch. For people willing to pay $30, you cut the price after the $60 sales start falling off. For people aren't even willing to pay that, you have used games sales which insert money into the system indirectly (some of those $60 sales will be made solely because the customer will be able to turn around and sell it when they're done).

Keep in mind, companies hire professionals whose entire job is to research the market and determine what the best price point for their product is. These people rely on significantly more rigorus methods than "I bet you could make more money by halving the price".

The "cut prices" argument only really works with games that can't meet the expectations that have been created for a $50-$60 dollar price point. Some of the recent "hardcore" Wii bombs might fall into this category.

My personal answer to saving game companies?

Compete and win. If game companies are going under, it means that the market is too crowded, and the amount of money that gamers are willing to spend can not support the current number of companies. Some of the less successful ones are just going to have to die. It sucks for you if they happen to make your personal favorite niche game, but it's unreasonable to expect those games to be made if there aren't enough gamers willing to put up the money to fund them
 

Miral

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Playbahnosh said:
Seriously, 90% off?! When I saw the price tags, I thought either Valve gone insane or I did. They sold whole fucking game packages with 75% and 90% OFF tags, that's ridiculous!
This is why I always keep an eye on their weekend and midweek specials. They frequently have insanely large discounts, just demanding my money. (As a consequence, I too have bought more games via Steam recently than any other medium [recently]. And I'm still trying to recover from the Christmas sale, which was just nuts, even for them.)

Playbahnosh said:
Also, I wouldn't be surprised if they made 90% more money with that "90% OFF" sale. I'll be very interested in the numbers if and when they publish the results of that stunt.
They have posted some numbers in the past; I can't recall the exact figures, but I think they said something like "if we discount a game to 80% off, it typically increases revenue to 1800%". (Again, actual figures might have been a bit different. But it was something on that order. Note that they said revenue, not just unit sales.)

Considering that Valve get a percentage of anything sold via Steam, they must be swimming in large piles of money by now. (Maybe that's part of the reason why they're in no hurry to release HL2:E3...)
 

Playbahnosh

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Miral said:
Considering that Valve get a percentage of anything sold via Steam, they must be swimming in large piles of money by now. (Maybe that's part of the reason why they're in no hurry to release HL2:E3...)
Exactly, they must be indeed having champagne baths in their solid-gold jacuzzis. And they deserve it, IMHO. They are the only ones, who deserve it. But I don't think they are resting on their laurels either, that's not the Valve kinda way, I think they are working on stuff right now as we speak, but, you now, they are not the sort who spoil us with information all the time. No, they just hint. Go read this weeks article on Detective Freeman, it explains it all, how the Valve wonder-factory works.

Valve is doing it the right way. I wonder when the rest of the bunch will fall in line. Valve is customer oriented, they really know how to talk to us gamers, they speak our language. Hell, they themselves are gamers. They know what we want, what we like to play or what we would like to play if they've made it. They support, care for a develop extra stuff for games long after other companies would've thrown it to the bargain bin or discontinue support[footnote]Just look at Half-Life! That game is 12 fucking years old and they still support it![/footnote]. They listen to feedback and the wishes of the community. They care about us[footnote]Even if they don't, they are doing one hell of a job pretending they do...[/footnote]! They work for the players, and not just living off them as the others do. Most importantly, they price their games fairly, or at least try to, and they regularly have these totally insane sales, like the Holiday Sale. They are raking in enormous piles of cash, yet they are not a fucking profit oriented steamroller.

Which reminds me...

BloodSquirrel said:
My personal answer to saving game companies?

Compete and win. If game companies are going under, it means that the market is too crowded, and the amount of money that gamers are willing to spend can not support the current number of companies. Some of the less successful ones are just going to have to die. It sucks for you if they happen to make your personal favorite niche game, but it's unreasonable to expect those games to be made if there aren't enough gamers willing to put up the money to fund them
I disagree. While I accept, that the customer base has only a limited amount of money to spend on games, I don't think that natural selection, "let only the strongest survive" way is for the good of the industry.

I'd rather go with symbiosis. You said it too, that people only have a set amount of money to spend on video games. If every studio were to cut the prices, the people could actually buy more games! I think you know, that most people don't actually buy video games because of the price, right? They rather torrent the shit out of them, because they can't or won't afford to buy them. Not everyone can afford to spend $60 on a few hours of entertainment, in reality, most people just won't do it even if they could, because that's a fucking lot of money, even if the feeling of having the original game, the jewel case, the support and the online multiplayer ability is in the price (you don't get those in the pirated copy). If the price of something is greater than the estimated value of that something for the customer, they won't buy it. What the big companies try to do is to balance this by huge marketing campaigns to raise that estimated value to the level of the pricetag. When the dazzled customers buy their shit, then realize they've been had, that doesn't concern the companies anymore, since the customers already did what they've been indoctrinated to do, they payed. Then the scammed customer realizes he is left with a $60 piece of crap, they won't be too happy. They'll try to like it, they'll try to enjoy it, because "Goddamit, I payed $60 for this! I need to like it!", but the damage is done. One thing is for certain, that customer will think twice before buying anything from that company from now on.

Exploitation works only in the short-term. It brings in huge profits on the expense of the customer base. The disillusioned customers will discontinue buying their games, the customer base will shrink, so they need to raise the prices and cut budgets even more to sustain the profits. That only results in shittier and more expensive games, until no one will buy them. It's called hunting/farming to extinction. But symbiosis on the other hand, is maintainable. When there are many good developers releasing good games for an affordable price, the customers can buy many games and every developer will get their share.

Take a look at Valve, they had the balls to lower the price of a game by 75% and they still had a fucking 1470% increase in sales on that game alone (according to THIS INTERVIEW). That means that (if I calculated correctly) more than 1100 percent more people bought that single game, than when it was sold at full price! HOLY SHIT! That means the customer/player base grew eleven-fold over the period of the sale. Are you reading this? 11 times more people, who never bought that game before, suddenly decided to pay up. For this, in the middle ages, Valve would've been burned for witchcraft.

Now, based on this, it's not too far fetched to estimate, that if the rest of the publishers would lover their prices by, say, 50%, their revenues would rise by at least 300%, given that the games are of high quality and that people want to play them. And the people do want to play them, because, and now hold onto something, the global piracy rate is above 90%! That means, for every copy sold, there is at least 9 torrented. So the potential customer base is there, obviously. Wouldn't it be rational to lower the prices, so they would be able and willing to buy those games?

But not just the games, the platforms too. There are huge crowds of people, who really wanna play a certain game, but can't, because they don't own the platform to play it on, like a certain console. Buying a console is a much harder decision than buying a single game. It's very naive to think, that everyone will just go buy the console if they spot a great platform-only game or games. Take me for example. I'd really like to play Heavy Rain when it comes out, but I don't own a PS3. Now, the PS3 console costs a lot, that alone would deter me from buying it, but I don't even have a TV, or a couch for that matter, nor a room to fit all that into. I live in a small apartment, but I do have a brutal gaming rig (for reviewing PC games, that's what I do). Even if I had that kind of money, I simply wouldn't buy all that stuff, because I don't have the free space, and it's too much hassle for one game anyway (there are no other PS3 only titles I really want). Now, I know at least 11 other people who has the exact same problem as me, and God know how many are there around the world. I would, however, most certainly buy the PC version. You see the problem here? Some other people only have a certain console and no gaming PC for example, so they can't play PC-only titles, same predicament but from the other side (I admit, gaming PCs cost more). Now, we are lost revenue to the makers of these games. Even if there are some people who own every gaming platform or willing to buy them, I'm dead certain that there are far too many people who just can't or won't bother buying other platforms for a game or some games.

My solution: why not have only one platform? Let the huge console and PC companies join forces and develop a single, robust system, that is in every way designed to run video games. It will be easy on the customers since they won't need to choose between them and miss the good games on the other platforms (very few people can afford all the platforms nowadays), and far much easier on the developers, since they only need to learn one system to develop to. Alternatively, port every game to every system. I know it's expensive, but if, using the real-life example of Valve above, they price the games to be affordable, they would rake in huge profits regardless.

Also, let's make peace between developers. The more diversity, the more ideas and potential the industry has, the better games could be made. Nowadays, the video game world is shrinking, small studios are bought or shut down by big ones, great ideas and concepts go down the drain, and for what? Market share? Fuck that! Using the above examples, every can get their share, and still be alive and well. More diverse games, more awesome ides and concepts, more happy gamers. Thats symbiosis for you. If you do stuff for the customers and each other, the better the world will become.
 

Miral

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Jun 6, 2008
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Playbahnosh said:
Take a look at Valve, they had the balls to lower the price of a game by 75% and they still had a fucking 1470% increase in sales on that game alone (according to THIS INTERVIEW).
Thanks, that looks like the link I was looking for earlier.