The Triple-A Problem

By Published July 13, 2011 at 12:01 am

A coursemate recently pointed me in the direction of an article on which reported that smartphone and tablet gaming now secured 8% of the US Games market. The abstract read: "The traditional home console business is quickly losing revenue share to the smartphone market."

At this, my face screwed up. For revenue share to be lost, the two must be comparison goods: the purchase of one directly reduces consumption of the other. Is this true? Are people NOT buying console/PC games because they’ve got Angry Birds? I’m not convinced. One could argue smartphone games are a gateway drug drawing in new gamers to console games, particularly casual-focused consoles like Wii and (3)DS. This would in fact make them complimentary goods, where the growth of one would positively, not negatively, impact the growth of the other. Mobile games might represent a widening of the gaming market, rather than a new rival muscling out console and PC gaming.

The discussion continued and it became apparent that examining demand alone was short-sighted – supply for console and PC games is also being affected as waning developers switch to making mobile games. No longer competing with increasingly expensive Triple-A titles (a loose term given to games which have a high level of investment and are expected to sell well) is a move I can sympathise with. For the last two generations of consoles (notably since the PS2), we have witnessed a lot of developers strive for the success of genre-leading developers by imitation. These games often follow a very well-established template for a game and tend to mingle aspects of two or more successful games but rarely bring anything new to the table. But this honey-trap has claws – the level of investment is necessarily high (anything less would be creating an inferior and uncompetitive product), and with high investment comes high sunk costs. It has spelt the downfall of many developers who have failed to anticipate the over-saturation of their chosen genre. Too little, too late.

But the investors never seem to learn, and have continued to fund these cripplingly expensive projects for years, hoping with each iteration that they might spawn the next big thing. But instead of offering the developer freedom to do as they wish (and probably the only real chance at making the aforementioned big thing), they insist on “low-risk” projects whose subject matter and genre have been proven to sell. But with such similarity, only the best of the bunch gets bought, making massive profits while its competitors lose a fortune. High trade-in rates drop retail prices drastically. A good example of the market adjusting the price to its correct amount?

As the saying goes, he who dares wins, and there have been a lot of losing developers. The fact of the matter is, the higher the investment cost, the greater the need to try and appeal to a very wide audience, leading to very bland, undaring titles. So is moving to mobile gaming the answer? Perhaps, but it’s not the only one.

Step forward, Single-A title! A relatively new term that I first saw discussed in a GamesTM article to describe medium-investment titles. Costs can be less than a quarter of the production cost of typical triple-A games and instead of being shackled by investors’ risk-aversion to unproven formulae, these games have the opportunity to fill the niche gaps between the triple-A titles. This position encourages innovation and uniqueness. Naturally, lower investment represents lower production values, so the quality-inferior single-A titles must choose their battles carefully. Some qualities are cheaper than others, and some qualities don’t matter to certain audiences.

Few single-A titles make their way onto high-street retail shelves, but they’re thriving on digital distribution platforms like Steam which offers its customers PC games for instantaneous download and continued support. On Steam, developers can be independent of a publisher. These indie studios are often self-funded and their games typically retail between £5 to £25 (or less in Steam’s habitual sales)

For PC gaming, it seems to be working. And it seems to be taking off in a very small way on consoles via their respective download marketplaces. But it will take a shift in shopping styles before download-only games hit the console mainstream.

So will we see single-A titles frequenting the shelves of high street games retailers at £20? With retailers getting such a small cut of any new game sale, it seems unlikely that they’d swap out the shelf space of higher-margin products. And with this attitude, its unlikely publishers will be supporting single-A releases for some time. But there’s nothing to hold back the indies from winning out in the inevitable creep of download-only popularity. Watch this (digital) space.

~Mike "mikemike37" Pickton.

Last modified on July 13, 2011 at 12:01 am

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