Someone recently asked me how the game industry lost the attention war. Paradoxically, interactive entertainment has never been more popular or lucrative, but the game industry— narrowly defined here as the major consoles and game publishers— is now, with one notable exception, but a sliver in […]

gamezincrisis.jpgSomeone recently asked me how the game industry lost the attention war. Paradoxically, interactive entertainment has never been more popular or lucrative, but the game industry— narrowly defined here as the major consoles and game publishers— is now, with one notable exception, but a sliver in a much larger interactive entertainment pie. Why? There’s a simple explanation, but first consider this recent litany of failure.

* Milestones of an Industry On the Road to Irrelevance
* Inside an Insular Industry
* A Future Business of Games Without a Single Industry

Milestones of an Industry On the Road to Irrelevance

* EA in Crisis: The industry’s largest publisher defenestrates their chief executive, citing sequel-itis, then drastically scales back its profit estimates, citing a failure to develop enough titles for the Wii.

* Nichification of the Next Gen Console: Xbox 360 eclipses Playstation 3, sending Sony into a tumult. But that conflict belies a more crucial truth: this generation, the console war is actually a duel between midgets. Selling in the low millions, each has little chance of reaching anything near the PS2’s truly massive installed base.

* Wii Victorious: At its E3 2006 debut, fanboys praise the Wii for its innovation, but because it lacks HDTV and hardcore gamer titles, dismiss it as a sideshow to PS3-versus-360. Instead, the Wii vastly outsells both and becomes a disruptive technology, forecast to eventually reside in nearly 1 of 3 homes.

* Rise of Non-Game Virtual Worlds: World of Warcraft premieres in 2004 and three years later, retains an uncontested monopoly on the fantasy MMO. The industry keeps churning out fantasy MMOs—all of which fail in comparison. Meanwhile, a slew of non-fantasy online worlds— Gaia Online, Club Penguin, Second Life, and more— attract millions of users, extensive media coverage, and investment dollars. None of them are produced by the game industry—which, after developing virtual worlds for some 20 years, represents a spectacular missed opportunity.

* Casual, Web-Based Games Rising: Dozens of free game sites like New Grounds and MiniClip rank in Alexa’s top 1000, attracting millions of casual players, especially women. Few have any relation to the game industry. Among the only fantasy MMOs to succeed post-WoW is the Web-based RuneScape—once again, not from a major publisher.

Inside an Insular Industry

Why is all this happening? The unifying explanation can’t be conveyed by strict business analysis, for it goes to a deeply rooted corporate culture: The game industry is Hollywood for Lost Boys.

It’s a business comprised almost entirely of young gamer dudes, serving an audience of young gamer dudes, covered by a gaming press of young gamer dudes, all of whom are only interested in creating, playing, and covering games that interest young gamer dudes—which they believe to be the pinnacle of entertainment. (For a cruelly accurate, street-level sketch of its oblivious insularity, read this excerpt from Smart Bomb, or immodestly, my own report from E3 2001.)

So of course EA would under-develop for the Wii: its low res graphics aren’t appealing to Lost Boys. Of course the industry would be slow to grasp the Wii’s disruptive power and fixate on the 360-versus-PS3 sideshow, since both can run the Hollywood-worthy epics like Halo 3 and Gears of War they’re interested in.

Of course they’d fail to capitalize on the rise of Flash-driven casual games, which appeal to women and older gamers. Of course they’d keep churning out fantasy MMOs they like, and ignore the rise of non-game virtual worlds, which they don’t. (As Will Wright once told me, developers are hobbled by a “moviemaker wannabe” streak: “You know: ‘Well, George Lucas made his world — here’s my world!’”)

And of course they’d be indifferent to user-created worlds like Second Life: the idea that amateur-produced content might provide a new and in many ways superior experience to traditional MMOs is entirely alien to them. Their peevishly incurious reaction is pretty much what you’d have got from a movie producer in the 90s, if you told him that film and TV would soon start losing their audience to a video clip site featuring stupid dog tricks and a dancing bald guy.

A Future Business of Games Without a Single Industry

Can the industry regain the attention? Not as it exists now, not without brutal changes to its gamer-centric culture. A few publishers, notably Ubisoft, are trying to steer their corporate ship out of Lost Boy territory, developing more Wii titles, more games for families and casual players. So the PS3 and the 360 will continue underselling, and as more publishers shift their dollars to the Wii, become even more niche.

As traditional MMOs besides WoW go extinct, user-created online worlds will thrive, and budget-conscious game studios will turn to Multiverse, Areae, Second Life, and other open platforms. Individual developers willing to make do with a little less geek glamor in exchange for more independence will leave the industry, and follow after the Flash-enabled success of games like Desktop Tower Defense.

After speaking at this year’s Game Developer’s Conference, venture capitalist and tech visionary Joi Ito described an industry steadfastly ignorant of the changing world outside, “making the same mistakes that the content guys have been making since the beginning of networked computers. They ALWAYS over-estimate the importance of the content and vastly underestimate the desire of users/people to communicate with each other and share.”

So in the short term, nothing will change for most of them; occasional tent pole hits like Halo 3 will soothe their cloistered delusions. They’ll keep ignoring non-traditional gamers, Web 2.0, and the user-created revolution, assuming like Hollywood that their core product has enough global appeal to get them through the latest media revolution.

And that will be their final disastrous turn. Because unlike the real Hollywood, there are only so many Lost Boys in the world willing to pay attention to them for so long.

Update, 6/6: Some replies to reader comments here.

Update 2, 6/7: Esteemed veteran game designer Ernest W. Adams offers his take here. As it happens, Ernest has related thoughts in his latest Designer’s Notebook essay for Gamasutra, “Is it Time to Dump EA?

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  1. Yeah–core gamers (myself included) are an interesting bunch to say the least.

  2. Mark Forman Monday, June 4, 2007

    Excellent post. All these incidences of arrogance and indifference to the larger marketplace are their milestones towards obsolescence.

    “And of course they’d be indifferent to user-created worlds like Second Life: the idea that amateur-produced content might provide a new and in many ways superior experience to traditional MMOs is entirely alien to them.”

    This caused me to reflect on newspaper/periodical industries missing the mark about blogging, and the entertainment industry missing the mark on podcasting/vlogging. The absurd idea that amateurs can produce anything of relevance or of quality. Oh well…

  3. Fantastic article, beautifully and concisely written. I would argue that an extension to this piece might cover quality control issues as user-oriented content becomes more mainstream, but that’s a story for another day.

    Casual gaming is a frustrating yet tantalising development, but has to move beyond the shackles of Shockwave & Flash. I find cross browser / platform issues almost intolerable when making games

  4. A Real Gamer Monday, June 4, 2007

    This article has nice sentiment, but unfortunately ignores a lot of current FACTS of game consumption and online world usage(and blogging too!)

    8 MILLION people worldwide play WoW. 4 MILLION of those in North America.

    By contrast Second Life is mostly a bunch of media hype that hardly anybody really uses. Last report I saw said Second Life had something close to 2 million registrants. Which sounds great, until you learn that their ACTIVE user base is less than 300K. People are trying it out and saying “No, thank you.”

    And as for the HUGE popularity of blogging. Well, please read the recent Pew study on this. A WHOPPING 8% of the American population actually blogs — and guess what, half of this 8% are students. It’s just not a very popular activity at all among adult Americans.

    The fact is that the games that are being produced today are being consumed by a MASS audience. And the gaming industry, as it exists today is growing extremely rapidly. It is already a several billion dollar industry and one of the fastest growing segments in computer software and Internet services. And the computer games that are published today are increasingly being played by mainstream consumers, not just hardcore gamers.

    The data supports all of these trends.

  5. Trevor F. Smith Monday, June 4, 2007

    What will be amazing to witness is when amateurs produce game platforms by gluing together open modules, repurposed hardware, and web APIs to attract communities who previously had never considered owning a game device.

  6. Jim, I think you’ve largely nailed this but I think there is a sort of a meta cause of this problem. It’s the fact that console game platforms are closed. If their platforms were more open, EA’s problems wouldn’t be as much of an issue because there would be other game companies or teams there to take up the slack. Ditto with the focus on young men — by broadening the base of developers you naturally get more diverse titles.

  7. Matthew Bellows Monday, June 4, 2007

    Well written, but a bit of a circular argument… you say the game industry is too narrowly focused on core experiences, but limit your critique to the major publishers (except Ubi) and the console developers (except Nintendo). You should add XBox Arcade… in it you’ll see another example of the real trend in the videogames industry: its reach is expanding to encompass a much broader audience. Some platforms will adapt (Wii, XB360 Arcade), new platforms will emerge (mobile, casual PC), and some will stay focused on their traditional business – Sink or swim.

    All of these, and the many examples you cite above ARE the new, broader, more expansive, and more interesting videogames industry. Your article is just a wake up call to Sony, EA, and the core developers who serve them.

  8. This is quite possibly the worst critique of the video game industry I’ve ever read. Blanket statements supported with mere speculation rather than hard data will win you few cases in the court of reason. You criticize the closed mindedness of companies like EA, yet fail to recognize that this company and other large publishers are major participants in many of the new trends you applaud and cite as their undoing. Were you aware that EA purchased cell phone game company JAMDAT and owns Pogo.com, one of the largest casual game hubs on the web? Probably not. Perhaps you also missed the announcement of Sony’s new Home project and its upcoming title LittleBigPlanet at GDC, both of which feature player interactivity and user generated content as staples of the base experiences. Consoles and game publishers aren’t going anywhere.

  9. Soapboxman – I think you’re right that the major publishers are taking steps, but Wagner’s point that the overall culture is messed up is dead on.

    I was the Technical Director for Pogo until about a year ago. Pogo and Jamdat were both acquisitions EA made because their own internal efforts fell flat (EA.com and EA mobile).

    That’s one of the reasons I left and founded Kongregate – http://www.kongregate.com. It’s a community site for Flash games – sort of an Xbox Live service for web games, with games uploaded by the developers, who share in ad revenue.

  10. “The game industry is Hollywood for Lost Boys.”

    So blogging is journalism for lost boys?

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