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What the GameSpot Debacle Means for Tech

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lolgerstmann.jpgLast week, after 10-plus years with CNET’s GameSpot, the Internet’s top game coverage site, editorial director Jeff Gerstmann was summarily fired under mysterious circumstances. The subsequent outrage is still roiling the Net, so in the end, it doesn’t really matter if (as the theory goes) he was defenestrated for rudely panning Kane & Lynch: Dead Men, a high-profile game from top GameSpot advertiser Eidos Interactive (CNET steadfastly denies this was the case).

In light of the ongoing fury of gamers who have already assumed the worst, he might as well have been. More relevant is how the controversy will help restructure the industry, vastly accelerating three trends already at hand:

Established Game Sites Must Consolidate or Die

Utterly dependent on game publishers for their ad revenue, fanboy-oriented sites like GameSpot and GameSpy have been playing both sides of the editorial/advertising wall for years. In 2006, I reported how those sites allow publishers to purchase more editorial prominence for their titles; Newsweek game correspondent N’Gai Croal notes this week how they also sell metrics to game retailers that track readers’ editorial interests.

Industry insiders have long known about questionable practices like these — and now, thanks to Gerstmann’s firing, so do gamers, who will likely abandon them en masse. To restore their credibility, these sites need to consolidate with larger editorial entities that don’t depend on game advertising.

Then again, it may be too late for them, because game blogs like Kotaku and Joystiq, for example, are already partnered with diversified advertising networks, and unsurprisingly, have been providing punchy coverage of the Gerstmann affair. With more freedom to be provocatively opinionated, game blogs and fansites like Penny Arcade (which broke the Gerstmann story) are gaining the reader trust (and page views) prominent sites like GameSpot have squandered, becoming far more central to the industry. This leads us to the next big shift:

The Death of Hardcore Games (Mostly)

The game industry has long invested in hit-driven, hardcore games like Kane & Lynch — titles that mainly appeal to the 18-34 male “power gamer” demographic that enjoys violent action and epic gameplay — regardless of how unappealing they are to pretty much anyone else. (Kayne & Lynch’s’ eponymous “heroes” are actually death row escapee cop killers — hence Gerstmann’s derisive comment that it is an “an ugly, ugly game”.)

Trouble is, power gamers are a fraction of a vastly larger market (just six million of some 55 million households in the U.S., according to Parks Associates). And because hardcore games take tens of millions of dollars to produce, they cost upwards of $60 at retail. Consequently, game reviews are hugely, disproportionately influential to a game’s sales — far more than movie reviews on box office receipts, as New York Times’ Seth Schiesel notes. For that reason, reviewers like Gerstmann can help make or break a hardcore game.

Now that such a prominent figure as Gertsmann has been removed, and for what many believe are dubious reasons, this essential chain in the promotion cycle is broken. Why? Because from this point forward, gamers will doubt the word of any reviewer on a site heavy with publisher ads, and reviewers will begin self-censoring, fearful of being too forthright and potentially suffering Gerstmann’s fate. Publishers will no longer be able to rely on the implicit pressure of their advertising dollars for good reviews, so they’ll have to earn a profit the old-fashioned way: by making good games. But that’s an inherently risky enterprise, especially when your potential audience is so small. Established indie game studios like Valve (which has its own distribution network) will keep pumping out hardcore titles, but publishers will defray their risks by largely getting out of the sub-genre, preferring lower budget titles with broader appeal. Which leads to the next trend:

Platform Chaos: 360 and PS3 Plummet; Wii, PS2, Casual Gaming Conquer

The biggest losers in all this are the 360 and PS3, indelibly branded as the main platforms for hardcore gamers. Console publishers were already shifting away from them in favor of the Wii and PS2, the former because it’s expected to gain a huge install base, the latter because it already has one. This adjustment will continue, especially for casual games on all platforms, including the PC. (Who needs reviewers when you can decide whether you like a game after 10 minutes of play?) A post-Gerstmann industry will cater to the 360/PS3 gamer even less (for reasons stated above), and when they do, will try to sell them titles aimed at a broader audience.

To be sure, some editorial damage control may delay these moves, but as I’ve argued before, these larger trends are irreversible from a market perspective; the game industry as we’ve understood it for the last two decades is careening toward drastic changes. In the end, Jeff Gerstmann is just one more unfortunate guy that got tossed out the window before impact. [digg=]

Image credit: Gamespot. LOLGerstmann embellishment by WJA.

29 Responses to “What the GameSpot Debacle Means for Tech”

  1. “Then again, most of the other negative comments also proceed from a failure to read the included citations.”

    Sadly, this isn’t the case. Most of the other negative comments proceed from your complete lack of understanding of the games industry.

    I’m fed up with with seeing the “hardcore games are dead” argument appear here, get shot down in flames yet again by well-informed cogently arguing commenters, only to find the same idea reappear a few weeks later.

    Just because you keep saying something doesn’t make it true.

  2. I wonder if you read your own citations. From the Park Associates survey, “power gamers” make up only 11 percent of the audience but account for nearly one third of the revenue. Do you seriously think that the industry would even consider marginalizing or ignoring their biggest spenders? That’s just asinine.

    On the subject of Gerstmann, this has probably had the highest profile compared to any similar incidents of the past, and it is bound to change the perceptions of more than a few readers, but you are connecting a lot of completely unrelated dots to think that it will somehow completely change the industry.

  3. “They do, actually, read the NYT link I included.”

    Compared to movie and music reviews (i.e. greater than zero), which is to be expected as games are more expensive than CDs, DVDs or cinema tickets.

    An effective mainstream media ad campaign for a game will have a vastly greater impact on sales than anything in the specialist press. A compelling premise, an existing fanbase and/or good word of mouth can outweigh any number of sniffy reviews.

    But feel free to ignore the comments from people who’ve worked in games publishing and/or journalism for many years if what they’re saying doesn’t fit your argument.

  4. “Reviews do not play a significant role in the commercial performance of games.”

    They do, actually, read the NYT link I included. Then again, most of the other negative comments also proceed from a failure to read the included citations.

  5. Previous posters have sufficiently beaten the crap out of Au’s arguments, so I won’t bother. But I do want to point out the somewhat misleading statement that “because hardcore games take tens of millions of dollars to produce, they cost upwards of $60.” Almost ALL games on next-gen consoles cost $60, whether they’re hardcore or not, whether they cost $40 million to develop or $2 million. It is true that publishers justified raising the standard console game price from $50 to $60 by citing the increased cost of developing next-gen games, but once that price point was set they used it for almost all of their games, whether they cost more than last-gen or not.

  6. How to write a WJA article:

    1. Take any topic.
    2. Teh hardcore gamez are d00med!11

    This has to be one of the worst yet. It’s transparent wish-fulfillment fantasy without a shred of evidence or logic to back it up.

    Reviews do not play a significant role in the commercial performance of games. Publishers care little about scores provided they get coverage – by the time Kane & Lynch received it’s 6.0, it had been splashed all over the site and teasered with previews and media for months.

    Why is Gerstmann’s firing (which you somehow – frankly offensively – manage to expand into the assertion that the entire enterprise of reviewing games is endemically corrupt) going to affect the way that people use review sites or their buying habits?

    Do you seriously believe that Gamespot and it’s competitors are going to see any drop in traffic as a result of this? Are you aware that there have been numerous actual and alleged editorial/advertising scandals in the games press in the past? Have you seen the state of US print games magazines recently?

    Publishers will keep making games the market demands, and selling into the millions, no matter how many faulty comparisons you cook up to classify non-casual gaming as a ‘niche’. (“Sub-genre”? Oh, please. Stop digging you clown.)

    We get it, you’ve figured out that casual games are on the ascent. That is an expansion of the market, not something that is happening at the expense of traditional games. Super Mario Galaxy and Metroid Prime 3 are rubbing shoulders with Carnival Games and Guitar Hero on the Wii and they’re all selling well.

  7. hi We’ll see how it plays out, but the Wii’s cute factor currently outweighs
    its usefulness. In an intense market of eye catching “gotta have” electronics and upgrades, I question whether Nintendo’s little engine “can”. Let’s see what the score is in 18 months.

  8. I think my head is spinning from the mush it just turned into after trying to process this. I can’t say anything better than what Disco, Ray, Ajay, and GFW Magazine’s Jeff Green (especially Mr. Green, who basically taps this article as irrelevant and uninformed) have already said.

  9. “Gerstmann-gate” as it has been referred to in the blogosphere, I think will be good for gaming media in the long-run. Some of the bigger fringe communities (like Kotaku, Destructoid, etc.) will get more traffic because their reviews aren’t under the gun from major gaming publishers.

  10. While I think the reasoning about larger publishing networks is sound, I disagree that “hardcore” games have any sort of death knell.

    The casual vs. hardcore argument is such a misnomer.

    Consider the roots of “hardcore” gaming — pong and space invaders. Those were much more simple than many of the casual games today. What happened? People played those games, became skilled at them, and the game complexity, production value, and distribution scaled as the audience grew and evolved. Genres were defined as there was a specialized fragmentation.

    The same will happen with casual gaming. Some players will not cross over into “hardcore,” but large amounts will, especially for the youth female player base. We’re already seeing this happen.

    Besides, the logic of “high costs in game development will wipe out that segment of the industry” is faulty. Were that true, we’d not have blockbuster films. In fact, what we’re instead seeing happen are game studios merging into mega-studios, mirroring their film cousins. Blizzard/Activision, EA’s purchase of BioWare, etc. This makes sense — even if one game fails, the company still has enough success on their other titles that they can just consider the failing game a tax write off. But the audience shows no indication of dying niche. There is still a large demand for quality, high profile, “hardcore” game titles, and as long as that demand exists, the market will adjust to provide that content.

  11. It seems to me the interesting point in the article isn’t the specificity of one console versus another or the argument about who’s making money. Instead, it’s the observation that this has become a closed-loop ecosystem with static pricing and an overall user base that’s not growing as fast as the costs needed to satisfy those users. Wii is interesting because it opens a variable in that feedback system.

    So maybe an implosion due to loss of trust in reviewers isn’t the plasma blast to the head Mr. Au describes. But this kind of high price, high cost market is what attracts a lot of smart people to figure out how to break the hegemony. I smell opportunity.

  12. “To restore their credibility, these sites need to consolidate with larger editorial entities that don’t depend on game advertising.”

    So, are you saying that only sites with larger editorial entities are more credible because they don’t depend on game advertising? In my twenty years of publishing, I have always found that bigger editorial departments mean greater reliance on advertising revenues.

  13. I think it’s been said and backed up with good arguments earlier on the discussion… laughable arguments, it’s a shame this is being posted here.

    I don’t see a necessary shift in the market but an expansion at large that is adding massive reach to a previously uninterested and unattended audience (casual gamers).

  14. randomPerson

    I don’t think so lol.

    It is the current hardcore and casual buyers that have made gaming bigger than the box office industry. And you think hardcore gamers and PS3 and 360 will just lose out. LOL. Don’t think so mate.

    Wii is attracting a different audience again. There are 70 year olds playing the wii for exercise. The casual market has potential to be huge yes, but PS3 and 360 can cater to that market in their own way as well with guitar hero, songstar etc etc.

    Also, gamespot isn’t a huge deal anyway. Hardcore gamers these days just download the demo from PSN or Xbox live and try the game out before buying anyway.

    Hardcore gamers will be more critical of reviews..yes that is true. But so what?–The entire industry will NOT change just because of the reviewers lol. Gamers what to play games more than they want to read reviews on some website.

  15. FreddieFoobar

    What’s the attach rate on the Wii again? Now remind me why I’d bother publishing games on a platform where the vast majority of console owners don’t buy anything beyond Wii Play? Sure, Nintendo are making a profit on the hardware and laughing all the way to the bank but what’s in it for EA? Vivendi? TT?

  16. I was reading this and getting up to speed on the gamespot issue because I hadn’t got the facts on it yet and then this post started to go down.

    wheres the proof that games aimed at that hardcore market are failing? Gears, Bioshock, Halo, GTA, COD are all massive and a big part of the market.

    Then came the line Platform Chaos: 360 and PS3 Plummet; Wii, PS2, Casual Gaming Conquer and I realised I was reading a post by wagner. You are getting really predictable, ok we get it you are a nitendo fanboy and hate microsoft…

    Om, where is the editorial on this stuff?

  17. This is strictly anecdotal evidence, but…

    As a Wii and 360 owner, I’ve actually found that the majority of my casual gaming gets done on the 360. XLA, with supremely produced titles like Geometry Wars and their ports of Catan and Puzzle Quest at budget prices, has provided a greater service to me than Nintendo’s Virtual Console, which most provides a quick nostalgia fix.

    Casual gaming (as opposed to social gaming) is often a method of relaxation ~ zen like repetition with a “lean back” focus. The Wii, while novel and fun, doesn’t really fulfill that need for me, mostly because of the unconventional controls.

    Outside of casual gaming, I find myself using the Wii and 360 for similar reasons ~ to play AAA titles like BioShock, Mass Effect, Resident Evil 4 and Metroid; well designed games from prominent development houses that are likely worth the investment (or at least the spot in my Gamefly queue). That said, as a 45 min-hour a day gamer, 90% of my time goes to the 360, the rest to the Wii. And 60% to casual gaming, the rest to AAA titles.

    This could be a product of my personal habits and preferences, but without more robust online distribution options and games that provide a fun, intuitive experience BECAUSE of, rather than IN SPITE of the Wiis controls, I expect the 360 to keep chuggin’.

    We’ll see how it plays out, but the Wii’s cute factor currently outweighs
    its usefulness. In an intense market of eye catching “gotta have” electronics and upgrades, I question whether Nintendo’s little engine “can”. Let’s see what the score is in 18 months.

  18. I gotta agree with Raymond and disco, this article was nonsense. I’m not sure what gaming articles are even doing on gigaom but based on another, similar article James wrote, he strikes me as the type of writer who just chooses a moderately contrarian position, even when it doesn’t make sense, and keeps arguing it to death. By the time the PS3 has beaten the Wii into the ground a year from now, nobody’s going to go back to his old articles and call him on it, so he just spouts this stuff out now. It’s the sort of time-wasting you hear on sports radio. Maybe James is a good reporter, I wouldn’t know, but he certainly isn’t a good analyst.

  19. This is possibly one of the most uninformed posts I’ve ever seen here.

    Item One:
    Consolidate or die? Since I joined the games industry many years ago there has been one editorial consolidation, of IGN and GameSpy and its arguable that that was more due to a complementary strength between the two sites (backend services and file distribution vs. editorial). In spite of that both IGNs and GameSpot’s traffic have gone up each year (Go look it up The only negative effect has been the lack of E3 this year which took away the usual large spike in May. As a person who has overseen many millions of dollars in online ad spends for a major game publisher I can tell you I’ve spent nearly as much on on-line advertising on sites like Kotaku, Joystiq and P-A as the big ones. If they’re not reliant on advertising I’m not exactly sure how their editors are paid. Oh yes, because they are partnered with “diversified advertising networks” whereas IGN and GameSpot only have the meager support of Fox Interactive (they own one or two other sites you may have heard of) and CNET.

    Item Two:
    Hardcore games are dead. This year, Halo 3 has become the biggest franchise ever. World of Warcraft makes $1B a year. No one is doubts that casual games are a growth area for the gaming industry but to blanket make a statement that hardcore games are over is plain stupid. Poll twenty game publishers and ask them just how many of them are making real money on the so called casual games revolution. Diner Dash and Cake Mania did great business but they’re not even close to the top ten selling games (or top twenty, thirty). No one outside of Nintendo has had any real success on Wii. Sure there’s exceptions (Sims, Guitar Hero) but game companies chase that demographic cause that’s where the money is.

    Here’s the other problem, it’s akin to saying the high end electronic industry is going to die because not that many people buy high end electronics. Here’s the truth, there’s some people who buy all the best and latest toys that come out. There’s a lot more people who pick and choose and only buy 1 or 2 a year. There’s even a lot more who will buy only one a few years later when the price drops. You know what though? THEY’RE ALL BUYING THE SAME THING. The industry isn’t dying, some people buy more, some less.

    Item Three:
    I’m at home so I don’t have ready access to all of tons of projections that shows just a far away from plummeting the 360 and PS3 are but let’s leave it as this, most people say it’ll be a real close race, some people think one platform will be on top, some people think it it’ll be another one. But let’s put it another way, here’s the number of titles being released in 2008 according to GameTrax (oohh big evil GameSpot reporting tool):

    Xbox 360 –162
    PS3 – 132
    Wii – 88
    PS2 – 42 (that one even surprised me)

    Hardly the rush of support away from the main consoles is it?

    The real problem is the fact that in this day and age too many people have their soapbox to post uniformed information online and too many people take it as fact. Was Gerstmann fired for a bad review? I don’t know. Honestly I doubt it, having dealt with GameSpot on lots of bad reviews and big spends, I doubt they’d start caving for Eidos’ money when they didn’t for mine. Regardless too many people have decided to venture opinions on something they know nothing about and build this into something it probably isn’t. What I hope is that the end result is that there will be less stupid, uninformed reviews and lack of journalistic integrity on both GameSpot and now apparently Gigaom.

  20. Point 1: No
    Point 2: No
    Point 3: No

    Why is everything a black and white issue? Consolidate or die? There are other choices. Any web site has to constantly adapt and evolve.

    Your second point is a joke. I guess that means Rockstar should cancel GTA because it fits into the description of what you call a “hardcore game”. The term itself is stupid. Similar to web sites, games change and evolve. Maybe you should call BioWare and tell them to give it up because they make games that appeal to the core audience.

    The last point is also laughable. Xbox 360 and PlayStation 3 haven’t even reached the halfway point of their lifespans, but you’re telling people they’re going to plummet. Why don’t you get an analyst to back up your theory.

    This is another case of you adding 2 and 2…and coming up with 5.