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The gaming market is hitting a wall
For the last 30 years, since games became mainstream entertainment, the modus operandi of the largest publishers has been simple – we create a game, and if it is successful, it then becomes a series. However, each subsequent version had to be bigger than the previous onegraphically more advanced, had to offer more content, lines of dialogue and have an even more massive world. Up to a certain point, with the dynamic technological progress, it was relatively simple and inexpensive to implement.
Of course, these smaller productions also appeared, but usually the industry giants were simply not interested in them – and the publishing process was handled by smaller entities or the authors ultimately decided on simple self-publishing. Today, in most cases, it looks the same – we have companies specializing in what can be called AAA (high-budget) and AA (medium-budget) productions, and those that bring together small teams, with significantly lower operating costs.
For a long time, this model was based on a simple relationship, known not only in the gaming industry – A higher budget usually means higher potential earnings. However, while this earning potential has so far been associated with relatively little risk, recent years have turned out to be very unstable. The industry fell into a certain trap resulting from the inevitable progress mentioned two paragraphs ago – each subsequent installment of the well-known series had to be bigger, more impressive and prettier. However, this usually involved not only an increasingly larger budget, but also a much longer development time.
See also: CD Projekt RED is getting ready to release The Witcher 4. The competitor is the most important game in history
Billions that evaporated
Currently, we are in a situation where work on a AAA title takes at least 3-4 years, and in some cases significantly more, sometimes approaching deadlines of 7-8 years. Until recently, when the production cycle lasted one or two years at most, companies could count on a return on investment within a reasonable time frame. And even if it didn't happen because the title turned out to be weak and sold poorly, it was due to relatively short development, the lost costs were not as painful as they are now. Today, when the game has been in development for over half a decade, not only have companies been spending and not earning anything during this time – but the risk of financial failure has not decreased at all. A larger budget does not automatically mean success, which is best proven by recent financial disasters such as Skull and Bones (Ubisoft), Concord (Sony Interactive Entertainment), FBC: Firebreak (Remedy) or Suicide Squad: Kill the Justice League (Warner Bros). These are the games that sometimes costing hundreds of millions of dollars during production and did not even come close to recovering half of the costs incurred.
And in the face of increasing competition (over 20,000 games debut on the market every year!), persuading users to buy is increasingly difficult. Especially in the initial, most financially profitable period, when the game still costs full price.
But to reduce it all to a single sentence – making games, especially high-budget ones, has become a very risky investment. What has worked flawlessly for years and seemed to be a crisis-proof business plan is now facing such big challenges for the first time. And the largest publishing houses, trying to find their way in this new reality, are doing something that until recently seemed counterintuitive. And suddenly they start to reduce the scale of their projects and diversify them more, and instead of putting everything on one card and counting on the “golden shot”, they choose a safer, but less lucrative path.
The giants go small
Although there is of course no shortage of titans on the market who are doomed to success and can afford such long breaks between released games – see Naughty Dog or Rockstar, the vast majority of other entities have recently started focus more and more on productions with a lower budget. So far, the most popular brands in their portfolio were automatically associated with large budgets, typical of the AAA segment, and productions lasting at least several dozen hours. Although an institution such as a “spin-off”, i.e. a title referring to the main series, has been known for a long time – until now, such procedures have been used quite rarely. Now that's changing.
Only in recent days, PlayStation's Santa Monica studio not only announced but also immediately released God of War: Sons of Sparta – a graphically simple, two-dimensional production in the world of the series, which has earned nearly $1.5 billion over the last 7 years alone. Mega Cat Studios, a small team that few people have heard of, also participated in the work. Konami, in turn, has just revealed Castlevania: Belmont's Curse, the first full-fledged installment in years of the series that has defined the genre of platform action games for years… and which has recently become famous primarily for the fact that Netflix bought the rights to its series adaptation.
Crystal Dynamics, currently focusing on new Tomb Raider parts, has another, formerly very popular franchise in its portfolio, for which there was no idea for years – until now. Legacy of Kain: Ascendance is supposed to resuscitate the vampire cycle, but again – instead of large projects that could not be completed in recent years, a graphically simple 2D game was chosen.
And that's not the end – another PlayStation team, Guerilla Games, currently creating the most popular series of action games for Sony consoles, Horizon, just a few weeks ago, to everyone's surprise, presented Horizon Hunters Gathering, focusing on an online format and gameplay with different dynamics than the main series.
In turn, Blizzard, owned by Microsoft, suddenly presented and immediately made available… an expansion to the iconic Diablo 2. Adding new content to the 27-year-old game is practically unheard of… and yet it was decided. Because it was recognized that it was the least risky way to make additional money on the famous series – adding a few changes and a new class had a budget of at most a few hundred thousand dollars, which was most likely paid for within the first 24 hours of launch.
Less is less… but also more reliable
To top it all off, although this is a trend that started a while ago, a great wave of the so-called remakes and remasters, i.e. projects that renew, to a greater or lesser extent, older, proven games. This is another a low-cost and therefore low-risk investment that turned out to help the market in the most difficult times. Further productions of this type are already on the way – apart from the long-awaited remake of the first The Witcher, the aforementioned God of War (the original trilogy debuted in 2005-2010), the beloved Assassin's Creed 4: Black Flag, Splinter Cell, the first Silent Hill (the remake is being made by the Polish Bloober Team) and even the first Tomb Raider, recently known as Tomb, will also be renewed. Raider: Legacy of Atlantis.
All these projects – both refreshes of existing titles and new, graphically simpler productions – have one thing in common. They are cheap to implement. Of course, budgets can still be counted in millions, but these amounts are still incomparably smaller compared to current costs. Of course, the potential sales may be slightly lower, but Achieving a positive ROI is much easier with this type of investment — and it no longer requires at least a dozen or so million people to buy the games. And the industry has had to deal with such dependencies over the last few years, which has led to numerous absurdities and the dismissal of teams that did their job well.
Moving away from this rigid pattern focused solely on maintaining exponential growth on each subsequent project, it also allows for a little more creativity when creating such games. When the stakes are not as high and you are not fighting for the attention of the entire mainstream, and instead you focus on a certain niche – you have more space for experiments and unusual solutions. And they are the basis for most of the best-received games of recent years – usually made by small, independent studios, rather than the largest developers and publishers.
The gaming industry, licking its wounds from the still unresolved previous crisis, may emerge stronger as a result… although there is another threat on the horizon that may completely change the gaming market. And how they are created.
