Game Over: The Killer Problems with the Gaming Industry

Today the Video Game Industry is easily the largest it's ever been. More people play games today then ever before, and what was once a closet hobby shunned by the general public is now a widely recognized entertainment industry enjoyed by a majority of Americans (and other citizens worldwide) and boasting profit margins large enough to put the gaming industry in direct competition with other media industries such as television and music that had held the top positions for so long. Honestly, right now seems like a pretty good good time to be a gamer. You're participating in a widely accepted and much enjoyed hobby, the industry is flourishing producing a veritable flood of games each year, and technology keeps improving so new games look better and better all the time.

But is the future of the gaming industry going to stay that way?



I'd argue that unfortunately it's not going to. Unless something changes, and fast, the gaming industry could be setting itself up for a massive falling out that could cripple it for years. As much good as the gaming industry has going for itself right now, there are also a lot of elements that, put together, could deal devastating blows to the gaming industry and make the Atari crash of the 80's look like childs play.

The point of this post is not to tell everyone that we're doomed and to play the doomsayer. Rather, it's purpose is to draw gamers attention to issues they may not have recognized and educate them on the possible outcomes of those issues so that control of gaming is once back in the hands of the people who should control it. Which leads me to my first point.

Knowledge is Power
One of the primary reasons that the gaming industry has put itself in a precarious position these days is simply because gaming has become widely accepted, so widely accepted in fact, that a massive portion of gamers are, to put it bluntly, complete noobs. Gaming has caught on as a hobby in an extremely short amount of time. Where in the early 90s you would have been hard pressed to find even a 30% portion of a population that were gamers, today the number has jumped to a majority, with over 65% of the U.S. alone being gamers, growing only larger when you consider that of the remaining 35%, a large portion play games without "admitting" they play games.

So why is this bad for gaming? Well quite simply put, the majority of these new players are very new to the experience and don't understand (and in some cases unfortunately don't care) to know the ins and outs of the gaming industry we know and love. To use an analogy, let us pretend that gamers are instead fishermen along a little known river. No one else is that interested in fishing, and so the fishermen put up with the jeers and catcalls from the non-fishing masses while they themselves have a great time. Along the way, since they all know each other, they develop codes of conduct and rules that keep the system going. You don't overfish the river, you're to be congenial with other fishers (except for rivalry among pole brands and lures), but you take care of the hobby together. If one location generates a lot of fish, the fisherman work together to keep that area stocked, even if it means not fishing there for a few years.

However, as time goes on more and more of the non-fishing crowd starts to try it out, sometimes secretly, and they begin to realize that there's nothing wrong with fishing, its actually a lot of fun. So en mass, they all begin to purchase poles and head down to the river to start fishing. However, now they outnumber the fishers who have been there by two to one and they really know nothing about fishing at all. Before long, they're fishing out the entire river, all the rules of conduct have been broken to pieces, and there just aren't enough old timers around to help educate the new guys. Even if there were, a percentage of the new guys don't want to learn the code of conduct because they're having plenty of fun as is, they don't want anyone to tell them what does and doesn't work. Before long, what'll happen? The sport is not what it once was, the river gets fished out, and the whole thing collapses.

Gaming is at risk of suffering the same fate. Part of the problem is that a large portion of the gaming industry is now comprised of players who have no idea how the industry operates or what reactions their actions can cause. Already this lack of understanding has led to problems inside the industry, and left alone it will only get worse. So what can anyone do? Simple, if you're new to the industry, learn about it! Ask someone who does know the industry to explain the way things work so that you know how it works. If enough players once again begin to understand the way the industry operates, control of the industry will once again switch back to where it belongs.

And those who refuse to learn? They'll end up in the minority, and eventually, they'll leave altogether when something new comes along.

The Folly of the Publishers
This leads me to the second problem with the current industry, which can be fixed, by and large, by addressing the lack of knowledge detailed above, primarily because the problem has become more and more prevalent as the lack of knowledge of gamers has become apparent.


Let me begin by explaining exactly how the gaming system works with relation to publishers, retailers, developers, and players so that those who are new get a grasp on how the system works. Games are traditionally conceived and created by a development studio. Once the studio reached a certain point in the production of the game, they began looking around for a publisher that would print up the discs, manuals and cases and ship the finished product to retail merchandisers. Sometimes the development studio would self publish. Regardless, the retailer would purchase a shipment of the new game and then sell it from their shelves to the consumer. Along the way, the retailer would get about $10 of the sale, the publisher $20 or more, and the developer what was left. While a little lopsided, the system worked because the power rested with the fans and the developers. Fans purchased what they wanted and for the most part, decent/good games floated to the top under their own power and the development studios benefited from this by having the power to create new games, concepts and ideas that fans could then judge on their own merit.

However, with the influx of newer gamers, publishers have taken advantage of the inexperience of the gaming public to wrest as much control as possible away from the public and developers and into their own hands. Publishers began buying up development studios or locking them into force publishing contracts that gave the publishers complete control over what flew and what didn't. At the same time, the massive influx of new gamers took the industry into the hundreds of billions of dollars of revenue, adding to the problem as not only were the publishers poised to take the majority of the money, the success of the industry also attracted corporate CEO's and stockholders from other areas of American business. The industry suddenly went from t-shirt wearing CEO's who were interested in "fun and new" to a corporate suit wearing MBA executive's with their ties on too tight that were only interested in "money". Unfortunately, gamers let this happen. Stockholders began buying into the game industry and electing the same kinds of officials that we see at places like AIG, in other words, money loving crooks.

Which is why the gaming industry needs to change. Activision's CEO Bobby Kotick has been famously quoted for saying that he wanted to 'take the fun out of video games' and that 'creativity with his company would be punished because it wasn't profitable enough.' Publishers have begun squeezing development studios into the dust with long term "take-it-or-leave-it" contracts and then taking the lions share of the cash. Need proof, look no further then last years mega hit from Activision, Call of Duty: Modern Warfare 2, which exceeded one billion dollars in sales, yet currently is the subject of a lawsuit from the development studio that built the game, Infinity Ward over withholding profits and bonuses from MW2 illegally until each member of the development team signs on for more. Oh, and Kotick himself has been the recipient of several million dollar bonuses over the last year.

Activision isn't the only place this happens. Gamers need to step up and learn about this sort of practice so that we can stop it from happening. Do we want to only be able to purchase games from people like Kotick, who only care about the industry enough to line their pockets with its cash like a fat parasite? Quite a few publishers right now really don't care one way or another what happens to the industry tomorrow as long as they get their million today. The power is in the wrong hands. Gaming has always been about fun (see Kotick's previously stated goal), but if gamers don't start taking steps to balance the equation of power, publishers will be the only ones who decide what goes, and what doesn't.

Used Morals
This particular problem has been compounded by retailers wanting to jump onto the bandwagon of "used game sales". Now look, I have no problem with right of sale doctrine, and I agree that gamers should be able to resell their purchase. The problem is that right now, the way the money is flowing is in the wrong direction.

A common practice these days is to take a game that you have beaten back to the store (usually GameStop, which deserves a problem section unto itself) and resell it to the store, which will then put it back on the shelf. Here's the issue. GameStop tends to give gamers anywhere from $2-$8 for what may be a $60 game, and then they turn around and sell that purchase for $55, undercutting the price of the new title. Then, they aggressively push the used titles on consumers, encouraging them to buy the used title, not the new title. This is simply because of profit margins. They're making a killing. Where a $60 new game is netting them only $10 or so (about what the developer gets usually) per sale, a used title generates $47-$53 of pure profit. It's like printing money!

It has gotten to the point now where nearly 50% of all game sales in the U.S. are used, meaning that titles that would have once sold two thousand copies now sell about half that, because many gamers are simply buying the used copies. The catch is, the ones that really suffer as a result are the developers. As a result, many devs have begun looking for ways to "recoup" the money lost from the reduction in sales. However, because the publishers have too much power and refuse to cut costs, in many cases the devs must find alternative methods of making cash or go out of business.

At this point most newer gamers bring up the terrible used car analogy, likening gaming to used car dealers asking for money to pay the manufacturer of the car. If you've ever used this analogy, I'll give you a hint. Don't. It has been so soundly beaten by those who understand the financial rules of the system that its about as tired as Fox new's diatribes on video game violence. I will say this however, if that analogy actually held A) your game disc would decrease in value due to wear and tear over time and B) Gamers selling used games at GameStop would be getting about $30-$40 back on a slightly used $60 game, not $2-$8.

Used games can exist, but not with the money flowing the way it is now. Only two groups profit from this: Publishers and retailers, the rest get the short end of the stick. You're only hurting the two groups that really matter in the industry:  Developers and players.

Casuality:
Yes, I made that word up. Anyway, unlike the rest of the problems I've discussed today, this one is a bit less lethal, but it's still something that isn't really working in our favor. I'll be short and sweet with it: Games these days are getting increasingly simple, easy and short. At some point, a large portion of the gaming populace realized that they would rather win then work at the game, and games began getting shorter, simpler, and easier. However, a lot of the older gaming public likes having their games the other way around, leading to a disparity between gamers. I'm not going to say much more about this, but it is an issue we face. A friend recently told me that he hadn't liked Crysis because it was too simple."Simple?" I asked? He replied that the levels were too large and there were too many controls, for leaning, crawling, multiple grenades, and weapon modifications weren't fun. It was baffling to me since you need those controls to live. Also, because I think he misunderstands the meaning of "simple."

All New, All the Time
This is a viable concern. The industry has reached the point where if it's momentum is so large, it is constantly trying to find the next big thing to attract the attention of people who are only there for the novelty. The problem is that this has a history of hurting more then helping, and not just in the gaming industry.

The best example of this happening before comes from the film industry. When movies first developed sound, it was such a new thing that most movies had to jump on the bandwagon or no one would see them. Unfortunately with the advent of sound many of the other filmmaking conventions died for several years as filmmakers were unable to produce the same effects (such as moving cameras) with sound. This actually led to worse movies for the next few years as everyone tried to adjust.

The same thing happened with gaming and the 3D explosion in the mid-90s. While 3D attracted hoards of new players, it also led to worse games all around for a few years as everyone was forced to go 3D or go home, even if the 3D game was much worse then its 2D counterparts.

Once again, we're looking at the same thing with the advent of, for lack of a better term, Tru-3D gaming. E3 is in a week, and we're already hearing rumors of new 3D games promising eye-popping visuals. But do we really need them? Will we ignore the plethora of good titles available for one or two games that make their name off of one slight gimmick? At what point do we say enough is enough, or at this point could the industry even handle millions of gamers who suddenly have no new gimmick like Guitar Hero to purchase?

Conclusion
Every industry has problems, and the gaming industry is no exception to that. The thing is, unlike most other industries, the gaming industry has always had a tight relation between the developers and the players. I think if we can keep that connection strong and make sure the right groups are calling the shots, the gaming industry will continue to remain profitable and fun. Right now, we're letting the wrong groups call the shots, and we're not doing enough about it. But the capacity for change is there, all we need to do is grab it. It may mean not purchasing a game until the price drops. It may mean refusing to sell back a game until we get a good deal. It may mean buying stock in a publisher so that we can control who's really in charge. But however we do it, the capacity for change is in the gamers hands.

And after all, we're very familiar with having control of things rest in our hands. The whole industry is based on it after all.

Afterthought: I didn't even get into DLC. Another day I guess. It's a double edged sword.

Comments welcome.