What’s Really Happening to the Industry

After a massive 8% drop in industry-wide retail sales during 2009, a certain stigma still seems to hang around the overall prospective health and viability of the video game business. It continues to come as something of a surprise, given today’s massive uptick in revenues, subscribers and popularity levels across the board for areas like social network games, digital distribution services, smartphone apps, MMOs, microtransaction-based platforms and virtual goods.

Happily, last year, we got the chance to conduct a detailed assessment of the overall state of the industry and better explore what was really happening in the original documentary Video Games Are Dead. Needless to say, your favorite thumb-numbers haven’t kicked the bucket quite yet – and, in many ways, are looking sprier and more full of life than they have since the golden age of arcades. Watch the video, and let us know what you think, as well as how successfully you feel that the business has responded to the need to change and adapt in the many months since – not to mention what new challenges it faces today. And, as always, we’ll continue to keep tabs on the state of the gaming nation in future episodes of Game Theory: As one of the world’s fastest-moving technology fields, even for today’s top insiders, everything tends to evolve at a breakneck pace.

Check out Part 2 of the series here.

About Scott Steinberg
Scott Steinberg is CEO of strategic consulting and product testing firm TechSavvy Global, and a noted keynote speaker and business expert. Hailed as a top tech expert and parenting guru by critics from USA Today to NPR, he’s also an on-air analyst for ABC, CBS and CNN.

5 Comments

  1. The problem for the consumer who is looking for more bang for their buck is the fact that most digitally distributed games that are released in both formats are the exact same cost as the game on a disc.

    And what happens when you are done with the game? I can’t sell my psn copy of the game. I can however recover some of the cost on my disc copy.

    I do agree that game companies save money when games are digitally distributed and turn a better profit. However, are game companies thinking about the customer in the general economic recession?

  2. Digital Distribution?? Great Idea. Just ask the music industry.

    It’s like following a fool to take that route.

    There is something wrong with the distribution chain – but that should be analyzed and fixed. Digital distribution in its current state means “devalueing” games, which is the exact opposite of what the industry should want…

  3. @miine: It doesn’t devalue games. Look at steam and how popular it is. Plus can you resale a single steam game? Nope. If you want a game off steam you have to buy it new. There is no buying it used.

  4. @Joshua George: Michael Pachter is sometimes wrong. But I agree with him that people who grew up with an iPod Touch/iPhone and learned these pricing schemes (either free or 99c etc.) – will those spend 40 US$ on a “real” game?

    A box game is so much more then just the distribution on a disk. It should be box-art, booklet etc. . And – where it all begins: the BUYING EXPERIENCE.

    This was where the music industry failed by giving non-music chains (Walmart etc) exclusive discs and better prices.
    If you can’t play a game in a store, if you can’t see what could be interesting to you – then boxed distribution will go down.

    Apples success is based on Jobs decision to have the full control over the buying experience by establishing their Apple Stores. They don’t attend expos (MacWorld or the worlds largest fair CeBit) anymore.

    Online distribution in its current state is fine for Apple and a few developers. But the rest of the industry should pay attention and avoid those “great” strategies from the music industry…

  5. @Joshua George (followup):

    This is what I mean with “devaluation”. The poorer the buying experience feels, the more devaluated the product gets.

    Living in germany I can tell you, that Nintendo did a great job by (buying) space within electronic retailer chains and setting up demo kiosks. Even if those are only featuring a few games (mostly their DS stuff) and the usual WiiSports – its better then nothing.

    The game industry should team up and support those stores which give the consumers a great buying experience – which always relates to costly interaction space instead of just shelf space.

    If they loose those social (!) places, consumers will first feel lost in digital store nirvana and then be lost as consumers at all.

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