Today’s Industry: Has Anything Changed?

Despite the video game industry’s crushing sales losses last year, it’s a fundamental truth that analysts, experts and insiders alike are quickly having to wake up and accept: Nothing has changed in 2010. Color us shamed and embarrassed; despite the continued success of social, mobile and online games, and rise of alternative platforms such as Facebook and the iPhone/iPad, monolithic publishers like Electronic Arts, UbiSoft and Activision still continue to struggle to play catch-up.

Not that these outfits or popular franchises ranging from Call of Duty to Assassin’s Creed will go the way of the dodo anytime soon, just like retail boxed products as a whole. (People still love the feel of physical products, and the lure of familiar franchises when disposable cash is too tight to risk on unknown series can’t be understated.) But as today’s most savvy business leaders know, the hottest action in gaming and most innovative industry developments are actually happening outside the shelves of your local GameStop. Not to mention, of course, increasingly being dominated by a mixture of venture-funded start-ups, scrappy indies and resourceful garage developers, who are quickly flipping the traditional game publishing model on its head, and running circles around larger corporations as a result.

But we’re not telling you anything that you don’t already know, or can’t read elsewhere for that matter. Which is why, in episode two of Game Theory, we instead decided to ask the question: If it’s so darned obvious which way the wind is blowing, why is everyone still acting as if last year’s monumental sales drop-off was just a fluke, or worse – as if nothing whatsoever was wrong with the business? As a litany of gaming’s top names explain, the sky is indeed falling: Unfortunately, too many remain clueless or simply content to stick their head in the sand and pretend such historical changes aren’t happening, right up until the point that they get crushed.

Take it from Gaikai CEO David Perry, who sums things up quite succinctly. “Overall, the industry is on the same general path,” he says. “We are still today in a world of retail. That’s the way it will be for the short-term. Long-term, this industry is going digital, and it’s going digital very quickly. To some extent, as the retailers come up with policies like used games, they’re actually putting their foot on the gas pedal to oblivion. And that ultimately is going to make the game industry digital about as fast as it could possibly be.”

“We’re in the Cambrian explosion of games, where all these weird new life forms are popping out for the very first time and filling these niches that are appearing dramatically,” seconds The Sims creator Will Wright, who points to the rise of social games and free online games as a major turning point for the field. “Of course a lot of the old, established things are going to be dying off pretty rapidly,” he ominously portends. “Even the major life forms.”

However, game publishers continue to swear that they’re not only aware of the changes and taking steps to keep up, but also poised to come out better for having done so. Yet years continue to pass, and despite assurances to the contrary, revenues continue to flatline and studios disintegrate. As a result, game industry leaders are grudgingly being forced to accept  that nothing has changed.Besieged on all fronts by shifting player habits, growing economic issues and the rise of digital downloads, games for social networks and free-to-play online outings, insiders are becoming increasingly desperate to reinvent themselves. Forget the happy faces you see in the headlines. Here, the field’s biggest names let down their guard to reveal the magnitude of the changes rocking the business, and what it takes to survive. But the question remains: Can developers and publishers evolve in time? Tune in to episode two of Game Theory to find out.

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.

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