Designers of last year’s Marvel’s Spider-Man 2 used the processing power of the PlayStation 5 so Peter Parker’s outfits would be rendered with realistic textures and skyscraper windows could reflect rays of sunlight.
That level of detail did not come cheap.
Insomniac Games, which is owned by Sony, spent about $300 million to develop Spider-Man 2, according to leaked documents, more than triple the budget of the first game in the series, which was released five years earlier. Chasing Hollywood realism requires Hollywood budgets, and even though Spider-Man 2 sold more than 11 million copies, several members of Insomniac lost their jobs when Sony announced 900 layoffs in February.
Cinematic games are getting so expensive and time-consuming to make that the video game industry has started to acknowledge that investing in graphics is providing diminished financial returns.
It was clear this year, however, that the live service strategy carries its own risks. Warner Bros. Discovery took a $200 million loss on Suicide Squad: Kill the Justice League, according to Bloomberg. Sony closed the studio behind Concord, its attempt to compete with team-based shooters like Overwatch and Apex Legends, one month after the game released to a minuscule player base.
“We have a market that has been in growth mode for decades,” Ball said. “Now we are in a mature market where instead of making bets on growth, companies need to try and steal shares from each other.”
Ismail is worried that major studios are in a tight spot where traditional games have become too expensive but live service games have become too risky. He pointed to recent games that had both jaw-dropping realism — Avatar: Frontiers of Pandora (individual pebbles of gravel cast shadows) and Senua’s Saga: Hellblade II (rays of sunlight flicker through the trees) — and lackluster sales.
Turns out you have to make a good game too. Who would have guessed?
Good games don’t automatically sell, on the contrary. Your average Ubisoft open world slop is “good”, but that’s not enough. Even very good, exceptional games don’t automatically sell. Game development is inherently risky. Large publishers tried to game the system by making “safe” bets, by offering spectacle in combination with tried and true mechanics and narratives. This worked for a long time, but due to changing market conditions, the core audience for these types of games getting tired of them and younger gamers not caring about the presentation, these publishers are spending more on a shrinking segment of the market.
The problem is that they maneuvered themselves into a corner. They have built huge, art-heavy studios in expensive cities to make large games that bring in large sums of money that finance this costly development. You can’t easily downsize this kind of operation, you can’t easily change your modus operandi after having built entire companies around it. I’m convinced that this will result in the death of most large publishers and developers. Ubisoft is only the start.
Why should EA, Microsoft or Sony fare any differently? Each can only hope that enough of their major competitors die so that they don’t have to fight around the same segment of the market anymore. They are all fundamentally unable to meaningfully capture the P2W and Gacha markets (same thing, really), especially in Asia, a segment where companies that were built to serve these types of games are truly at home. Those will slowly take over, until they too are too large and bloated to respond to changing market conditions - or until some event outside of their control, like a major conflict and/or economic crisis, wipes them off the map, paving the way for someone else entirely to lead the industry. The only thing that will remain constant is millions of small Indies fighting for scraps, with a tiny handful having the right combination of luck and skill (although mostly the former) to make a decent living.
Amen