Raph Koster on the cost of making games from the industry side

All of this talk about the price of making games and the price of playing games thanks to Star Wars: Battlefront II has meant getting a pretty decent peek behind the curtain. Case in point: a lengthy discussion and explanation by Raph Koster about how expensive games really are. While Koster outright says that it’s wrong to say games are “too expensive to make,” he also points out that it’s undeniable that costs on making a game have risen hugely while box price has proportionally fallen. And as he points out, that’s because there’s no real market for second best.

The key thing to understand is that the public doesn’t buy B games. A game with stellar gameplay and less than state of the art graphics is generally simply left on the shelf. Yes, indie games with distinctive art have managed to break through so everyone will cite counterexamples, but looked at statistically, it’s something like 99.9% don’t.

Koster also focuses in on the idea that free-to-play is inherently predatory or winds up costing more in the long run; people will have price limits to get into something, but many will pay more over a period of time than they would pay up front. (The example he uses is of golfers dropping $50 a weekend for a full year when they’d never pay that much money up front.) It’s a worthwhile read if you have any interest in the costs of making games and how the economics work, which should be all of us; it also mirrors several of the things said in our recent Soapbox on the same topic, albeit from a development side rather than a journalism side.

Source: Raph Koster
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peor togs

Part of the problem is that normal middle class peoples salaries and wages haven’t kept up with the cost of food, housing, taxes, etc either. It’s inflation of cost with no proportional increase in income. People don’t have as much to spend.

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Jonny Sage

And yet theyre buying more $5 lattes than ever before…

Nick
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Nick

Very insightful article and also great discussion below. I feel like I’ve learned quite a bit so thanks everyone who participated.

I’ve been a gamer for over 30 years now, and this is pretty much the only hobby that has stuck with me since I was a toddler. That and my love of movies and animals. Everything else has come and gone but those are my constants.

I’m already willing to pay more for AAA games now, as I want these to continue to be made. I recall spending $80 for Street Fighter 2 Turbo when it first came out on SNES. That was over 20 years ago. People would never pay $80 for a standard game release these days and costs have to have increased exponentially since then.

In recent years I have dropped $90 – $100 pre-ordering games like Street Fighter V (I know…), Injustice 2, Assassin’s Creed Origins, Final Fantasy XV, and possibly a few others. I’m hoping Season Passes are actually make hte games more profitable as I know they often take effort and more money to create the additional content.

I feel $100 for me these days for a AAA game with extended support is fair. I would not pay this for lesser games, however. For games other than AAA I am happy to spend $20 for a small indie to $60 flat for a more extensive game.

In regards to MMOs – this year I spent $200 on Marvel Heroes (and hundreds in prior years) and a shocking $600 on Aion of all games. For ongoing MMOs though I justify this in my head that I get many more hours out of them than a standard console game as they hold my interest far longer. A lot of that money went towards RNG lockboxes though so it is a bit shameful.

Anyway I am glad this topic is being covered and look forward to more insight on this issue.

Benjamin Northrup
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Benjamin Northrup

I just wonder why so many consumers care how game companies make money, or counter argents with, “we’ll they have to make a profit!” I’m a consumer, I don’t care about producer profits, i want the cheapest product i can get at the highest quality I can get. Games should cost what we’ll pay for them, just like anything else. This inforation is fun to know, just because I work doing economic analysis myself and have a strong passion for economics, but ad a consumer I just do not care about the input costs of games. If I could get the exact same thing for less, I would and often do after waiting for it to hit a price threshold that I’m okay with.

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socontrariwise

Koster is writing such odd stuff since a while that I am loosing belief in his analytical skills and realistic self-assessment.
Restaurants compete on fixed costs of ingredients which are the same for everyone? Never seen the insane price differences for a fruit or piece of meat depending on quality? Rental differences based on contract length and timepoint and neighborhood changes? Liquor license? Food waste based on menu and portion type and audience is a significant factor too. Heck even prices for butter and eggs and such varies tremendously over time, even from year to year for all kinds of impacts by nature, fads, global economy etc.

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Raph Koster

“Fixed cost” doesn’t mean costs never change. If so, nothing would ever be a fixed cost. It means prices stay pretty predictable.

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camelotcrusade

Really engaging to read, and just as gloomy as I feared. When Ralph said this in his post:

Basically, there isn’t a good business plan. There aren’t any realistic expectations. Any sane business person would say “don’t make games.”

… I found myself thinking of something I’ve said to my friends many times, along the lines of “Wow, I’m sure glad I didn’t follow my dreams as a kid and become a game developer.” Sad, and not a thought I enjoy having.

And yet the industry endures, and from the glut on steam it seems to show no signs of slowing down (at least to the consumer). Is it a bubble that has yet to burst? What is going on?

It seems to me at least part of the answer is that a void of reliable, comparable data is propping up unrealistic expectations by virtue of failing to defeat them, and when data does cut through the noise it tends to be sensational (in either direction, good or bad) rather than empirical.

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Armsbend

See my post below about the name ‘Ralph’.

:)

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camelotcrusade

LOL, yes, my brain has auto-correct. :p

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Raph Koster

A lot of it is starry-eyed kids getting in on the indie side.

A lot of it is that the major incumbents are in a good place, for a while. It’s the lower end of AAA and the middle tier that feel the crunch.

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camelotcrusade

Thought of something to add later than I could edit.

I work in the research industry, and in many consumer industries it’s a given that solid analytics (industry jargon for data analysis) helps you make better decisions–analytics which companies are willing to pay for as the risks and rewards of product development get higher.

The need for that data creates a secondary industry which gathers, analyzes and then sells the insights these companies need (sometimes in partnership with them, at least for data collection), and which also drives think tanks to publish learning that educates the industry justifies the relevance of the data at the same time (i.e., with case studies that demonstrate how data-based decisions are better than the alternative).

Unfortunately, this research also costs money, and given game developers are already in the hole it’s got to be tough for them to a) devote resources to in-house analytics or b) pay another company to provide them. Add to it the lack of industry collaboration (to invest in a foundational data pool with standard, client-neutral metrics, for example) and it may be quite a while before data can have the influence it should.

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socontrariwise

There is a good article on that. http://maggotranch.com/MMO_Metrics.pdf

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camelotcrusade

Yes! Dated but still relevant. There are so many things that could be measured, benchmarked, and shared. And that’s not even touching the huge challenge of distilling “what gamers want” from what they say they want, starting at the concept phase.

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Raph Koster

There’s a bunch of industry analytis stuff, but it’s mostly confidential. Many companies have in-house analysts. They use EEDAR externally, or Quantic Foundry for different purposes.

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camelotcrusade

It’s not as powerful if you can’t benchmark against the industry, though, and certainly it doesn’t help the industry as a whole if most of the learning from successes and failures is anecdotal or extrapolated.

Obviously competition is cited as a reason to keep all learning proprietary, but I think there eventually comes a realization that *some* level of sharing benefits everyone enough to warrant establishing norms. Perhaps the market isn’t mature enough for this, is changing too much, or has too many ephemeral players.

On the note of learning, thank you for making us all smarter on this topic. It takes time and effort to share – and you’ve given a lot of it!

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Raph Koster

Agree, sharing is obviously going to get to more accurate results. Instead, only certain analyst firms really have good overviews.

And you’re welcome. :)

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Eliandal

Thank you for this intriguing discussion! Also, thank you to Mr. Koster for coming in here and (repeatedly) defending his assertions/viewpoints. Appreciated, and much food for though in the comments!!

miol
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miol

I guess, he doesn’t know about Hellblade and how top notch graphics, acting and motion capturing are affordable even for Indies!

It’s the wanted higher shelf-lives, which publishers want through their so called “services”, that makes games cost more!

They just want less risks and more constant incoming revenue streams, so a single game has to hold its ground for more than just a single year, therefore costing more overall, BUT NOT more per year!

https://www.youtube.com/watch?v=0qq6HcKj59Q
https://docs.google.com/spreadsheets/d/1lGS8t84T8excDoTkBZOtapA72H2IGAA0kyHMLtUlVXE/edit?usp=sharing

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Raph Koster

If anything, Hellblade validates my points. Certainly the CEO of Hellblade agrees with just about everything I’ve been saying about the financial structure of the industry. See here: http://www.hellblade.com/the-independent-aaa-proposition/

I mean, he says

Many have packed it in and started over in indie gaming, apps, or other areas. Others have been absorbed into publishers who are not willing to bet $100m+ on external game developers. Most have simply gone bust because they cannot attract funding to compete with huge teams…

This isn’t “survival of the fittest”. Evolution has nothing to do with being “fitter” or “better” and everything to do with being more adaptive to a changing environment….

How have we survived? We focus on quality, stay on budget, ship on time but then, so have many others on this list. it comes down to this: we have been lucky.

He explicitly lists merch as a revenue channel. Merch is upsells too.

Most critically, he argues for pursuing genres that AAA cannot because the finances don’t make sense at an AAA level. I said the same thing elsewhere in this thread.

miol
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miol

This isn’t “survival of the fittest”. Evolution has nothing to do with being “fitter” or “better” and everything to do with being more adaptive to a changing environment

What does being “fitter” or “better” mean?
Exactly, for instance better graphics!

What is this “changing enviroment”?
It’s seeing games not as a product but as a service for many years longer!

Who are only able to afford labour intesive services, than just selling merch from a small webshop?

This is what the CEO of Hellblade also said:

“We’ve variously been told point blank that single-player story games are dead!”

“Independent AAA is a path by which developers can make bleeding-edge games for specialist audiences and maintain stewardship over their game vision. Developers making games to serve gamers, not the salesmen, not the middlemen.”

Why do you think a single story RPG game with best acting and graphics for Star Wars was simply cut mid-production in favor of a Battlefront II with more repeatable content?

It’s really not about the production costs, but about revenue!

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Sally Bowls

Why do you think a single story RPG game with best acting and graphics for Star Wars was simply cut mid-production in favor of a Battlefront II with more repeatable content?

It’s really not about the production costs, but about revenue!

In my opinion, one of the reasons is that the majority of gamers are criminals. I.e., the majority of copies of a game tend to be pirated. So you can avoid all the hassles of DRM that does not work with a nice online multiplayer game.

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shear

I don’t think he is wrong but the thing is that gaming was always, at least to me, an entertainment form that is cheap and everyone is on a level field.

When 1% tells me that we are not paying enough it makes me laugh.

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Zora

One has to question, at some point, why would the industry allow for costs to levitate to this level when, at the end of it all, said industry does not have direct control on its market sustainability.

To put it simply, once we are done going all over the charts and proved that no really, games should cost more because this and that… what happens if that “more” is still over what a significant and potentially growing slice of your audience is wiling to shell out for them, for whatever reason?

The burden of keeping costs in check is on those who offer the product. If they are unwilling/incapable of that, expecting the customers to come to the rescue with their wallets is hardly an acceptable discourse.

Customers being promoted to business partners is the ultimate kickstarter, I suppose?

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Raph Koster

This is just what happens in capitalistic markets with these characteristics.

Everything would change if, say, computers stopped getting more powerful. If we hit true photorealism.

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Zora

Everything would change if, say, computers stopped getting more powerful. If we hit true photorealism.

Heh, and then -I- am the one depicted as a romantic idealist all the time!

I agree with your sentiment, although precisely because it is a free market economy I have to accept that the price point will -always- be right. With right meaning not “fair” to either sides or any such nonsense, but simply just as much as the publisher believes it can get away with before the customer turns around and leaves.

I got it that the industry can (try to) offload its expenditures on lil customer me, but how far can it push it? When free choice is involved it’s more of a battle of will than a pure number game, based ultimately on perception of value and perception of growth… and boy oh boy I don’t envy those beancounters trying to put such volatile realities onto charts.

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Raph Koster

This video makes the ahistorical claim that this is all traceable to FIFA, which is silly you remember MMO history. :) It’s more like convergent evolution.

Both things can be true: games are too expensive, AND the top studios are making serious bank.

I’m halfway through the video and haven’t found the evidence that EA dev costs have dropped yet… got a pointer to the specific data?

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Tobasco da Gama

I think Raph could have done well to expand more on the risk aspect of “cost”, from a business perspective. It’s more difficult to quantify risk objectively, but at the same time risk is a huge consideration in business decisions (at least for publicly-traded companies), probably to a greater degree than any other single factor.

That’s why we see the same trends happening in AAA games and blockbuster movies. Game studios and movie studios keep churning out rehashed crap that gets poor reviews brings in billion dollar profits anyway. Because it turns out that if you spend enough on an entertainment product you can probably convince people that it’s worth buying. However, you have to first put a critical mass of money on the screen for that strategy to work.

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A Dad Supreme

I want to give Raph Koster credit for coming here and defending his position and statements, even though people don’t agree.

Too many times you see a dev make some statement with no room for interaction. Nice to see someone face down shouters, bandwagoners and “me too’s” for a change, even if I don’t agree with everything he says.

I welcome the dialogue because that’s how people eventually can come to some type of common ground.

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Jon-Enee Merriex

I second that!

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Raph Koster

Also, remember:

* I don’t like lootboxes

* I don’t work for a publisher

* I don’t like pay to win

I’m not arguing FOR these things. I’m explaining why they exist.

Bree Royce
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Bree Royce

This looks like basically the same argument I was making – really, building on, since Bailey made it first with films – in Multiplex monotony and the death of the mid-budget MMORPG, only Koster is putting numbers rather than reasons to this shift in the market, and everyone should read his original, not just our recap. For example, he says,

“Too expensive’ isn’t a measure of just cost though, it’s a measure of risk. As costs have risen, we have seen massive consolidation across the industry. There used to be over 20 publishers of AAA games in the 90s. There also used to be dozens of third-party studios. As costs have risen, third parties have either died when they overextended trying to reach the quality bar, or they were absorbed by the larger companies. Publishers overextended by banking on major franchises, and when one didn’t hit, went away.”

The impact on the MMORPG genre has been particularly brutal considering how long they take to develop and how much they cost after launch (relative to all the other gaming gambles investors might take). You might even argue that there aren’t many (and haven’t ever truly been) AAA tier MMORPGs period, so it’s no wonder there are so few new ones on the horizon.

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Sally Bowls

re “there aren’t many
Two?

“A couple of our competitors have found out that through very, very expensive lessons–one of our competitors just recently announced they’re restarting an MMO project in the US,” Zelnick said. “We look at it and say ‘How many MMOs have ever been successful in the US?’ Two. World of Warcraft and EverQuest. That’s kind of a bad slugging percentage.”

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Melissa McDonald

So what, last 3 months or so? this topic has been the majority of the articles here, or at least, the “opinion pieces”.

I see a lot of unrealistic expectations among the comments. Simply put, these companies have to make a profit. It seems the majority want a AAA-class game for free, with no micro-transactions, no loot boxes, and no subscriptions.

That ain’t gonna happen. Kiss your hobby goodbye if you aren’t willing to pay for something, sometime, to someone, to keep it going.

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A Dad Supreme

It seems the majority want a AAA-class game for free, with no micro-transactions, no loot boxes, and no subscriptions.

Definitely the vibe that emanates from the comments, not just here but so many other forums around.

It reminds me of the furor people had over P2P games five years ago when they were mostly demanding F2P because X game had a successful model. They were all agreeing with people like Scott Hartsman.

Now they got their wish with almost complete banishment of sub games, and they still aren’t happy.

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Jacobin GW

And it seems the majority of publishers want to put in as little effort as possible yet still get you to hand over your entire bank account.

These companies can kiss their customers goodbye if they think nickle and diming + slot machines will keep players coming back.

Your ‘bend over and take it’ attitude and complete lack of quality standards when it comes to your own money is sad and just allows anti-gameplay monetization to slither along.

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Denice J. Cook

Well, I will agree with you on the level that devs and publishers spit out Early Access, half-baked, never-finished games and charge all outdoors for them, sometimes even adding costly DLCs before they launch the base game!

So in that manner, they do take advantage of players, however, players encourage it by buying in.

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Raph Koster

it seems the majority of publishers want to put in as little effort as possible yet still get you to hand over your entire bank account.

This is pretty much an accurate, albeit cynical definition of “business.”

By a laissez faire capitalist definition, if it is working for them, it’s by definition satisfying the audience and the right balance has been struck.

If they were truly overreaching, customers would move on because they are overcharging. And maybe with this new Battlefront, they did. But overall, the model is looking healthy, sorry to say.

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Bree Royce

“this topic has been the majority of the articles here, or at least, the opinion pieces.” Just fref, neither of these is even remotely close to being true. I’m currently going through every post for our end-of-the-year roundups anyway, and I’ll keep a tally and come back when it’s done just for perspective’s sake, but while the topic is a loud and persistent one and some of us grow tired of it, it’s a tiny sliver of the content pie. :D

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Melissa McDonald

Ah well it’s just my perception. I bow to the statistics.

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Sally Bowls

While these lockbox articles are the “sound and fury,” IMO the most important article(s) are the ones like the seminal

Massively Overthinking: How should MMOs make money in a world without lockboxes?

We shall see what cleverer-than-I devs come up with. My current guesses of assumptions are:
non-AAA but larger than tiny team games are rarely successful
2005-era subscriptions won’t work for new games
one-time/lifetime $60 does not work for AAA

so how do you get an average of $120 over a couple of years? lockboxes are unpopular. other people paying to win is unpopular (my purchasing of power is, of course, just noble “supporting the dev”)

My guesses of future possibilities are:
1) Amazon/Google come in and shake up an industry while “destroying” competitors
2) advertising
3) “Netflix”/XBox live – $25/month lets you play every Blizzard or EA game. small studios with a game or two might have trouble competing with that
4) not many more AAA games

It is extremely easy to criticise past/current/future US health care monetization. IMO, it is quite difficult to propose an alternative most people like.

It is easy and accurate to criticise lockboxes. As I say “just because something is a bad idea, does not mean it is the best idea.”
Can devs do better than lockboxes? IMO, probably
Have I read any viable yet obviously better alternatives? IMO, not yet

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Armsbend

“Have I read any viable yet obviously better alternatives? IMO, not yet”

To what? EA’s bottom line? I personally do not care if they have a viable alternative to prop up a bastardized balance sheet. My wish is that EA can’t find an alternative, suffers and then looses or has to renegotiate all of it’s licenses.

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Sally Bowls

an alternative way to fund games in general. YMMV, but some unemployed / amateur devs cobbling together a Kickstarter campaign seems quite unlikely to make a game I am interested in playing.

So how do real game companies finance and monetize games these days? IDK and these days I am not sure they do either.

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Scott Leyes

mmmmmmmmmm….. pie.

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Erik Heinze-Milne

I think it should really be that people don’t buy B games at AAA prices. Which the publisher takes as “the public doesn’t buy B games” when in reality they are simply charging too much for what they are trying to sell.

This is why indies can be so successful, because they aren’t locked into this “$60 no matter what” BS pricing model.

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Raph Koster

You missed the fundamental point: a B game should cost $60. An AAA game should cost $150.

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Erik Heinze-Milne

Why, exactly, should they cost that? People noting that box prices haven’t increased much always seem to ignore that this is a MUCH larger market now. Since the unit cost (especially with digital distribution now) is basically nil, more people buying is pure profit.

Not to mention that very few AAA games actually meet the standard for AAA quality these days, and we have a perfect storm of publishers trying to overcharge for games that aren’t even worth the NON-overcharging price.

I can count on one hand the games that I would actually consider having been worth a $60 box price, let alone $150.

Stop blaming consumer’s for the industries fuck ups.

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Jon-Enee Merriex

This fails to take into account the marketing prices have sky rocketed at the same time that distribution prices have dropped. Marketing a game now costs 10 times what it cost 10 years ago.

Your unwillingness to actually face a fact that games cost much more than the consumer is willing to pay is the reason schemes like lockboxes exist. People just are not willing to accept basic math. They pull on these loose strings like distribution costs while failing to note employee costs, marketing costs and other costs have risen, not fallen, in the same time period.

If you are going to recruit top talent now a days, you’re not going to have a studio in podunk America. You’re going to be in coastal city. You’re going to offer free lunch and 100% healthcare. You’re going to end up spending at least $100K per employee or more. Why? Because that same talent can head over to a movie FX studio or an animation studio, or a advertising agency, or Google, or insert any major company here and get those benefits and more.

In my time in the industry, I’ve literally worked with people who’ve worked at NASA and other various rocket science firms. Those people are not cheap AND those people are absolutely critical to creating your favorite game. Those people btw, don’t work for less than $100K.

And again, I’m not even breaching the marketing side of things where it used to cost $0.25 to acquire a user and now it’s $5.45 (that is this month’s rate). Why? Because Disney is buying every spot they can for Star Wars, Warner is buying the rest for Justice League and good lord don’t let there be an election going on.

The reality is, the average game with a 5 year development cycle with a team of 50 people will cost $25M (50 x 100,000 = 5,000,000 x 5 = 25,000,000) and that is just for labor costs. That means at $60 a box the game needs to sell well over 400K boxes (25,000,000 / 60 = 416,666).

AND THAT DOESN’T INCLUDE THE COST OF MARKETING! Remember, this month the CPA (cost per acquisition) is at $5.45. That’s another $2.1M (5.45 x 400,000 = 2,180,000) which needs to be recouped as well. If we’re talking about a MMO, then we’re also saying we need servers, bandwidth, security and more. All more costs.

So, no, you’re wrong. The B game definitely still costs at least $60.

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socontrariwise

I disagree in so far as that people who want MMO’s with social focus, interesting, complex and meaningful crafting (not grinding, that is different) with housing where you don’t have to be some freaking hero-pretense are desperately enough scouring the net for something to play – no big marketing needed. And there are a lot of us, leverage of the Anno, Farmville or Sims crowd as example.
I’m so fed up with the western MMO developers by now for their iteration of the same – I spend my time in Creativerse and Sims 3 mostly with a few thieving episodes in ESO interspersed. If BDO wasn’t so ridiculous sexist and grindy I would have stayed there doing what I did: collecting and growing seeds, exploring and taking pics.
In my opinion the whole western MMO market suffocates itself simply because it competes all for the same audience. If you all have essentially the same game, optics and such is the only way of competition left. But pretending that it is the optics you need to make a successful MMO – I disagree.

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Erik Heinze-Milne

Ah, it’s hilarious that you think people are actually getting paid $100k a year as a minimum. Marketing budgets are WILDLY over-bloated, you don’t need anywhere near the level of bullshit marketing that is put out. Destiny dance off commercial, sure that was TOTALLY necessary. CDPR seems to do pretty well without insane marketing budgets, and they aren’t in a costal city, nor even the US at all. For that matter, NEITHER IS DICE. DICE is in SWEDEN.

CDPR has PROVEN that it is possible to successfully make a real AAA quality game without resorting to underhanded tactics and insane marketing budgets. Not only that, but they have done it MULTIPLE TIMES. Ironically, I actually WOULD happily pay $150 for CDPR’s games, because they are high quality, respectful of the players time, and most importantly, don’t repeatedly insult their customers intelligence by trying to act like they “can’t afford to make games”.

Also, online advertising is dirt cheap. If you are trying to compete with movie studios for television airtime (something many gamers don’t even watch anymore), you are blatantly wasting money.

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Raph Koster

it’s hilarious that you think people are actually getting paid $100k a year as a minimum.

You are just incorrect. You need to go do some research. A company spending $100k on a fully burdened employee is only a salary of 50-60k. If anything, Jon-Enee is understating things.

Online advertising in games is not dirt cheap either.

I love that you are a fan of CDPR, but you clearly do not know basic financials in the games business.

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Erik Heinze-Milne

you clearly do not know basic financials in the games business.

What I know, is that people are successfully doing the thing that you are claiming is impossible due to the costs involved. So either reality is lying, or you are. I’m going to keep believing reality.

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Raph Koster

You REALLY don’t understand.

Some people are doing it, yes. But the odds are poor. For each of them that succeeded, there are many who failed. The trend lines are very clear. You are ignoring data points.

“This guy survived getting shot in the head! I’m going to believe reality!”

In this thread alone we have me, Jon-Enee, and the link to the Hellblade CEO, and we all say the same things, with no coordination and clearly different viewpoints on it. You’re going off of guesstimates of budgets and incorrect estimates of salaries.

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Erik Heinze-Milne

IF what you are saying is true, then you are saying that you are making something more expensive to make than the market is willing to pay. If that is the case, then you should be out of business. Crying that it costs too much to make isn’t going to make people want to pay more for the same old same old.

Essentially, even IF what you say is true (which I still strongly doubt), then it is still on you to figure out how to reduce costs while still offering a quality product. To take a phrase so often thrown at gamers, stop being so entitled. You are not entitled to our money just because you want it. You are not entitled to have people buy your product even if you charge more than what your customers value it at.

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Raph Koster

The market currently is willing to pay, is the problem. Just not in upfront lump sums.

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Erik Heinze-Milne

Not sure 2-5% of your users count as “the market”. The market isn’t willing, but you have a minority with large spending habits artificially propping the industry up.

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Raph Koster

The audience used to only be that 2-5%. All these other folks are only here because of free to play.

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Erik Heinze-Milne

Except it’s NOT free to play. People are still paying the full $60, and THEN getting micro-transactions shoved down their throats.

Nobody had issues with F2P plus micro-transactions.

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Raph Koster

Right, I misread what you were getting at.

So, the market is willing to pay, regardless. If it weren’t, the people only paying the $60 would leave. And really, the folks paying more are subsidizing the $60 price for those who aren’t.

BF is a good example of when the market ISN’T willing to pay. Based on the figures I can see, this brouhaha has harmed it enormously in the market.

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Armsbend

So well said; so true.

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birini

No words for how happy I am to see this conversation happen. Thank you both for your insights.

I have a question, if either of you is comfortable answering it. I’ve felt for a while when gamers deny the realities of firm profits and investor returns, it becomes easier for studios to disregard them and their concerns. Is that correct or am I overstating it?

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Raph Koster

I guess the way I would put it is that devs ARE gamers. But the more they get attacked, yeah, the more likely they are to be dismissive. Same is true in the other direction.

Most devs and gamers are aligned on these issues more than not (biz people is another story, but even there it’s mixed). But it can get frustrating when gamers deny the lived day to day reality of a dev.

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birini

Thanks for the reply and your time this afternoon. I love having the ability to learn about this market from a legit expert (two actually with Mr. Merriex). Really great stuff.

deekay_plus
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deekay_plus

as someone who recently dabbled a bit in advertising i can tell you it’s dirt cheap right now to advertise online.

and judging by the number of repeat ads on tv shows my mom watches these days to the point it’s probabkly counterproductive for those products, it’s probably also dirt cheap to advertise on tv right now too.

unless ofc you’re doing something like advertising on the super bowl or another major sporting event, that is far and away the most costly form of marketting out there.

nothwithstanding paying “influencers” you can spend many amounts of moneyz (six figures per influencer) to peddle your product for a while.

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Raph Koster

OK, second person to say this. It’s just wrong.

It currently costs $5 to get ONE user into the most accessible, mass market games on earth, that you GIVE AWAY.

You should be extrapolating out from there.

Online advertising is an auction market. People bid for visibility on an ad that 15% of people block, 9999 people don’t click on, and then doesn’t actually trigger a purchase for 97% who even clicked.

Each ad is cheap. Ads that net out positive are *expensive*.

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socontrariwise

What games are we talking here? If a game has reached “mass market”, it becomes of course more expensive to get further people in than do initial marketing or growth phase one. So where is the number coming from?

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Raph Koster

$5 acquisition cost is pretty common in mobile (it can go double that depending on seasonality and specific genre). I can talk about this freely because that number gets shared all the time in industry presentations.

You’re absolutely right that acquisition costs rise as you move away from the natural core target of a product.

You can go research more marketing costs, though.

For indies, look at this advice: http://launchyourindiegame.com/fundamentals-pricing-indie-game-marketing/

For AAA, just compare this: https://en.wikipedia.org/wiki/List_of_best-selling_PC_games to reported marketing budgets. AAA marketing budgets can be estimated to be anywhere from half the dev cost to a multiple of it. Then just divide out.

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Raph Koster

Everything about this post is dead on.

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Jon-Enee Merriex

Ah, it’s hilarious that you think people are actually getting paid $100k a year as a minimum.

http://www.gamesetwatch.com/2014/09/05/GAMA14_ACG_SalarySurvey_F.pdf

This is from 3 years ago. Additionally, they didn’t include the actual employee costs (which is the number I’m talking about). That salary plus $10-15K on heathcare, plus $5-10K on bonuses and perks. The average employee costs about $100K per year.

Marketing budgets are WILDLY over-bloated, you don’t need anywhere near the level of bullshit marketing that is put out. Destiny dance off commercial, sure that was TOTALLY necessary.

My $2M number was small and was based off a game with a super tight budget. That Destiny commercial was a part of a $20 or 30 Million advertising spend. At $2M you’re not going to do a commercial really. You’re doing online advertising with 0 TV. Advertising in the US – especially on National TV – is not something that happens on a sub $5M budget. Even then, it’s Sham-WoW quality.

CDPR seems to do pretty well without insane marketing budgets, and they aren’t in a costal city, nor even the US at all. For that matter, NEITHER IS DICE. DICE is in SWEDEN.

It’s fallacy to say that CDPR spends nothing on marketing – especially when Atari spent Millions marketing the original Witcher. My ex was a designer on that game and still works there now. They do in fact spend at least 20% of their budget on advertising.

Regarding DICE, have you seen their campus? I’ve interviewed with them and turned them down for a reason I was told is common to them. I was born and raised in the US and I didn’t want to move. That said, even in Sweden, DICE is located in a MAJOR city that sits on an archipelago of the Baltic Sea. If that’s not coastal I don’t know what is.

That said, DICE also uses a lot of EA support… and has a studio in Los Angeles.

I have a question, if either of you is comfortable answering it. I’ve felt for a while when gamers deny the realities of firm profits and investor returns, it becomes easier for studios to disregard them and their concerns. Is that correct or am I overstating it?

At least in my experience not at all. Even when I was working on Modern Warfare 3 Activision cared A LOT about what players thought. As much as people hate on Bobby Kotick I remember multiple times where his concerns were only about making players happy. Happy Players = Paying Players which = More Revenue and Profits which = Happy Investors.

I think that trend has played out in every company I’ve worked for. Even in my current position at “EvilCorp” as Massively has deigned us. Everyone here REALLY cares what players are saying. We take it personally. We fight about it, we are constantly talking about how do we make things better for our players. I think that has been consistent at every company I’ve worked for. Even the ones where we all hated our games.

That’s why I believe DICE when they say they were devastated by the response. When you’ve spent 5 years on your life creating something, it’s hard to hear people shitting all over it.

as someone who recently dabbled a bit in advertising i can tell you it’s dirt cheap right now to advertise online.

This isn’t the case. I’ve worked in online gaming for over a decade. Marketing for online games is one of the many things I’ve dealt with.

You can go and bid $0.25 for ads. You’re adds will go out in random corners of the internet but you won’t get the prime real estate. Additionally, if you’re just working with Google you’re missing a large part of the pie. Major sites don’t use Google ads and you have to make deals directly with them. Facebook has a similar system where the more you pay the more faces see your content. So while it looks like you’re paying a little money, the end result is you’re not getting any effect. This can be good for branding but is horrible for acquisition.

If you’re serious about advertising you’re going to be focusing on acquisition which is MUCH more expensive. The $5.45 number is a real number that I’m currently paying to advertise online this month. Now, you can not pay that much, but the person paying the $5.45 is going to grab all the inventory before your ads can run.

Everything about this post is dead on.

Oh shnit! Raph Koster replied :D. Thanks for your blog post. It was something that has been really needed in this conversation and it had to come from someone everyone agreed knew what they were talking about.

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Sally Bowls

TY
I am not a gaming executive, but it seems to me your first couple of paragraphs are understating what I think of as burdened employee costs. Very roughly, I tend to think of the rule of thumb that fully burdened costs of an employee is about double the salary. And the 2015 ESA report said the average cost of a California game dev was $113,000. So I tend to say the fully burdened cost of a California game dev was about a quarter of million dollars a year. Maybe an accountant would not let you call that the burdened labor rate. But if you told me a company had twenty people paid an average of $113K per annum, then my uninformed guess would put their fixed costs to be about five million a year.

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socontrariwise

How do you end up with double and not 1.2-1.4 times?

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Jon-Enee Merriex

TY
I am not a gaming executive, but it seems to me your first couple of paragraphs are understating what I think of as burdened employee costs. Very roughly, I tend to think of the rule of thumb that fully burdened costs of an employee is about double the salary. And the 2015 ESA report said the average cost of a California game dev was $113,000. So I tend to say the fully burdened cost of a California game dev was about a quarter of million dollars a year. Maybe an accountant would not let you call that the burdened labor rate. But if you told me a company had twenty people paid an average of $113K per annum, then my uninformed guess would put their fixed costs to be about five million a year.

I don’t disagree. I used napkin maths and using $100K is a lot easier than $158K or $202K.

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Raph Koster

There are also fairly disparate salaries for a QA person versus an artists versus a graphics programmer.

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Raph Koster

it had to come from someone everyone agreed knew what they were talking about.

and who wasn’t currently beholden to a pub. :)

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Jon-Enee Merriex

and who wasn’t currently beholden to a pub. :)

Exactly.

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birini

Thanks so much.

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Eamil

Look at Battlefront II for example. As a AAA game it’s the absolute bare minimum they could get away with. The gameplay isn’t significantly improved, the progression system is tied purely to RNG even now with cash for loot boxes disabled, the campaign is four hours at best (and sold on a false premise) and not a very good story…

EA’s development costs have been trending DOWNWARDS for the last ten years.

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Sorenthaz

It’s probably because they’re not making as many games so they save $$$ by focusing on less risky/more money grabby stuff VS trying to do a ton of different things that may or may not make them $$$.

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Raph Koster

Unit cost is NOT nil.

Even in a digital distro scenario you’re looking at 30% off the top going to the storefront. That is effectively supplanting the previous cost of goods price. Depending on store, there may be other factors and hidden costs.

The market is larger, yes. But please, I encourage you to go read the various articles linked within my latest post. The pace of budget growth far exceeds the pace of audience growth, if you exclude mobile (which is its own ecosystem, recapitulating the AAA market).

Not to mention that very few AAA games actually meet the standard for AAA quality these days

I don’t see how anyone can look at AAA games and say this with a straight face. “Significantly improved” gameplay is not the determinant of AAA. Assuming gameplay has to get better each gen is part of the problem.

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Eamil

“Significantly improved” gameplay is not the determinant of AAA.

Your post isn’t actually responding to me but since you used a quote from my post there, my point is that the first EA Battlefront was lackluster to begin with, and often compared unfavorably with the old Battlefront games that are now over a decade old. It completely failed to retain a significant playerbase past the first month or so of its existence, which even by the standards of AAA shooters is absolutely dismal.

I wasn’t saying that every AAA game has to consistently or vastly improve on what came before it, I was saying that Battlefront II is a prime example of low-effort schlock that’s still categorized as AAA.

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Erik Heinze-Milne

It doesn’t have to get better, but it at the very least has to not get worse, which is a litmus test that “AAA” publishers have been REPEATEDLY failing over the last decade.

Also, which storefront are you talking about exactly? The one you directly own and control. I’m sure paying yourself that 30% storefront cut is REALLY hurting the bottom line…

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Raph Koster

Despite Origin in the Battlefront case, the fact is that the vast majority of games do not sell on first party storefronts.

deekay_plus
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deekay_plus

gamestop always took 30% off the base price that increased as the price went down with discount copies first affecting the developer studio then the publisher until only gamestop made any money off boxed copies. this is ofc in addition to the console tax which may or may not be either per unit or a flat fee depending on contracting.

this also assumes that the developer/publisher isn’t operating primarily through their own store front which is the case with swbf2, this effectively nullifying the 30% store front tax. tho not withistanding the costs of operating first party stores like origin.

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Raph Koster

Yeah, and large corps often effectively internally bill other business units for their support, I would be unsurprised if there weren’t a predetermined slice that went to the first party store.

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Erik Heinze-Milne

Yep, and yet the devs and publishers still crow about how games are “too expensive to make”.

Bull

Shit.

borghive
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borghive

Yep, box prices for games have hardly increased at all, publishers and small studios have to make money some how, so that is why we are stuck with this microtransaction hell and loot box hell.

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Erik Heinze-Milne

Yep, those record profits each year just aren’t recordy enough!

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Raph Koster

The record profits all accrue to the top, no question. And there’s also no question top pubs overreach, driven in part by the need for stock market performance.

Again, this isn’t a defense. It’s an explanation.

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birini

I’d expand on this, the critical part of stock market performance is that those returns are how you attract capital. If video games stop having high returns, capital is fluid and can move to companies and industries that DO deliver high returns (hi, Amazon) with the outcome that there is less capital available to produce games and, ultimately, fewer games.

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Sally Bowls

I think a very important point is “the public doesn’t buy B games” which I agree with. There is an argument that the public doesn’t buy B software or really anything. After a period of intense competition, it’s winner take all and you are left with Microsoft Office and Photoshop and Google and Facebook and Amazon and Walmart while MySpace, AOL, Yahoo, Sears and Macy’s go away.

Although, my main takeaway point is the obvious

Basically, there isn’t a good business plan. There aren’t any realistic expectations. Any sane business person would say “don’t make games.”

—-

A completely subjective matter of opinion is can small/ugly sell? Can a game with non-AAA production values do well? A lot of commenters say yes. I don’t believe that. There will always be the exception going viral. Everyone says they don’t need production values; go indies. But if you look at how the broad marketplace (not just social media activists) spends instead of talks, it seems to me it is quite risky to attempt a midsize PC/console game without AAA Production values. Games with “a thousand” devs can work; games with 1 or 5-10 can work. Can mid-tier games or gaming companies do well?

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A Dad Supreme

It makes you/I sound pessimistic, but I agree. I don’t believe people will really support “B” or less games, even though they always give you lip service saying they would before they are made.

When someone puts up that one example that’s small, cheap to make, fun and successful as “proof”, I think they end up doing more of a disservice to the rest. That’s how we got to the massive Kickstarter mess that people burned out on; so many new people decided X game made it so let’s do one too!

After getting so much money and so many projects either horribly slow to market, failed, or just poorly made when released, it shows the actual reality rather than that “dream” game that made it once or twice.

Even AAA games don’t always do well and they’ve got more talent and resources for the most part.

Humble Bundle is full of games that cost $1 or something, that no one plays and only downloaded because it was part of a bundle.

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Cosmic Cleric

I don’t know, I look at some B games like Rimworld and They Are Billions, and think they are very purchasable. I bought them both.

borghive
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borghive

Kickstarter for me has been great as a gamer, we have gotten some really amazing games from crowdfunding that would have never seen the light of day. Sure, there are going to be some failed projects or poorly made released games, but I think overall crowdfunding has been great for hobby.

I think it will get better as time progresses, because the tools these small studios are using will get better, letting them create more polished games with smaller teams and not having to rely on some big publisher spending half their budget on marketing.

Xijit
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Xijit

Every MMO that is over 2 years old says this is horse shit … And every 10 year old MMO laughs in his face as they cash players checks.

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Raph Koster

Excuse me, but which part is horseshit?

MMOs invented the business model that all the games are moving to today. They invented the service game in the early 80s. They invented the flat subscription fee in 1997, and people argued like crazy against it (see https://www.raphkoster.com/games/snippets/on-pay-to-play-or-mmorpg-business-models-101/). They started pioneering freemium and F2P in ’99 with games like Furcadia, Achaea, and Kart Rider.

If anything, MMOs are an object lesson in what is going to happen to all games, precisely because it does make more money over the long haul.

Xijit
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Xijit

The “Go AAA or go home because people don’t buy B games” mentality: if this were true, them every MMO on the planet would be a graveyard after 6 months because something even more AAA got released right on its heels.

Yes, it is true that the AAA eye porn juggernauts rule the holiday season, but every one of those games goes dead by March and the title will on sale for 90% off by June. At the same time, there are hundreds of old MMO titles out there that still have thousands of players logging (and paying) into the game every day.

… Why? Because it is about mechanics, not Graphics and budget, that keep people playing.

Those small / old titles still offer more / better gameplay than the eye porn seasonal blockbuster, and as a result they can stay viable while EA and Activision and Ubisoft have to sink billion dollar investments into the next seasonal juggernaut.

I know I am comparing apples to oranges here by lining up MMOs next to AAA seasonal FPS games, but that is just because it is the easiest contrast longevity.

But then you go and look at games like Dark Souls … Dark Souls has always existed somewhere between “Visually Dated” and “Butt Ugly Trash,” however From Software has seen phenominoal success with them because the gameplay is perfect, and they have never had to sink $300 million into the games to do it.

Two other great examples of this are Minecraft and Pokemon … Both of which have also developed billion dollar franchises out of shoestring budgets, simply because they focused on gameplay and mechanics over eye porn.

You do not have to sink top of the line budgets into something in order to make money … You just have to put effort into making sure the gameplay is appealing to a target audience, and then being conservatively realistic about your budget on how many copies you will sell.

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socontrariwise

I agree, especially looking at my better half being addicted to games like Galactiv Civilizations and Rome: Total War and such. There is nothing eye candy about any of them and the thrive all. There are companies doing nothing but those games. Or the point and click adventures, Daedalus is happily slogging away on those. Most are by far not the top-notch-eye candy.
Again: I believe we are seeing this budget inflation because people try to squeeze into an oversaturated market of more or less clones.
Of course I believe as well that something like ATitD would thrive if it wasn’t constantly deleting people’s achievements and making feeling like you matter or accomplish pretty impossible if you don’t happen to be at the start or a reboot and not having tons of time at hand…

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Veldan

It’s called “eye candy”.

And I think your argument is flawed. You’re comparing modern releases to old MMOs, that built up a large playerbase in their early days. Tell me, how many MMOs with subpar graphics that release today achieve that success?

As for Pokemon GO: it was obviously not the mechanics that gave them success. It was the fact that it was a pokemon game combined with the fact that it was a mobile ARG. A decades old IP with tons of fans all over the world, combined with a new(ish) game format created for a device that everyone already owned (phones).

Xijit
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Xijit

I gave 2, besides pokemon (and I was just talking regular Pokemon Gameboy games, not “GO” or how much money gets dumped into the Anime): Dark Souls and Minecraft.

Both games have zero visual flair and have developed colossal player bases world wide.

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Raph Koster

The visuals for Dark Souls easily cost millions.

Minecraft created a genre. As mentioned elsewhere, that’s one way to get out of this trap. It’s also an insanely lucky lightning bolt from the blue.

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Veldan

I’m not knowledgeable enough about those 2 to say meaningful things about them. My point is that they are the exceptions to the rule, and have special reason for their success, that don’t apply to 99% of the games out there.

Xijit
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Kickstarter Donor
Xijit

Yeah, but that is because 99% of the titles out there are shit and the only thing exceptional about the ones that succeed is sound mechanics and don’t treat their customers like incompetent cattle.

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Raph Koster

Yes, it is true that the AAA eye porn juggernauts rule the holiday season, but every one of those games goes dead by March and the title will on sale for 90% off by June. At the same time, there are hundreds of old MMO titles out there that still have thousands of players logging (and paying) into the game every day.

RIGHT! And that is why the AAA games are copying MMO business models, such as subs, DLC, microtransactions, and lootboxes! Precisely because it limits their exposure to market volatility.

You see? The thing you describe as the counterargument is what AAA is doing.

Only they do it with high polish and high $ spend because they can’t drop their current audience (who expects that) on the floor.

PS, Pokemon has been a giant budget juggernaut for ages.

You do not have to sink top of the line budgets into something in order to make money … You just have to put effort into making sure the gameplay is appealing to a target audience, and then being conservatively realistic about your budget on how many copies you will sell.

This is accurate but ignores the fact that high polish is how you defend territory against competitors.

Xijit
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Kickstarter Donor
Xijit

That is still flawed thinking and a self fulfilling prophecy: if you took at $300 million dollar budget for an eye porn game that has to be propped up by DLC & RNG gamble boxes, and developed ten $30 million dollar titles that were feature complete and fun to play, but with average visual fidelity, you would not NEED all that greedy ass DLC/ in game gambling tactics to to turn a profit.

On top of which, having 10 distinct titles out there is far less economically risky than trying to bet the entire company on 1 single blockbuster.

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Raph Koster

Here, we don’t disagree! I agree that a spread of titles is a wiser long-term choice even though it does not give the same return as the blockbuster.

Unfortunately, the videogame industry chases the larger return of the single big hit.

This manifests in all kinds of industries, and in human psychology; no matter how many times you tell people “invest in a balanced portfolio and don’t daytrade” they do it anyway.

It’s also vulnerable to competitors, though. You make a portfolio of ten games, each different. Half fail (that’s conservative btw). Of the remainder, you have to hope that none of the other big guys picked THAT genre to make their $200m game in. If they did, your nice little $30m one is toast.

High cost is defensive for those who have money.

That said, also defensive is strong brandbuilding and customer loyalty. From a marketing point of view, the order is

Gameplay
matters less than
Visuals
matters less than
Brand
matters less than
Characters

Characters win the marketing war every time. Not just in games, either.

Xijit
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Kickstarter Donor
Xijit

Ok, IMO, the best developed game in any kind of modern history was Warhammer 40k: Dawn Of War.

(Not Dawn Df War 2)

They had a straightforward game mechanic, that was proven to work, plus an established IP, and then they polished the shit out of it.

… Graphics were good, but not like eye porn extreme, and the game ran well on basically any PC becauae they didn’t aim for cutting edge specs.

And then, they fortified the fuck out of it by releasing mutiple stand alone expansion packs that reiterated the same polish and stability of the base game, but with new units and variations of mechanics.

Plus, by reusing what they had already built: they put out mutiple releases at a reduced cost.

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Brama Gola

You mean the game from the publisher THQ? Who went out of business….

Xijit
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Xijit

I mean the game that was developed by the makers of Homeworld & company of heroes and was then published by the company who, nearly a decade later, went out of buisnes by over investing / over reaching into the hardware market instead of staying in the software buisnes.

borghive
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borghive

Those small / old titles still offer more / better gameplay than the eye porn

I agree, if you look at twitch over the last year, a lot of the top games being streamed kind of lean towards the uglier side graphically. PUBG is a janky mess but has very impressive sales and concurrent users.

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Sorenthaz

And DayZ/H1Z1/Rust have been similar before PUBG came out as well.

But I think part of that can be attributed to the fact that most AAA studios/publishers aren’t going to do/allow risky new concepts like that. The Survival Sandbox/Battle Royale craze has still largely been exclusive to Indie/smaller companies with a few outliers like Epic stepping in with Fortnite. Zelda: Breath of the Wild is the only AAA I’ve really seen that has taken survival sandbox concepts (weather/temperature effects, ultimately having to craft your own food/elixirs, only the Master Sword and clothing has any permanence while your weapons/shields/bows all have unrepairable durability) and made them a core part of the gameplay.

Indie games and crowdsourced projects are pretty much the only games that are going to to try new things on a risky level.

Bree Royce
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Bree Royce

I agree – in fact, a lot of the major money-makers right now have B-tier graphics at best (maybe thanks to console/mobile?). I’m not convinced that we can dismiss them all as outliers just to keep this point rolling – there are a lot of outliers, and they are bigguns. Somebody do a chart! :D

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Sally Bowls

Re “(maybe thanks to console/mobile?)”:
The WoW minimum spec is an E8500 CPU. The processor in my phone has a geekbench4 score of double that in single core and triple that multicore.

It could be that designing to make money is a significant reason the major money makers are the major money makers. :-) As a dev turns the dial towards upper end hardware, they make the potential market with the best equipment happier and more people with the worst equipment not buy.

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socontrariwise

Which is a good point because the highest graphic fidelity severely limits your market …

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Raph Koster

The space for stuff like PUBG is in new genres, new markets, that AAA doesn’t play in (because AAA never plays in new markets, it’s too high risk).

Now that the survival game market is validated at AAA revenue levels, we are seeing AAA studios move in very aggressively with higher polish in an attempt to strangle competitors in the crib.

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socontrariwise

What AAA studio is aiming for the survival market? With which game? I’m not up to date there.
We are not talking shooter here are we?

Bree Royce
Staff
Bree Royce

I think you would surely at minimum count Epic (with Fortnite) and Bluehole/Tencent (with PUBG).

Bree Royce
Staff
Bree Royce

True. Will they succeed? Or just succeed in burning a whole lot of money in hot pursuit? (My guess is on the latter in the short term.) And how much of this is driven by the global market? Already it looks as if China is far more easily woo-able by PUBG’s eyesore than the west is. If you have an ugly-pretty game, would it be better to take it eastward?

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Raph Koster

Complicated question.

Part of the reason that service games are a safer business model isn’t just that the revenue is more reliable. It’s also that there are network effects. People tend to join the most popular service. It’s very hard to start a new competitor in a service business when a leader is already established. (And network effects aren’t just in services, but in any model that accrues community).

It can be done — WoW did it. Nothing managed to break its hold, though, once established. Nothing has been able to topple Minecraft, which relies on network effects, despite many trying with serious dollars. PUBG may have just gotten too big to topple already.

Not sure what you’re saying about Asian markets being more wooable than Western ones in PUBGs case. PUBG is an earth-shatteringly popular game, easily the single most popular game since Pokemon GO, and has completely crushed it on the Western games market. It is an event on par with WoW, with Counterstrike, with Starcraft.

Bree Royce
Staff
Bree Royce

I was referring to the fact that PUBG continues tearing up the charts in China even as it slumps here. But of course, that’s pre-launch.

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Brama Gola

Pre-launch, loller. Meanwhile, people are tired of it on a lot of levels already. Alpha/Beta is the new “release” cycle, and, surprise! People have played the game for almost a year in “not released” mode, and it got old for them.

It is zero surprise that a new market, one that has been hungry for it given all the clones that China produced, would eat it up while we are pseudo “over it”.

I mean, hasn’t this entire entry been about companies chasing after the money?

Xijit
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Kickstarter Donor
Xijit

I mean … Graphics help, but they ain’t everything.

Ideally you would want to pair awesome game play with amazing visuals, but without the gameplay you have just got a semi interactive movie that quickly turns tedious and I sure as hell am not going to be eager to toss money at the sequel.

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Arktouros

Yes, indie games with distinctive art have managed to break through so everyone will cite counterexamples, but looked at statistically, it’s something like 99.9% don’t.

I think this is the most important part that people miss about a lot of things on this topic. Pointing to some obscure, non statistically standard example and holding it up as if anyone can get the same results is moronic. Just like Battlefront 2 is equally it’s own statistical deviant in that many of these business practices have gone on for years (as we MMO gamers should know better than most) and largely ignored.

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socontrariwise

I disagree though on the claim that simply because the majority of indie games does not break even or make enough profit for the next game (those ARE the metrics of success we are talking about aren’t they…?) means they are not counting as counter example. Quality in gameplay is not exactly something many indie games offer. Lack of development and management experience, ridiculous feature set, trying to compete with polished games of a lot more feature breadth – none of that validates that you need awesome graphics.
And if someone wants to argue against that I’m happy to see a comprehensive analysis that manages to score graphic quality and gameplay feature polish and “wholesomeness” with market availability. But of course none of that is available /standardized so we are debating opinions here.

Theryl
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Theryl

As someone pointed out below, it’s a lot like the movie business. Once in a blue moon an indie/arthouse film breaks into the mainstream, but the vast majority of revenue comes from franchise flicks and sequels.

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Alex Malone

Really interesting view point from Raph.

I still think he hasn’t really addressed the ethics side of the argument and I’d like to see him explain more about the demise of the “b-game market”, but his explanation of how price points affect appeal, having no upper boundary for payments etc was all good to see in the context of how developers get their money.

He does make it sound like we’re heading for a future where all games are free and funded by subscriptions and microtransactions. That is my idea of hell and could easily kill off my favourite hobby for me

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Raph Koster

The ethics side is easy: gambling mechanics are basically unethical. The end.

As far as the demise of the B game market, it has a lot to do with technical advancement, as I mentioned. B doesn’t mean a B in gameplay. It ends up meaning B in polish. And consumers buy on polish first, gameplay second, because as Billy Joel once sang, “you can’t get the sound from a story in a magazine.” Everything about game marketing has tilted hugely towards visuals for ages.

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Sally Bowls

But why is gambling with money unethical and in the news while gambling with my far more valuable time is not?????? It has to be more than the meme of “unemployed in parents’ basement poors”

https://www.gamasutra.com/blogs/BryantFrancis/20171113/309533/From_loot_tables_to_loot_boxes_how_do_we_manage_an_addiction_to_addiction.php

is interesting. It has the stereotypical story of a mother telling the teenage boy

“took a sideways look at me and laughed, saying “you do know that’s how casinos keep people coming back, right?”

except she is not warning them about those satanic lootboxes from hell. She is talking about spending a whole summer raiding Zul’Gurub for random drops in search of two pieces of DPS-Paladin loot

Why is spending money for the hormonal rush of RNG loot boxes an unethical addition yet spending time for the hormonal rush of RNG loot from a boss not?

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Brama Gola

Why is spending MONEY for the hormonal rush of RNG loot boxes an unethical addition yet spending TIME for the hormonal rush of RNG loot from a boss not?

You answered your own question.

As cool as people like to say: Time is Money, its not. Especially if you are not getting paid.

But, your answer is in the word choice, obviously.

One is Time.
One is Money.

When you start charging people for their “FREE” time — you are a greedy arsehole.

Bree Royce
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Bree Royce

I think the best answer you can hope for is the one people have been giving you for months tbh: RNG loot drops are a core part of some gameplay loops, while lockboxes are external monetization. It’s not unethical to design an actual game loop that makes people want to keep playing; it’s unethical to monetize a game with gambling in order to exploit your most foolish or greedy customers.

None of which is to say that RNG loot drops aren’t worthy of objection. They suck, they’re stupid, and I’d rather avoid crap games that monkey with them. They’re just not unethical.

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Sally Bowls

My immediate snark is to question the assumption that lootboxes are not “a core part of some gameplay loops”

Let me be clear that I am criticising or at least disagreeing with the opinion, not the author.

It’s not unethical to design an actual game loop that makes people want to keep playing;

I find that unfathomable considering the last decade of history with video games.

The American Psychiatric Association added “Internet Use Disorder” to a section of the DSM

https://www.webmd.com/mental-health/addiction/features/video-game-addiction-no-fun
even has

But can a game truly become an addiction? Absolutely, Young tells WebMD. “It’s a clinical impulse control disorder,” an addiction in the same sense as compulsive gambling.

2006’s “how can you kill that who has no life” was referring to designing games to consume lots of time from vulnerable and susceptible people, not lockboxes. When I Google “dies while gaming”, I get 5,160,000 results.

In https://en.wikipedia.org/wiki/Internet_addiction_disorder the first two entries under Related disorders are
1) Online gambling addiction and
2) Online gaming addiction (Internet gaming disorder).

I find it disingenuous at best to somehow claim, presumably because of personal preferences, that games designed to prey upon people vulnerable to online gambling addiction are on a different ethical plane than games designed to prey upon people vulnerable to online gaming addiction.

tl;dr: (to keep the South Park quote theme) I call shenanigans.

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Stropp

There’s also the fun factor.

Some people enjoy raiding. Or PvP, or dungeon runs, or whatever. So the gameplay has two purposes: Keep them playing/having fun which also leads them to keep paying.

Lootboxes on the other hand have only one purpose, to keep them paying. There is no gameplay. Any fun is a byproduct, like playing the slots.

While both use Vegas-like techniques, things like raids at least offer gameplay and a challenge.

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Sally Bowls

That is simply not true: some people get fun out of opening a lockbox and developers spend time on “gameplay” http://massivelyop.com/2016/08/02/swtor-wants-to-make-your-lockbox-experience-better/. Nor do I think any of the cool kids of WoW think there is any challenge in AFKing through a LFR raid.

I don’t want to defend lockboxes; just pointing out that people enjoying something that is bad for them or that we don’t like is different than people not enjoying it.

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Raph Koster

You can make an argument for both being unethical — I have, I’ve been publicly concerned about the addictive qualities of MMOs since the 90s.

But it’s also easy in my mind to say that directly profiting off of exploiting a brain bug is worse than not directly profiting.

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Cosmic Cleric

Makes me wonder if all “games of chance” (RNG) are unethical, if you have to pay to play them?

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Sally Bowls

FWIW:
Q: How much does a $60 console game sell for (over 2 years)?
A: averages between $75 to $150 depending on game and region

From the last EA Earnings Call:

Eric O. Handler – MKM Partners LLC
Yes. Thanks very much for the question. Just curious if you could give us a little bit of a range for all your titles that come out in a given year for console, what percentage of revenue is the $60 versus the add-on content live services dollars? And I know that could vary by game, but if you could sort of give us a range of how it plays out over a two-year period?…

Blake J. Jorgensen – Electronic Arts, Inc.
So let me hit the first one really quick. It really varies. In some titles, you’d have a 10% to 25% uplift off of the core, so $60 plus 25% of that. In some titles, they’re going to be 125% or 150%. It also varies dramatically by region or geography because you have different spend capabilities around the world. So it’s kind of hard to pare it down.

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Raph Koster

I believe that if you do the math on their published earnings, you’ll find it averages out to over half of ALL the revenue coming into EA is from upsells.

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Brian Lewis

According to their Q2 FY2018 reports, Live Services is 55% of Digital, and ~35% of Total (Digital + Physical + Other) revenue.

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Sally Bowls

Nor was the upsell story unique to EA. It figured a lot in the discussion of UbiSoft (“The quality of our new releases is the result of our effort to transform our model and make our business more profitable and recurring. Given longer development lead times, our talents can fully express their creative visions and therefore maximize the potential of our games.“) and Blizzard (their first quarter with a billion dollars of in game revenue)

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Armsbend

Shoring up their defenses. I hope they all get blasted to kingdom come.

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Raph Koster

You are jumping to conclusions on a number of things here.

First, that I am “on their side” in whatever binary structure you’ve built in your head. I don’t know if you think I am pro-P2W (I’m not) or pro-lootbox (I’m not). I’m not a game publisher.

Second, that this is intended to be defensive. It’s not. It’s just some facts. Take ’em or leave ’em.

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Armsbend

Fair enough. These are sensitive times – gaming or otherwise.

May I ask a personal question? Whenever I see your name I automatically think, “Ralph…did the writer forget the ‘L’? Did Raph forget? Did his parents?” Is it an old family name? Did you make it up? Did your parents just like the way it rolled off of the tongue?

It isn’t often you see a name no one else has. I’ve been slightly curious since I first saw it.

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Raph Koster

It is short for Raphael. :)

I am not the only Raphael Koster on earth. There’s even one who is also in games, poor guy. :/

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Jon-Enee Merriex

OMG Raph Koster is a Ninja Turtle! I KNEW IT! #ExplainsSoMuch

Seriously though, that’s been a question I’ve had for years. Thanks for answering and thank you Armsbend for asking.

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Armsbend

I know right? I figured I wasn’t the only one :)

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Raph Koster

When I go to Starbucks and they ask my name, I say “Raph-R-A-P-H-like-the-Teenage-Mutant-Ninja-Turtle.”

It still only works half the time.

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Armsbend

Dude…at a coffee shop you might as well say Raphael. Or Ralph. Or Johnny. I usually make up a name I’d like to be called and go with it – avoiding confusion :)

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Armsbend

Thanks!

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Toy Clown

Then how does one explain the MMO market flooded with games that aren’t fit to be released to the public? MMO’s used to have a decent array of features before release, and now so many MMOs are released unfinished and years pass without them getting the most basic of quality-of-life features (or charging for them). It still boggles my mind that games like ArcheAge are still running, for example.

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socontrariwise

I think we’re living in different MMO worlds. I got late to the party in 2000 but MMO are a lot more polished and feature rich nowadays in my perception than they used to.

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Raph Koster

Easy:

1. MMOs always cost 3-10x what a stand-alone game did.

2. MMOs never launched polished, until WoW.

3. MMOs are much harder to make than naive developers think when they start building one. Then they run out of money partway through.

deekay_plus
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deekay_plus

wow launched polished? wut?

Bree Royce
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Bree Royce

It did compared to what came before it!

deekay_plus
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deekay_plus

even that i’d disagree with :P

Bree Royce
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Bree Royce

I don’t think it’s debatable. WoW’s problems weren’t polish so much as unpreparedness for how big it got in such a hurry. I remember from beta and launch a lot of lag and DCs, but the game itself as designed was exceptionally polished compared to games my guild was coming from (SWG and COH).

deekay_plus
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deekay_plus

ehhhhhhh… it had alot of that blizzard sheen to it perhaps. but alot of shortcomings even compared to previous mmo;s.

it was no wonder my l2 brethren would quit l2 for 2-4 months to it and come back and say it was an empty and lacking experience.

(not saying l2 was polished by any means).

by euro release? yes it was polished. at na release? no. just no.

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Raph Koster

It was dramatically more polished than any MMO before it. By a lot. Try reading Gamespot’s original review, you’ll see it comes up over and over. https://www.gamespot.com/reviews/world-of-warcraft-review/1900-6114072/

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Cosmic Cleric

Coming from SWG on WoW day two release, it was amazing how polished it was!

Having said that, the loot bug the first couple of days was a pain in the butt.

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Arktouros

I’m not sure where you got this idea that MMO games used to launch feature complete or even have an array of features. For example I remember when DAOC launched it had whole sections of the game unitemized and we were just grinding for raw silver for a long time. Other games like Anarchy Online released so broken their payment model wasn’t even secure meaning your credit card info could have gotten stolen. Ultima Online launched it was an unimaginable mess of bugs and exploits.

By today’s standards games are pretty much amazing compared to old MMOs. A great example was SWTOR. SWTOR actually launched as probably the most feature complete MMO ever. It had full on voice acted story, tons of dungeons, tons of heroic dungeons, high end raids with variable difficulty, the whole works. They even had PvP setup with battlegrounds and even an open world area. So it was a very impressive feature list that ultimately failed to keep people interested and playing at the time.

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Cosmic Cleric

It should have done allot better than it did.

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Veldan

SWTOR had all those features but not a single one was “done”. Most felt half-baked. I played it at launch and canceled my sub just before the free month ended.

– The open world PvP zone (Ilum?) was a joke, and people were even joking about it ingame
– The dungeons (flashpoints?) were horribly unbalanced difficulty wise. You got some sort of daily reward (a gear token?) for completing one, but you got to choose which one, so people only ever ran the easiest one, which was very easy. It was hard to find a group for the next-to-easiest one, impossible for any other.
– The instanced PvP was sort of a love it or hate it thing. Some people saw huttball and went “omg this is the best thing ever” while others went “omg this is the most frustrating and unfun PvP ever”. I was in the latter category.
– Raids: noone was doing them yet. Were they even present and/or active at launch?

My impression after 1 month was that the only thing it really had going for itself was the voice acted leveling story (which was very good!). After you had seen that, the rest was a pretty crappy MMO, and you had to make a decision to either stick around hoping for good patches to push the game in the right direction, or say “Ok guys, it’s been a fun 30 days, bye”.

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Arktouros

And yet, for all those failures, it still was by far more feature complete than other games that preceded it that had none of those systems. WOW launched without battlegrounds or any kind of PvP system other than mindless slaughter. Hell EQ2 at the same time launched without any PvP system at all. Age of Conan had no end game content that was viable to do. The list goes on.

My point, primarily, was that feature complete doesn’t guarantee success and that MMOs have always launched in various states.

SWTOR’s ultimately failing was it mismanaged it’s content. I could grind Ilum and Battlegrounds and got geared to Tier 2 a week after hitting level cap allowing me to bypass 90% of the end game PvE content with inferior rewards. It’s like they set the game on the “Easy” setting (presumably to be attractive to newer players) but in turn we just burned through the game that much faster and were left with nothing to do after. They had years of development time be consumed or rendered pointless too quickly. One of the secrets to WOW’s success is always give people plateaus that you can later erode (nerf) into mountains then later hills once your new content is ready to go.

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Raph Koster

That voice acting probably cost $20-30 million by itself.

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Cosmic Cleric

Jeebus! How much does a voice actor make per gig?

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Raph Koster

They are paid scale for acting. A contemporaneous article cited around #750 for a four hour session. That said… SWTOR had over 200,000 lines of voice dialogue, with hundreds of actors. It was the equivalent of many movies’ worth of recording.

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Arktouros

With the dialogue numbers they were boasting I can only imagine more than that.

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Jacobin GW

SOE with planetside 2 was a major offender. Instead of selling the game for $60 they slice it up into hundreds of parts for $400+.

Now studios are selling the game for $60 + slicing it up + adding RNG slot machines so you don’t even know if you will get $400 worth. Add in the constant BUY MORE! infomercial spam and decent or even good games just become unplayable.

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Raph Koster

Planetside 2 is an MMO. It was always going to have ongoing costs. You think running the servers is free? Sell that game for $60, have no ongoing revenue, go straight to bankruptcy.

deekay_plus
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deekay_plus

the pserver community proves hosting and bandwidth costs are chump change. we’ve got literal “amateurs” hosting 10000 man servers with customization not dreamed of on retail in multitudes of games with less shitty monetization than the best of them.

granted the don’t have the overhead cost of developing in the entire game or paying employees but nonetheless the evidence is there in spades and spades.

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Raph Koster

Pserver for which game? Homegrown server or actual commercial ones?

State of the art for an online FPS is to run the server at 60fps and send the entire snapshot/deltas of world state down every frame. They actually model individual bullet trajectories against the actual full resolution art on the server, in some cases.

A UO server ran at 4 frames per second on the server and updated you on a range about two screens wide.

Again I’ll point to the “software is a gas” thing. :)

Also, amateurs run into issues with hosting game servers all the time, and end up begging for donations…?

deekay_plus
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deekay_plus

lol most guns in ps2 are hitscan and for a long time rof was determined by local fps for all guns. the gun play is still a joke. i heard it’s better now but not much.

amatauers running pservers by and large in the best case examples do far better than retail on numerous metrics and development goals. but yes they do ask for donations. and it turns out their “donations” schemes are often far more consumer equitable than the professionals.

((Edited by mod, way too far dude.))

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Raph Koster

So you’re talking Planetside 2? That game came out five years ago. I was talking about current games.

Look, you don’t need to persuade me that amateurs can often outcompete professionals. But there’s tradeoffs — from customer support to ongoing tech development to legal recourse. *shrug* I am not sure what argument you are making… I am pretty sure that nobody operating an amateur server would tell you it’s easy or cheap in terms of time… older the game, cheaper it gets, of course.

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Jacobin GW

Yet SOE still died – nice bizzaro logic.

Ongoing costs does not excuse anti-consumer and anti-gameplay monetization schemes.

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Raph Koster

1. You stated ” Instead of selling the game for $60″ which means you are ignorant of fundamental business facts. You should go read https://www.raphkoster.com/games/snippets/on-pay-to-play-or-mmorpg-business-models-101/, because the argument over ongoing costs was settled several decades ago.

2. SOE didn’t die. It was spun out and acquired, and obliged to change its name.

I agree with the statement “Ongoing costs does not excuse anti-consumer and anti-gameplay monetization schemes” but you need to argue it from facts.

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Jacobin GW

Daybreak managed to fish a few bits out of the SOE dumpster but as a MMO company leading the FTP charge it was obviously a failure. Even the complete fluke H1Z1 which isn’t even FTP has been completely overshadowed.

The $60 vs $400 launch content valuation has little to do with ongoing costs and does not apply to your ‘fundamental business facts’. I did not complain about the optional sub (which I paid for in PS2 and in various other MMOs for over a decade).

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Raph Koster

Daybreak managed to fish a few bits out of the SOE dumpster but as a MMO company leading the FTP charge it was obviously a failure. Even the complete fluke H1Z1 which isn’t even FTP has been completely overshadowed.

I wouldn’t even disagree, but it just has no bearing on the actual topic. A company can pursue this business model because it is lower risk, and still fail at it.

The $60 vs $400 launch content valuation has little to do with ongoing costs and does not apply to your ‘fundamental business facts’.

You are basically arguing that a whole bunch of upsells available at launch are “part of the base game.” They aren’t, by definition.

It’s very similar to the argument that DLC that was on the shipping disc was actually “part of the base game they left out.” This is also just not the case.

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Jacobin GW

‘part of the game’ is relative. Of course publishers will invent convenient definitions to justify nickel and diming but it still results in a poor gameplay experience.

Charging $7.50 per gun in a FPS that gets nerfed a week later is all just harmless upsells though right?

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Arktouros

Planetside 2 was aiming for the “LOL” model for their game.

In many ways the “Guns” in PS2 were comparable to the “Heroes” in LOL that could be purchased for StationCash or Certs similar again to LOL. Then you had the split of in-game modifiers (IE: Suit armors, grenade slots, etc) segregated from the cash shop while the cosmetics portion of the game (IE: Camos, tire wheels, armors, helmets, etc) were entirely cash shop. Hell even just like LOL when they drop a new hero it tends to be overpowered (to drive sales) then later gets nerfed SOE did the same thing with new guns being a bit OP then later also nerfed.

Really, if anything, it’s a great example of why pointing to one game’s business model and saying “Just copy what they’re doing.” doesn’t work.

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Jeffery Witman

I think his reasoning is circular. Publishers and studios won’t fund, make, or advertise anything but the latest graphics-heavy and expensive to produce game with a proven IP that is licensed for millions of dollars. If that’s all the AAA studios are willing to make them that’s going to be the majority of the available product and thus will be all that available to consumers.

Look at all the crowd-funding and word of mouth that any game gets when it looks like it will break the (stale) mold of modern MMOs. The issue isn’t that gamers won’t buy it, it’s that studios don’t want to risk failing at making anything different. That’s why every big game is a sequel to another big game or a game based on a proven IP source.

They’re also talking about consoles and mobile gaming more these days, but the PC side hasn’t gone away. That’s 7 different platforms to develop for (iOS, Android, PC, PS4, XB1, Wii/Switch/3DS). You can definitely take in more money by being available on more platforms, but you’re going to also increase your development costs greatly (and cross-platform games are rarely actually cross-platform from the player side, Adventure Quest as the obvious exception).

It seems like a self-created problem stemming from every studio wanting to hit WoW numbers for far too long before realizing that no one ever would. Now they just churn out Skinner boxes with better graphics or sightly different characters time and again. Sports games tend to be the worst examples of that, with some games just being an updated player roster with the same controls and graphics as the previous game. Why spend money on a novel game when you can make Madden 2kX by updating a couple things (a minor patch in any other game) and throwing a $60 price tag on it? Why bother telling a deep, interesting story with an engaging combat and class system when you can throw a standard fantasy cover over your last Freemium offering and get people to throw lots of money at it again?

I don’t disagree with the upfront cost being a barrier to entry for many, or long term investment being more profitable over time. You can give a game away, have a small sub fee, and sell some cool stuff in a cash shop while doing just fine if you have a game worth playing. They don’t want to fail, though, so they need a model where games not worth playing can still pull in money.

That kills enjoyment, artistic endeavors, and the industry as a whole, honestly. If they want to be casinos they should just be casinos. No need to reinvent the slot machine.

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Raph Koster

Publishers and studios won’t fund, make, or advertise anything but the latest graphics-heavy and expensive to produce game with a proven IP that is licensed for millions of dollars. If that’s all the AAA studios are willing to make them that’s going to be the majority of the available product and thus will be all that available to consumers.

Correct, because this is the lowest risk investment at high costs.

And pubs play at the high costs level because it minimizes competition. High costs are how they freeze out upstarts.

I’ll again link to https://www.raphkoster.com/2015/06/02/an-industry-lifecycle/ and in particular, these paragraphs:

Because they make lots of money, and they are more worried about little guys than big guys, they start spending more of their cash on production values and on marketing, to freeze out smaller competitors. This manifests as things like buying up ads or users as intentionally high prices that smaller shops cannot afford; pushing higher art costs as they work to extend a technological lead so that smaller groups cannot compete; and buying some smaller guys outright. One of these people eventually makes the game that defines that genre forever. They “win.” And are rewarded with even larger swimming pools of money.

They quickly discover that mechanics innovation doesn’t drive loyalty and is very expensive. Brands and stories, however, are relatively cheap once established, and do drive loyalty. So they divert their spending from innovation towards narrative elements. In particular, they find that characters drive the most, followed by narrative worlds users can imagine themselves in. Soon they discover the idea of the brand extension, where they push these characters into many different (and usually cloned) mechanics and systems in order to extend their reach to new markets.

They also become the new big guys, and quickly succumb to all the same practices that they despised in the previous generation of big guys: exploitative pricing strategies, long crunch hours, aggressive marketing tactics, freezing out competitors using cash, etc.

Sports games tend to be the worst examples of that, with some games just being an updated player roster with the same controls and graphics as the previous game. Why spend money on a novel game when you can make Madden 2kX by updating a couple things (a minor patch in any other game) and throwing a $60 price tag on it?

This is one of those things that we all like to say (I’ve said it myself, when I was feeling bitter!) but isn’t really accurate.

You can give a game away, have a small sub fee, and sell some cool stuff in a cash shop while doing just fine if you have a game worth playing. They don’t want to fail, though, so they need a model where games not worth playing can still pull in money.

A public company can’t “do just fine.” It has to show growth.

Also, I would deeply challenge the idea that these games “aren’t worth playing.” Millions obviously do and it is not from lack of choice given that there’s something like 10000 new games a year on Steam.

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Jon-Enee Merriex

A public company can’t “do just fine.” It has to show growth.

Also, I would deeply challenge the idea that these games “aren’t worth playing.” Millions obviously do and it is not from lack of choice given that there’s something like 10000 new games a year on Steam.

Quoted for Truth. Since the majority of people don’t actually invest they don’t understand the basic understanding. If my 401K isn’t growing, I’m going to move money around. So for a company it is not good enough to just “do as good as last year”. That is a death sentence. They have to do BETTER than last year – EVERY YEAR – or they lose money.

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socontrariwise

No they don’t have to. There is growth stock and there is dividend stock.

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Ashfyn Ninegold

They have some good reasons to think this will gain them the most money. Here’s a list of 2017’s highest grossing films, every single one of them either 1) a remake; 2) derivative: or 3) a franchise:

10. Pirates of the Caribbean # 5: $750 million
9. Wonder Woman: $775 million
8. Guardians of the Galaxy 2: $820 million
7. Justice League: $850 million
6. Spider-Man #9: $900 million
5. Beauty & the Beast (3rd remake): $950 million
4. Despicable Me 3: $1 billion
3. Transformers #5: $1.2 billion
2. Fast & Furious #8: $1.3 billion
1. Star Wars 8: 1.7 billion (estimated, obviously not released yet, but who are we kidding?)

So where’s Dunkirk on this list? Okja? Wind River? The Big Sick? Or even Baby Driver?

Dunkirk, arguable the best film of 2017, made $525 million. Very respectable, but not even close to getting in the top ten.

These are worldwide figures, not US domestic.

Everything you’ve said is also true about the movie industry and frankly the music industry as well. And let’s not talk about how many times we’ve heard Beethoven’s 5th, because it just rocks:

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A Dad Supreme

Dunkirk, arguable the best film of 2017, made $525 million. Very respectable, but not even close to getting in the top ten.

The only reason I didn’t go see Dunkirk was because I already know how it turns out in the end. My high school history teacher gave me a spoiler. /wink

Half joking but something like Saving Private Ryan was a fictional take on a somewhat true story, plus it was “first”. I do think people tend to get fatigued on a certain type of movie or genre just like videogames and won’t go to see them all with the same urgency.

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Jeffery Witman

If making money is the only concern then this is a great argument for continuing things the way they are. The difference is that there are indie movies, studios, and streaming services that will pay for something different, novel, new, etc. Even in television you have options outside the mainstream networks. Games don’t have that for the most part. You have a few indie studios here and there muddling along, but no Netflix or Amazon or Cannes for games. More importantly, you don’t have the funding sources to back the smaller projects that might support indie studios. Crowd funding has taken this role on, but it’s done so poorly.

And again, if studios are putting all their money, best talent, advertising budgets, and viral marketing behind those films, of course they’re going to be the ones that get seen the most.

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silverlock

Movies cost a lot to make but no one has ever tried to make me pay extra to jump straight to the end. Although I must admit their have been a few that I would have.

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Raph Koster

Movies charge you each time you watch them. At a dramatically higher price per minute, I might add.

Once you aren’t willing to pay that anymore, they then charge other people for the rights to let you watch it for free.

Cyclone Jack
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Cyclone Jack

Nor do you need to pay extra for the ending, or to hear sound, or to have a seat to sit in. A ticket is all encompassing. Sure, you can get some popcorn or a drink, but those don’t change the outcome of your movie experience (unless you chugged an extra large drink and had to pee during the key moment of the film).

Theryl
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Theryl

Although theaters make most of their money from concessions. Ticket sales barely cover the cost of showing the film, if that. I suppose there’s a parallel to gaming in there somewhere.

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Cyclone Jack

Damn you and your Earth logic. :)

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draugris

It´s an interesting read but this statement:

“Pretty much every physical sport uses pay to win. You buy a better tennis racket, better sneakers, better racecar, better golf clubs, because you think it will get you an advantage. ”

is simply plain stupid. I don´t know if this guy has ever done any competitive physical sport himself.

Bree Royce
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Bree Royce

Dudes but seriously, at least google designers before ripping into them. Disagree with him, fine, but acting like the literal founders of the genre are just some randos is embarrassing.

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draugris

Did you answer me ? Because i don´t understand what you wrote in the context of my post.

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Raph Koster

Of course I have played competitive sports.

A Wilson Pro Staff 85 Original tennis racket goes for TWO THOUSAND DOLLARS. It is because it’s lighter and faster. That right there is paying in order to gain an advantage.

The entire sport of car racing is based around R&D expenditures.

And at least one type of swim suit was banned from competition because it was deemed over the line, in terms of being a purchased benefit that unbalanced the game: http://www.symscape.com/blog/swimsuit-banned-as-technology-doping

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draugris

I am sorry but this is just completely exaggerated. I did competitive sports myself. I did Teakwondo for over 6 years competitively. I did championships etc. Equipment for you and for me does not in any way makes that much of difference. In physical sports it is way way more about skill, talent and training than in games. Take your 2k tennis rack and play against a champion in a 200$ rack and he will still kick your ass. My best friend was in the german national team for Taekwondo and the gear they had was much much more about sponsorship than about a real world advantage. Maybe it makes a slight difference at a top of the tops level but even then this argument is strange because if pay to win would only effect players at an e-sports level we would have a lot better world for the average player.

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Raph Koster

Tae Kwon Do has, of course, almost no equipment dependencies at all. So it’s a poor example.

Nobody is disagreeing that in physical sports your training and skill matter more. Pay 2 win in general is incremental odds, nothing more. if you check the actual boosts given by P2W stuff in games, it tends to be really small. But it adds up.

Psst, training is pay 2 win too; only wealthier athletes can afford top notch training regimens, wealthier nations do the same and that’s why they disproportionately win all the medals.

I did a blog post on this very recently on tennis, actually: https://www.raphkoster.com/2017/09/22/31098/

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Cosmic Cleric

Are you speaking more towards the perception that better equipment gives an edge, or that it actually does give an edge, when saying that his comment is incorrect?

Gotta think he’s right, at least as far as perceptions goes.

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Alex Malone

Gotta agree with Raph too. Sometimes it is only the perception, but a lot of times it is a genuine advantage. From my own history:

Sailing – a new boat with new sails is almost always faster than an older boat. Have competed at national level.

Roller Derby – the best boots are usually the most expensive and are designed to minimise effort by reducing weight and maximising transfer of energy (i.e. not losing energy in cushions, optimum angles for power delivery to floor).

Squash – similar to derby, the best rackets weigh less (so you waste less energy) and transfer energy to the ball best.

None of these are “pay2win” exactly, however in every sport I’ve ever played you will definitely be better if you have the best equipment compared to average equipment. The exact advantage depends a lot on the sport – in sailing, you are heavily reliant on the boat so a better boat makes a massive difference, whereas roller derby is more dependant on you personally so better skates only helps a little.

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Raph Koster

Most of what people decry as pay 2 win in games is also stuff on the order of a 2% boost in a random dice roll.

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Cosmic Cleric

To be fair, if that 2% boost allowed you to beat an opponent in battle that you couldn’t otherwise (ex.: critical shot moment) then that truly is P2W.

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Raph Koster

No question! That was my point about sports equipment. :)

Heck, sports movies are full of stories about the scrappy team with shitty equipment who beat the well-funded one with great gear. It’s a fable about how grit can overcome money.

That shark swimsuit was apparently more than 2%… something like 125 records fell during the brief period it was in use.

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TomTurtle

Competition has increased. Consumer expectations and price sensitivity have increased. Longer periods of monetization with an increased focus on multiplayer to accomplish this.

He makes interesting points in the full read. The increase in multiplayer makes me think how even a series like Final Fantasy has dipped more and more into multiplayer, such as the FFXV Comrades DLC. It’s hard to ignore all the games outside of MMOs that are now finding ways to monetize consumers more and more.

When games are expensive to make, we get predatory business models, sequels, and clones.

I don’t know how accurate that is or not, but it makes sense at a glance. Though I still get the sense there are many businesses abusing consumers beyond what many would consider necessary.

I don’t know much about the economics of it all. I’m very curious to see where the video games industry will continue to go, if there will be any kind of crash or big shake-up or continuing on with incremental changes.

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Schmidt.Capela

I don’t really agree with him when it comes to only the cutting edge, most expensive games having a chance in the market.

I mean, that is generally true in games that aim for maximum graphical realism; in that segment any step backwards stands up like a sore thumb. And yeah, many gamers are only interested in games that fit that segment, as seen by all the comments about not bothering with games with stylized or cartoonish graphics.

For other artistic choices, though, it isn’t that bad. I mean, yeah, players expect better graphics than in the days of yore, but if your chosen art style isn’t realistic in the first place you can avoid many of the costs that the pursuit of realism would require. And there is a market for games in styles that don’t pursue photo-realism; Nintendo, in particular, does very well without pursuing photorealism.

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Raph Koster

Two quick things…

First, it isn’t just photorealism. Nintendo’s art direction is not cheap, just like World of Warcraft’s is not cheap. WoW almost certainly massively outspent EQ2 on art, even though the graphics were technologically less advanced. Cost is not solely driven by tech. It’s driven by polish. I assure you that Nintendo games ooze money.

Second, it’s true that more diverse games can thrive at the B level, because there’s less pressures driving up costs. But as we all know, that means that the higher end pubs stop making those games. The studios who do are at very high risk, basically — this leads to a common business pattern called “hollowing out the middle.” This is where cost drives up competition and causes more mid-sized businesses to fail, and you’re left with only really big and really small players in a market.

We have clearly seen this pattern in videogames over the years.

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Sray

Using Nintendo as an example in this situation is not really great, as Nintendo is more of an outlier in a market that it has all to itself. Photorealism isn’t necessarily a measure of how “good” graphics are. Your average Mario game looks significantly better than indie efforts like Yooka Laylee or Mighty No 9 (and those are indies that actually sold very well) despite both having “cartoony” graphics. Furthermore, despite a sizeable adult fan base, Nintendo games are primarily aimed at children with graphics designed to appeal to them; whereas similar, lower budget games are generally meant to appeal to a nostalgia market for adults. This kind of an “oranges to limes” comparison: it’s not entirely without merit, but it’s not really the same thing either.

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Anthony Clark

Yeah, it costs a lot to make, but they get a lot more in sales back.’

This in no way excuses the practice of loot crate gambling.

RNG needs to die.

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Raph Koster

I don’t like loot crate gambling either.

But you can’t argue against it without knowing the full context.

Are you willing to trade lootboxes for one of the following?

– prices doubling?

– no games over 2gb in size?

– sub fees?

Basically, you can’t have your cake and eat it too. You cannot get a Destiny without the business model. If you break the business model, you can’t have a Destiny unless you make up the money somewhere else.

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Veldan

I think you’ll find many people here that would gladly pick the “sub fees” option if it meant lockboxes (or loot crates, or gacha, or whatever term is currently deemed appropriate) would go away. I know I would.

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Arcanum Zero

Oof, not I. I don’t consider ‘software as a service’ substantially more ethical than lockboxes. I welcome anyone who can to convince me that MS Office 365 is anything but abuse of monopoly. Talk about consumers buying B software.

When I buy a thing, I buy a thing. If I’m paying a subscription monthly, I’d better be getting new functionality monthly — that is absolutely the only circumstance under which that is acceptable.

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Sally Bowls

Filter Bubble.

I think almost everyone here would. Which does not change the reality that in the mainstream market the sub idea is not viable outside of niche (and thus small/cheap to develop) games.

Re Filter Bubble: there was an interesting GDC talk by Raph where he talks about Filter Bubbles, Google, abortion, and sibling political consultant.

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Raph Koster

I would too!

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David Goodman

Well, I get what’s he’s going for and trying to say. I don’t ‘disagree’ as such.

I understand that Stardew Valley is an outlier — it’s a damned good game, but it’s one out of thousands being published that are. If not tens-of-thousands.

However, with that said…

I don’t see other publishers trying to copy-cat Stardew Valley; I don’t see big “AAA” developers trying to copy that kind of style of game.

I see Battlefieldfront of Dutywargame 13: Revenge of the Smeegol. (My fake example got away from me – i’m not deleting it though.)

I see a million clones of the same games, reskinned and repackaged and monetized in similar, if not exactly the same, methods (or adding those methods to games whose originals did not have them.)

I am not seeing multiple “clones” of Stardew Valley, or Darkest Dungeon, or many other games. I might not be looking hard enough, but I don’t have to look at ALL to see the other common games.

I would suspect that the huge sales numbers of a major AAA release title are more valuable as stockholder-bait than a series of very successful, but no “made all the monies” clones.

Seems rather self-inflicted.

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Cosmic Cleric

“Man, that Smeegol guy totally WTFBBQ pwned me with that ‘One Ring’ weapon!!!1!!1!!! Total P2W bullshite!!!”

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Raph Koster

A Stardew Valley does not provide a high enough return on investment for it to be worth the opportunity cost for someone with lots of money. It’s great for someone smaller, but it’s too high a risk for the larger company.

Is it self-inflicted? Yes, but it’s systemic (and not limited to games!). Again, please read https://www.raphkoster.com/2015/06/02/an-industry-lifecycle/ and https://www.raphkoster.com/2014/05/07/the-financial-future-of-game-developers/ for yet more context.

pepperzine
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pepperzine

Please correct me if I’m wrong, as I’ve never played stardew valley, but isn’t basically a copy of harvest moon?

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be rational

Yup, Harvest Moon definitely “heavily inspired” Stardew Valley.

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Humble DG

Side note – It’s like click-bait to me when the post picture is from SWG. :)

Bree Royce
Staff
Bree Royce

I’m sure you know, but for those who don’t: Koster was the creative director on SWG. And lead designer on UO, for that matter. SWG is surely his most famous game among MMORPG fans, hence why I picked a picture of a terminal from that game for this post. A bazaar terminal might have been more appropriate, but this one was handier. ;)

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Sally Bowls

Although, if this were a talk show, you would hold up this at the end of the intro before he comes through the curtain. (And if you were a modern Internet maven instead of a journalist, there would be an Amazon affiliate link.)

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styopa
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styopa

I genuinely enjoy serious commentary from actual industry actors.

Maybe he just sneaks past my gullibility filter, but I get the sense that he’s talking realities, and less of the (in this industry-usual) pub-hungry dev trying to be a celebrity, parroting what the marketing dept tells them to say.

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Tobasco da Gama

Seems like a not-inaccurate tl;dr would be that gamers on the whole don’t want to buy games that aren’t too expensive to make.

A more inflammatory tl;dr would be that Steam sales ruined gaming. :)

pepperzine
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pepperzine

When it comes to tarnishing MMORPGs specifically, we get to thank the early f2p titles with cash shops (such as Maplestory) and those early subscriptions based games that transitioned over to f2p, like LOTRO and DDO, instead of steam sales ;) Should also throw in the over-saturation of the market after companies witnessed the success of WoW.

wpDiscuz