Comment by caseyy

> Games cost more to make but there is resistance from players to pay more

It's a little bit more involved than that. Games don't have to cost much more to make, they just are due to declining quality of leadership and poor executive decisions. It's more like, "AAA studios are running their budgets up (arbitrarily, usually not driven by any customer request or engagement)" and "players are resistant to paying for that".

"Clair Obscur Expedition 33" literally just came out a few days ago. It's gorgeous high-fidelity AAA-like art, it's super well done, it's incredibly well received, and it's retailing at $50 ($60 for the 'Deluxe Edition') at launch (not including current steam sale). It's doing great, because they made a great product, kept to a reasonable budget, and sold it at a reasonable price. Oblivion also just got a remaster at the same pricing by Virtuos, and it's doing really well. Baldur's Gate 3 is also another example, amazing title, AAA quality graphical fidelity, $60 launch pricing (digitally on Steam & GOG, anyway).

Compare that to something like Ubisoft's "Star Wars Outlaws", which was $70 digital base ($130 Deluxe Edition) at launch. Yes, it's high-fidelity and AAA-like too, but it's very much not well done, it's not well received, and it's arbitrarily super expensive on top of all of that.

Games don't just "cost more to make" automatically, it's mostly not based on inflation or underlying costs. AAA studios are increasingly more mismanaged (or just demanding higher margins) than they did before, and that mismanagement is impacting their cost structures. Instead of fixing those mistakes, companies are expecting players to just forever eat those additional costs.

If the game is really, really good, they might get away with it. (Nintendo, probably). If their games aren't that good, players are going to walk (Ubisoft).

It's not "the market is saturated". It's not "the market is overcrowded". It's "the market is competitive and expects quality", you can't just shove a half-baked only-ok game at high pricing, and expect it to be a success.

I also wonder if the decline of the middle class and a growing lack of leisure time for the lower/middle class (more people than ever working multiple jobs to make ends meet), also have been having an impact on sales.

There is much to be said about the industry. Most game releases compete for significantly less than 20% of the net bookings each year. Others are black hole games (the multi-year/multi-decade lifespan games that attract players and hardly let go at all), accounting for about 30% of the annual net bookings. The top 20-30 franchises account for about 50%, and the 20,000 other games made annually account for about 20%. Of the 20%, the top 50 releases each year will take 19% of the bookings, with remaining 19k+ sharing the 1%.

Just like Facebook, the first-mover advantage has favored many now-established studios and franchises. They exploded game-development costs because they could, and funneled these costs into marketing and moat features indie developers could not build (such as huge open worlds, amazing sweaty character face wrinkle rendering tech, and SOTA systems). But many of these companies did not respect the player's wishes for well play-tested games with interesting stories and mechanics. Still, they captured the top 20-30 franchise part of the annual net bookings, and strongly compete in the top-50 game part. Some even built some black hole games (GTA Online, Rainbow Six: Siege, Fortnite). For a long time, they avoided much of the pressures felt strongly by smaller companies. They were "above" the 99% of games that have to compete for close to 1% of the revenues. Their marketing was so strong (plus, they strengthened it with access journalism) and features so moated, they could do no wrong.

However, over the last 5 years, things have changed. Many AAA industry legends have left their jobs at major studios to start small studios and create games as a form of interactive art, rather than to make publishers rich. Ultimately, in their view, the greed and blind following of what players would consume (trends) in large numbers led to a sterile industry that could no longer create art.

The growth engines got exhausted because players did not actually demand what they were offering, such as season passes, eSports corporate shooters, microtransactions, padded playtimes, user-generated content, and the other things. The new growth engines (AI, targeting kids, etc) are also what the players don't want very much. The industry understands it, and investors are starting to catch on after facing a decade of poor returns, too. The crucial point I am trying to make is that the industry spent a lot of money on these growth engines that the players didn't truly want, led by market metrics that genuinely showed they were consuming it. But now the gig is up, the writing is on the wall, and everyone inside and out of the industry sees it.

As a contrast, many Eastern companies (Nintendo is an especially prominent example) stuck to classic pricing models, did not inflate the cost of their games with their money for moat (most indie developers can make games to compete with Nintendo outside of the IP), and never used the growth engines used in the West. These companies, along with many people in them whom I know personally, are largely unaffected by the industry crisis. They were always making games their users wanted.

Finally, I have to say, the industry is split in two. 8/10 AAA companies are struggling because they cling to the growth engines (old and new) that the players don't want. About 2/10 game developers and publishers genuinely build games that people want, even in the West. And now that the pressure is up, some AAA executives from the 8/10ths are becoming acutely aware of this. Emphasis on "some". So, yes, the industry in some part was, is, and will continue to make games that players want. But the more interesting part for our discussion is the large part of it that wasn't, isn't, and perhaps won't be.

Of course, there's some probability I'm reading this wrong. I'm making my business bets in the industry based on it, but that doesn't mean it's necessarily right.

And thanks for reading the report before engaging in the discussion. That is appreciated.

games don't cost more to make, just certain out of touch companies keep dumping tons of money into dumb shit gamers don't care about. it has never been easier to make games with a lower entry barrier than it is right now.