Achievement Unlocked 12.12.08: Slowdown Showdown

Posted by Rod Oracheski on 12.12.2008

With the global economy slowing down, are cracks appearing in the popular 'video games are recession proof' adage? 411mania's Rod Oracheski takes a look at what's happening in the industry as a result of the economic downturn.



With the bulk of the year behind us, it should be time to celebrate the things that have happened, the games that came out, and the fun times we've all had. Unfortunately that's not the case for many companies, currently trying to overcome both a sluggish economy and credit crisis. This week, let's take a look at what impact the economy has had on what we're playing and how we're playing it, and what the ongoing repercussions might be.

It's a commonly-held belief that the video game industry, like other forms of entertainment, is immune (or at least highly resistant) to recession. Unfortunately, with the US economy in a tailspin, coupled with a global economic slowdown and the ongoing credit crisis, that doesn't appear to be the case - at least not for everyone.

While some companies are doing well, several companies are in dire straits right now, and at different levels of the industry. Developers, publishers, even hardware vendors are feeling the pinch.

SIXAXIS controls? Not a great idea.

Factor Five hit the news recently after a blog post by an employee indicated the company was in trouble and seeking funding. After 1UP ran the story, the blog post was taken down and a new one was put up saying the story misinterpreted the posting - something the cached version didn't seem to support.

Interpreted correctly or not, there's no denying Factor Five is seeking funding for their projects. They were hit hard by the collapse of Brash Entertainment, a company with which they'd signed a multiple game development deal with only eight months prior. With the credit crisis putting a new focus on risk, finding funding may be a trickier proposal now than it was a year ago - especially for a developer whose last project was roundly panned. Hopefully it works out for them, as they've done some stellar stuff in the past - even if Lair isn't one of those things.

A recent Gamasutra article talks about the economic crunch, noting that major publishers (like Activision, Electronic Arts, or Ubisoft) are relatively safe given the nature of their output - seasonal blockbusters that generally sell very well.

Nobody told consumers, however, and EA was forced to revise their financial forecast for 2009 in light of slower-than-anticipated sales. In the related conference call, CEO John Riccitiello said the company will be trimming in 2009 - cutting costs by making fewer games and increasing job cuts - a 6 per cent reduction in staff. He did also mention that the company will continue to look at the Mirror's Edge franchise, however - seeing the potential for growth there.

Leap of faith for EA.

While competitor Activision Blizzard is doing well, it should be noted the company relied heavily on sequels and not the smattering of new intellectual properties (IP) that EA trotted out for the holiday season. Taking a chance on Mirror's Edge may have backfired on EA this year, though that risk may set the stage for future gains. Activision, on the other hand, has publicly taken (via CEO Bobby Kotick) the stance that they're interested primarily in IP that can be 'leveraged' yearly for maximum gain - with one-off games left at the wayside.

Ubisoft is likely to lose money, though it's due to the economic crisis - not their Fall lineup. The collapse of UK chain Woolworths (more specifically their CD/DVD division: Entertainment UK) may cost Ubisoft $2 million, which comes at a bad time. Microsoft may lose up to $38.7 million in the same collapse, with Nintendo out $31.3 million.

Though they aren't in financial straits, with net income up $107 million year over year, Ubisoft is looking to maintain that sort of positive momentum, even if that means not putting out games in a series on a yearly basis. It's encouraging talk, coming from the same publisher who put two teams (more, if you count the multiplayer) on the Splinter Cell series so it could be a yearly release.

Hey Activision, think about that...Call of Duty burnout is a very real danger!

Midway is another publisher who has hit hard times, scrambling to avoid delisting on the New York Stock Exchange while losing money hand over fist - a net loss in the third quarter of $75.9 million. How bad is it for Midway? People are jumping ship while the company pins its hopes - formerly on TNA iMPACT! and Mortal Kombat vs DC, on a game starring Vin Diesel.

That's a tough way to dig out...

Atari once crossed the streams.

Other publishers are going a different way, despite the economy, with Atari - who qualify for a 'risen from the ashes' description - announcing their new game plan to rebuild the business. New President Phil Harrison, formerly of Sony, recently announced the company will focus on MMO games, with the purchase of Cryptic Studios (developers of the upcoming Champions Online and Star Trek Online MMOs), as well as a small group of potentially high-quality console offerings: The Witcher: Rise of the White Wolf, Ghostbusters, and Chronicles of Riddick: Assault on Dark Athena.

Even hardware manufacturers aren't immune to the economic crisis, with Sony recently announcing a slew of cuts in an attempt to rein in costs. The company will cut 16,000 jobs in addition to divesting itself of unprofitable businesses and cutting back on investments, all in an attempt to reduce costs by $1.1 billion.

The economic conditions affect gamers here the most of all, with hardware vendors reticent to lower costs in this economic climate - particularly if they're currently selling for a loss. Yes - if conditions were better, we'd probably have cheaper consoles...dare to dream, huh?

Sony would desperately (despite what their PR says about bundles, and value, and bundled value) like to drop the price of the PS3, but it's reportedly already selling at a loss and dropping further would simply incur more of a loss per unit sold. Consider last month's NPD numbers, with the PS3 trailing badly (outsold at a 2.2:1 rate by the 360 and a staggering 5.4:1 rate by the Wii) and dropping year-over-year - it's a trend that Sony would love to reverse, but they don't have the financial room to do it.

It's simple to look at the prices of the respective consoles and say that Sony has the most wiggle room for pricing, if only by virtue of it being the highest price of the three, but that's simply not the case. Both Nintendo and Microsoft make money, however much that may be, on each console sold and could drop the price (again, in Microsoft's case) if they saw their sales drop off. Both Sony and Microsoft are willing to lose a certain amount on hardware, they've shown that in the past - Nintendo has historically been against the practice, but in today's market perhaps that has changed - and I believe Sony is at or near that amount. Maybe if Home can prove to be a big enough revenue stream...

That said, I think we're in for a drop in the next few months - possibly alongside Killzone 2. This was the first month in which they could compare year-to-year sales at the same price point, and despite the addition of several key games to the lineup they dropped almost 100,000 units. Sony either needs to get some momentum going on the PS3 or start prepping the PS4 to try and beat Microsoft to market in the same way the 360 took a one-year lead over the PS3. I don't think either one should, or could, take aim at Nintendo at this point. Given the way Microsoft has apparently cornered the market on third-party sales, generating more third-party revenue than the PS3 and Wii combined, I don't know if they really want to in any case.

Declining sales of the PSP and PS2 (down 26% and 59% year over year, respectively) also hurt Sony, as those models are likely far more profitable to them. As with the PS3, it would be difficult to implement a price drop on either offering that doesn't hurt the bottom line after a fashion - they're making money on those units, so cutting price would also cut profits. In any case, is it really in Sony's best interest to prop up PS2 sales any longer, or should they make more of an effort to get those gamers looking towards the PS3?

Difficult decisions coming up at Sony.



With no new developments in Trophies this week, let's talk about Sony's other bignews: Home is finally here.

After beating the "Request timed out - /HUBPS3_SVML/unity/start.jsp" minigame and getting logged in, then disconnected, then logged in again, I was able to cruise through some new areas and listen to people screaming into their headsets before being disconnected for a final time. Awesome start to the new experience.

Actually that's pretty much the launch Home was anticipated to have, with a flood of people trying to download and access it. The 77 MB download is a little smaller than expected, though the 3 GB of reserved HDD space is a little surprising.

As with Microsoft's NXE update, I'm not really sure how excited anyone can be by the thought of a new UI - and that's really what Home is, a 3D UI for you to explore.

There was talk of presentations through Home in the past, but with the low caps on spaces (I believe 50 is the max, with buffer for invites likely taking that to the 64 person max cited earlier in development) seems to make that unlikely unless it's via streaming video - something that could be done just as easily (and without the jerks screaming into their headsets) via the XMB. Right now, with the Red Bull area up and running, it seems like Home is just a great way to see ads in a different way.

In today's economic climate, I see Home and hope Sony didn't spend a lot of money on this...



After casting aside the single-player campaign in order to level up online, I've returned to the Call of Duty: World At War campaign. Why? I'm trying to unlock the zombie mode, of course!

Cheap deaths bring this one down in flames.

While I like the game, when comparing it to Call of Duty 4: Modern Warfare, I have to say that it falls flat at times - particularly in the area of 'cheap' deaths. I'm playing on the second-highest difficulty setting and I have to say that it's unlikely I'll beat CoD: WaW's hardest setting. I beat CoD4 on the hardest difficulty, enduring some of that game's most annoying habits without too much trouble. This time around...no so much.

I've noticed that friendly soldiers will routinely ignore enemy soldiers, even when standing next to them, instead shooting at far-off enemies as I get riddled with bullets. It's something that rarely happened in CoD4, but it's aggravatingly common in this release. It's still satisfying to finally beat a level, but it's more of a "Thank God I don't have to play that crap again!" feeling...

I also put considerable time into Prince of Persia, and I have to say that I'm pretty disappointed by this relaunch of the series. The controls are responsive, the graphics are incredible (possibly the best on consoles to date), and the audio is top-notch...but where's the challenge?

The game takes hand-holding to new levels - often literally. If you throw yourself off a cliff, for example, Elika (your companion) will automatically save you with an outstretched hand - dropping you onto the path just before you went all lemming on her. In combat you're prompted when to block. Every. Single. Time.

The game doesn't focus as much on the combat this time around, but there's just no challenge from the meat of the game - the environmental exploration - either. In addition to the 'hand up' save, you can also hit a button at any time to be shown a glowing ball that traces the path to your objective. At least this is optional - or would be if there was any real way to tell you were going the right direction aside from the glowing ball...

Prince of Persia is an interesting game, to be sure. It combines drop-dead gorgeous visuals with rock-solid presentation, but falls short on the gameplay side of things by erring on the side of opening up to the casual market. It's a game that's definitely worth playing, but I can't say it's one that you have to own - a solid rental.

As I said last week, I've been spending time with the Resident Evil 5 demo. I'm not really sold on the game after playing it multiple times, however. The graphics are amazing but, like Prince of Persia, it's the gameplay that's lacking.

Unlike Prince of Persia, RE5 errs on the side of...well, of being Resident Evil. Capcom is apparently unwilling to step any part of their game other than the graphics into next-gen, and that's just unfortunate. Zombies move faster this time around, which doesn't work well with the tank-style controls. You're also saddled with a mandatory partner who has the survival skills of a lemming (Two lemming mentions in one column and neither is about the game? WTF is going on!) so you're constantly babysitting her because if she dies you're forced to restart.

As for the gameplay design itself, being unable to move and shoot is one thing, but requiring multiple buttons to aim and fire the gun? Needing to hold one button and hit another to swipe with the knife? That's just outdated game design. I'm not saying make it a run-and-gun shooter, but come on - there are better ways to up the difficulty and tension without deliberately hamstringing the player!

The game looks amazing, but I can definitely see - even from just these two levels and boss-style encounters - that the gameplay is going to be frustrating for a great many gamers who aren't willing to excuse it 'because it's RESIDENT EVIL!' It's a top-tier, high-budget title, and those kind of gameplay decisions are frustrating, puzzling, and disappointing.

Check out the YouTube videos here and here. If your computer can handle it, definitely watch them in HD (option should show beneath the lower right corner of the video).

Flame on, RE lovers. You'll see...

Until next week, when I'll have impressions of Codemasters' Rise of the Argonauts, I'm out.