411 Games Fact or Fiction 01.27.09: Recession Proofing the Industry, Working Around Game Legeslation, Playing Online With the Developers and More!

Posted by Jacob Lopez on 01.27.2009

Is the economic slump really to blame for the industry layoffs? Are tax cuts a way around unconstitutional game laws? Ever wanted to play Mortal Kombat with Ed Boon? That and more as Rod Oracheski and James McGee square it off in this week's 411 Games Fact or Fiction.

Welcome to this week's 411 Games Fact or Fiction. This time we talk a bit about game industry tax breaks, online petitions, industry layoffs and of course lots of other gaming news.

Rod Oracheski, the 411'er who writes Achievement Unlocked, will be joining us this week as he takes on James McGee who usually covers the news.


Let's do it.


1) Kotaku recently ran a column about the industry layoffs. Studios are shutting down left and right. The story implies that most of the fault lies on the publishers and developers and their bad planning, and has less to do with the current economy. Fact or Fiction?



Is the industry recession-proof?


Rod Oracheski: Fact. It was tough to decide which side of the issue to fall on here. On one hand, I'd agree that failing to better plan for the slumping economy was one reason publishers and developers need to cut staff but to say that has little to do with the economy at all is ridiculous. In many cases it seems to have been bad decisions on what to greenlight, decisions that come from the top. Each company is different, obviously, and in different situations. A good deal of EA's cuts, for example, seem to be aimed at preventing larger cuts in the future - slimming down now to avoid wholesale closures down the road. Others are companies reacting late or being hit by other factors - Factor 5 and Brash's financial issues, for example.

Some of it isn't bad decisions or bad luck - it's bad games. At least some of the closures have been related to putting out big-budget flops (Haze and Lair spring to mind). Simple solution - stop making bad games. For the less-obvious ones, well...people don't seem to be buying as many games, which generally means they cut out the 'on the bubble' titles - so new IP, especially those in 'niche' genres, stay on the shelves.

The only way to avoid that would be to drop all new IP development and just keep shoveling out sequels. Does anyone really want that? I mean I'm enjoying Skate 2 and Call of Duty: World at War, and looking forward to Call of Duty: Modern Warfare 2 (or whatever they call it) in a big way, but I also want to play new IP like Ninja Blade and Brütal Legend. So why don't studios do one, then the other - I think Ben Affleck summed it up best in Jay and Silent Bob Strike Back when he explained that "You gotta do the safe picture. Then you can do the
art picture."

I did get a good laugh at the notion that gaming is recession proof because sales went up in December. Sales of just about everything went up in December - it's called Christmas, guys!

James McGee: Fact. Like Rod said, it's a little tough to call this one, but I think these hard times have been coming for a while in the game industry, and they're due largely to poor decisions on the part of developers and publishers. You can look at the film and music industries for precedent: numbers go down and people start crying "Oh, its piracy! It's television! It's fluoride!" No, it's overcharging for a crap product. You hate to see developers like Free Radical close all together, but it's one of the consequences any company has to face. Haze may have been a fitting swan song, because it was just another over-hyped, derivative shooter in a flood of like-titles. Every company can't expect to put out essentially the same game with a different coat of paint and expect the industry to sustain itself forever.

Like with the legislation issue (question 5) [Ed. Note: James was given questions 4-6 before questions 1-3] , there is an upside to this in that studios will trim the fat and devote more time and effort to a handful of games rather than spreading themselves too thin. The downside is which games will developers choose to concentrate on? Again, Rod called this one (kudos for the Affleck reference!), and like him, I'd like to see a mixture of both new IPs and sequels. That means gamers have to champion both causes and show studios what they're really interested in.

Score: 1 for 1



2) Last week the MK vs. DC development team, which included Mortal Kombat creator Ed Boon logged onto the PlayStation Network to go head-to-head with the series fans. We have seen other developers like the Gears of War team join in online matches. While this is not very common, and it probably doesn't do a lot to promote the game, it is a great way for developers to connect to their fans.



Got the chops to take on the MK Creator?

Rod Oracheski: Fact. It's great PR for the game and the company, getting people talking about MK vs DC (and for free - which is the best advertising ever) and maybe inspiring some who were on the fence about the title to pick it up just for the opportunity. It also helps the development team, giving them a chance to hear some honest feedback from people who weren't involved in the development process at all.

Things like this really help word-of-mouth advertising, whether it's someone at work the next day talking to his gaming buddies about getting to play Ed Boon, or seeing everyone on your friends list playing MK vs DC and deciding you should get that one too. It's definitely win-win, and something we should see more of.


James McGee: Fact. Studios like Valve and Bungie have set the standard for great fan communication. As a result, they are two of the most beloved developers going today. Interacting with fans can only ever be a good thing for game makers, because it gives them raw, unfiltered feedback from their consumers while building that sense of loyalty. Playing the actual games on Live or PSN is the ideal form of interaction, because it lets fans and developers share in their mutual hobby. I also think you get a more honest representation of the consumer, because everyone plays online, from casual gamers to hardcore devotees, and so you're not as likely to run into the same skewed perspective as the trolls that frequent online discussion forums, flaming or fawning indiscriminately

Score: 2 for 2



3) Fallout 3 and Grand Theft Auto IV, while obviously not the first games to make use of downloadable content, are two of the games that come to mind when you think worthy DLC. Fallout 3's Operation Anchorage add-on gives players several hours of extra playtime. GTA IV's Lost and Damned is the first part of the Xbox 360-exclusive episodic content, and almost a completely new game. Maybe I am stretching the possibilities a bit, but if these are successful, do you think it is possible to one day see direct sequels or spin-offs as DLC rather than full-on retail releases?


Rod Oracheski: Fact. I think that's coming whether or not these are successful. Companies want to cut costs, and digital distribution - even if it's only one facet of their total distribution methods - is a tempting proposition. It's still got a ways to go and a lot of hurdles to overcome before it'll be mainstream. Bandwidth is an issue - and more than speed, you need to consider caps. If I'm capped to 30 GB download in a month, how many games can I realistically get per month that way?

I think substantial DLC will be the next big step. We'll see expansions for big games, giving publishers a chance to use one release to keep making money - using a single game as a platform for eight months worth of content releases (drop the first four months after retail launch, then every two months after that), then dropping the sequel on us after 12-18 months have passed and launching a new platform for content.


James McGee: Fact. I hate to say "I called it," but I've been predicting this trend for a long time. As computer and console technology continues to advance, high-speed internet becomes more common and efficient, and the costs of brick-and-mortar distributions increase, the logical evolution is digital distribution. It started with music, movies are following suit, and games are close behind. Valve's Steam services has more or less perfected the art of digital distribution, and everyone from Gamestop to Amazon are jumping on the bandwagon. And we're talking full games, here, like the aforementioned Fallout 3—not just glorified flash games and expansions. I think it is fully within the realm of possibilities to see retail distribution go the way of the dodo within the next decade or two because it just makes sense for everyone involved. It cuts cost for both developers and consumers, it's convenient, it cuts down on pollution and resource consumption (now we just need to make computers more green) and admit it: all us geeks think that technology is kinda sexy.

Score: 3 for 3



Alright, switch!



4) Last week Ubisoft reported strong 3rd quarter results with sales of over $650 million. A few days later, stocks tumbled 23.5%. Do you think investors are just starting to fear putting their money on the game industry?


But things were going well...

James McGee: Fact. I don't think this necessarily reflects poorly on the game industry. There is so much fear in the air regarding the economy in general, everyone is getting tight-fisted. To be fair, our "fledgling industry" (yeah, we all know its been big business since the late '70s, but most people still refuse to accept that fact) isn't as sure a bet as other ventures.


Rod Oracheski: Fact. Like James said, people are getting tighter with their money and that means they're leery of the video game market right now. Can you blame them? Investors look for low-risk ventures right now, willing to accept that 'low-reward' part to have a better chance of keeping their money, and they see news item after news item about video game companies shutting down or cutting staff.

When Ubisoft announced they were lowering their fourth quarter earnings expectations, skittish investors bailed out. I would guess that stock is going to be picked up, and it's already started to recover, by people who know the market a little better, people who know who Ubisoft is and what their third quarter sales were like, and know they have a good slate of games coming up.

Score: 4 for 4



5) Texas offers tax breaks to developers of games that meet certain criteria. Oklahoma is on its way to doing the same. Both exclude production on M-rated games. Some responded to the news with worry that it may be a way for state government to discourage the development of M-rated games, or maybe it is just a step towards offering incentives for game studios. Do you agree with the notion that it may just be a way to force away development of M-rated games?


James McGee: Fact. I think it's pretty obvious that these measures are geared toward stifling M-rated games. Most of the politicians involved in the current voting are the same ones who proposed Oklahoma's gaming legislation in 2006 (which was later ruled unconstitutional). It's an indirect way of achieving the same goal. These tax breaks don't outright ban M-rated games, but they make it harder for developers to produce mature titles. It's a shrewd bit of political maneuvering, but there is a silver lining. Publishers will likely stay away from the M-rating unless they have a project that truly warrants the content, and that they are truly passionate about. That could lead to better games for us, so thanks, Mr. Politician!


Rod Oracheski: Fiction. I don't believe any of those politicians truly care whether or not people make M-rated games. They just don't want to be the ones funding (via tax breaks) a game that comes under fire for being violent or over the line in some other way. I know here in Canada we provide tax incentives to movie studios to film on location, and I imagine it's the same in the US. I'm also willing to bet that both exclude pornos from those breaks. For these politicians, it's one and the same - controversial material that they can't afford to be seen as supporting.

Score: 4 for 5



6) Winter, a Wii adventure game which still has no publisher has pulled in a lot of attention, and with good reason. Fans are making their voices heard, and an online petition is already making its way around the internet. I hate to sound like a negative Nancy, but do you think that publishers with big money at stake are ready to listen to online petitions?


Games McGee: Fiction. Maybe it's a faux pas to say this (being an internet writer myself), but the opinions of the online community are not always indicative of public taste at large. You need look no further than online darlings Okami and Psychonauts, both of which floundered in sales (poor Okami had two chances on two systems and still didn't set the sales charts on fire). Bottom line: publishers are interested in making money, and the signatures of a few internet devotees don't guarantee a profit. If gamersreally want to champion small developers and off-beat games, they should focus more on buying those games than gabbing about it on the 'net.


Rod Oracheski: Fiction. The Internet does a lot of things nobody should pay attention to. Okami and Psychonauts, as James pointed out, are both good examples of games that had great Internet followings that led to nothing at retail. 1,000,000 signatures on a petition are great, but when a publisher suspects (and they should) that it'll lead to under 30k in sales, it's going to look at another project instead. The economy just isn't in a place where companies can take a chance on risky new IP - recent closures show that pretty well.

In any case, how many online petitions that actually accomplished something wound up accomplishing something lasting? The Internet's unwashed masses brought back Serenity for a movie that didn't set the world on fire. They petitioned Jericho back on the air after a great first season and got a live-action version of The Tick greenlit...then didn't watch.

Full disclosure - I once signed a petition at PetitionOnline that was aimed at getting PetitionOnline to shut itself down. It had upwards of 700,000 signatures before they took it down. PetitionOnline is still, at the time of this writing, online.

Do the right thing, PetitionOnline.

Final Score: 5 for 6.




We have a final score of 5 for 6. Rod and James get to go home happy knowing they tend to agree on most of the current gaming news.

Next week Ramon should be back. This time, I promise.

Until then, this has been another edition of 411Games Fact or Fiction.