With Microsoft's business update tomorrow, the challenges listed in Sony's most recent financial report, and the seemingly endless barrages of layoffs and studio closures, I thought it might be worth having a thread dedicated to talking about the business of video games and the headwinds the industry is facing. (That has the added benefit of letting the console-specific threads be more purely about gaming! In theory. Maybe.)

Core issues are stalled growth and the staggering costs of development/marketing. Both Microsoft and Sony recently reported record high revenue for their gaming divisions, yet that isn't necessarily translating to record profits. Microsoft is falling significantly short in console sales and Game Pass growth. Sony's record revenue is tampered by near-record expenditures. They're not producing nearly as many PS5s as intended, with shipments falling behind PS4 at this point in its lifecycle. They adjusted revenue expectations down 5% and expect console sales to slow down. PS+ subscriptions aren't moving the needle in the way they intended.

Sony announced that they don't have any major franchise titles slated for release before March 2025. (So it'll be third parties carrying those torches and first-party titles with a less seismic impact.) Microsoft has been struggling with a steady flow of killer content. Both companies are, officially and as-yet-unconfirmed, eyeing other platforms to make their businesses more viable. Microsoft is already delivering their first-party titles day-and-date on PC, and the new head of Sony's gaming division certainly makes it sound as if PC (and maybe mobile/cloud) will be more of a part of their strategy going forward.

Last month, GamesIndustry.biz posted an article leading with "if 2023 was the year of layoffs, 2024 will be the year of closures." Aside from Nintendo, it sounds pretty bleak.

So....errr, what do you think?

I think Nintendo was smart to go down a different path and not try to keep up with the latest and greatest graphics, especially because it cuts down their budget/time for making games while also reducing the cost of hardware (for them). Even their strategy to basically rarely discount their first party games probably works better than most of us would admit. And some of the best games I've played are smaller games that work fine on their system anyway (not to say that there aren't a ton of great games that are poorly ported or can't be ported to the switch).

It feels like AAA games on the other consoles cost way too much and take way too much time to complete, especially if the game doesn't land, but that may just be anecdotal. My kids are at the age where the majority of our time is spent on the Switch despite me owning both a PS5 and Series X on day one, so my view is a bit skewed. Also, Gamepass has meant that I haven't bought a 1st party Microsoft game in a long long time, but that train (and even PS Plus) is coming to an end soon as far as dirt cheap subs so we'll see what happens with my buying after my subs expire.

It's been a while for a market correction, that's what this is. I believe this happened right after the Sega CD thing... the market sort of crashed and was stagnant. Then it rose again. Every single commodity goes thru this but gaming has been almost immune for almost 3 decades --- which is amazing. It'll course correct and be right back on track.
To fujishig's point above, while I do care about graphics to a degree, they're not the determining factor in whether I get a game but please, PLEASE, stop making games so goddam long to play. I get some dungeon crawlers might be an epic adventure but most don't need to be more than 25 hours (or less). This alone could help with production costs.

The problem is that I think a lot of people equate value with length, so when a AAA title comes in at under 25 hours, people are like "is that it" even if nobody is going to play it that long. It's also why the kludge multiplayer/online in there, otherwise there is little incentive to get stuff on release rather than just wait for it to go down in price (and/or forget about it completely).

Should also mention that mobile games, filled with microtransactions and gatcha and online-only, are huge moneymakers, and console games have had a hard time transitioning to that model at that cost. But they try anyway and it turns off people that want just traditional console games (see: Avengers, Suicide Squad). But it may be that we're just a dying breed because it is unbelievable to me how much people spend on 2k tokens and Madden cards and the like, so gaming is going to continue to go down that route.

I blame the publishers for a lot of this. For the last 5+ years they have been devaluing their games with immediate sales, game pass, subscription services, and it has created a market where a huge percent of the market just waits until it's on sale since the trend is for the price to drop heavily within a month or two of release.

I'm still curious who the sucker is that pays full price for Ubisoft games, particularly right before Black Friday...

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I think 10 hours is my sweet spot for most single player games (though I've thoroughly enjoyed far shorter titles, such as Prince of Persia: The Sands of Time on PS2), unless it's an RPG. Then I don't mind longer length, as long as it doesn't fall victim to obvious padding.

I can remember games back on XBox 360, PS2, XBox and you would see the credits of the Team who had worked on it and be say like 100-150 people...now when you look at the credits it's like watching the listing of some huge big-time Sci-Fi Movie Production like Avatar or Transformers......the sheer amount of people involved in todays games is stunning and staggering. it's no real surprise when you see a report later down the road this or that game costs $100 Million and Up to make. That's a lot of money spent with hopes they'll get a close or above return. And it's not just people involved but the latest Hardware, Facilities (which like any other has to pay rent, lease, utilities, upkeep, etc.).

Another area of concern is that it seems like The Business Side of Gaming has become a priority over The Enjoyment of Gaming or at least with those who pull & hold the Purse Sting; that be funding and investors who seem to be more concerned about the return of their investment & funding than the quality of the games. Hence why you see a lot of reports of Workers and Employees complaining about long work hours, days, not getting sleep, rest or even paid.

But at the same time a lot of this falls on the demands from Gamers themselves who have constantly wanted and even complained about the need for Better and More Realistic "Eye Candy" as we would call it....there's Games today that were only pipe dreams just 6-10yrs ago yet you still see complaints about the graphics. It takes alot of people, time, hardware, software to make what we see today look like it does....A monster has been created by a lot of different hands with all pointing fingers at each other.

Maybe a game developer can chime in but I want to say "crunch" was a thing for a long time, at least as far back as how long corporations with shareholders were making games. The industry has, for as long as I can remember, basically abused the developer base because it's such a popular "dream" job.

Yeah, not much of anything is really new in regards to this "business of gaming vs enjoyment gaming". I'm not even sure where this terminology is coming from.

Devs may make games a priority as far as being good, but business will always push to make as much money as possible.

Crunch times have existed forever, because business, not because they focus on "an enjoyment of gaming".

Case in point. E.T. for the 2600. All of this existed even way back then.

Maybe this is more of some people just feeling jaded because we went from this new hotness of what the Xbox 360 era brought to gaming and then MS lost sight of gaming and tried to make the Xbox One the One device to rule them all in the living room. We know how that went.

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Definitely. And, at least from my outside perspective, at least for studios in/around the US, and at least outside of QA -- a lot of caveats! -- it seems like things are better in that respect than they've maybe ever been. Which isn't to say good, exactly, but less terrible?

Though I could see that pendulum soon swinging back the other way.

Though I think there could be a strong argument that things are more extreme now, even if it's always been this way to some extent. It's some combination of development costs skyrocketing, the risk for developers who can only put out a game every 4-5 years where one misfire could sink the entire company, publicly traded companies who only really give a shit about the next quarter's results rather than any long-term stability/success, and too many companies competing for the same few dollars. Everything has to be bigger and better than the last thing, the payoffs could be huge but so are the costs to get there, the creatives often aren't equipped to handle business on this scale while the money men don't really understand gaming, there's a lot of homogenization in gameplay/design to hedge bets (basically retreading a previous success' footsteps), and games take so long to make anymore that by the time one comes out, the trends you were hoping to ride have already come and gone.

Me, sometimes! Though generally just gifts or for Far Cry, and I'm trying to break myself of some of those habits.
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Right. It's bizarre to see people groan about buying a game that's too short, and yet the completion rates for the allegedly short game are, like, 20%. It's, like, they don't actually want 100 hours of gameplay; they just want to know that there's the option of playing for 100 hours, even if they're going to bow out after 8 hours anyway.
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But yeah, the first thing I do when I'm thinking about buying a game is to hit up HowLongToBeat or look for completion times in reviews. I sort my backlog by length, prioritizing games I could turn around relatively quickly and whittle that backlog down. (Which is why Persona 5 Royal has been there for a couple of years and perhaps always will be!) Obviously something like Assassin's Creed: Valhalla is obscenely long for a completionist; even after 100%-ing Origins and Odyssey, getting every trophy for the base game, Valhalla broke me. I finished the campaign but didn't engage with nearly as much of the side content as before. Controversially, I thought Days Gone and Ghost of Tsushima were both too long (just two of the first things that popped into my head). Tsushima was fine in a replay where I just mainlined the campaign, but honestly, when I finished the first big region, I was ready for the game to be over. Days Gone felt to me like the first game in a franchise and its sequel bundled together. My sweet spot is definitely more in the 10-25 hour range, with a preference more towards the lower end of that. I play a lot of tremendously long games, but all other things equal, I'd rather have a bunch of more varied experiences than devote myself body and soul to one game for months on end.

I completely agree.

No change to exclusive strategy. Four games to be brought to other platforms. Games not named, but not Starfield or Indiana Jones. Games are over a year old. Couple of them are live service titles. Two are smaller and not built to be platform exclusive. Sure sound like Hi-Fi Rush, Pentiment, Sea of Thieves, and...hmmm, Grounded, Killer Instinct, or Redfall? Grounded is my kneejerk.

Franchise being the key word here. All franchises start somewhere. Ghost of Tsushima, Spider-man and Horizon certainly turned out okay. Sony has a few new games hitting this year don't they? Rise of the Ronin comes to mind.

Wasn't Sony's actual announcement that they have no upcoming first party games until 2025?

No, the specific quote referenced “new major existing franchise titles”.

Ah, okay, thanks.

And we've had all four officially confirmed today!

Pentiment is coming to Switch and PS4/5 on Feb. 22nd, and Limited Run Games is handling the physical releases.
Hi-Fi Rush is coming to PS5 on March 19th, and Limited Run Games is handling the physical releases (including an Xbox edition).
Grounded is coming to Switch and PS4/5 on April 16th.
Sea of Thieves is coming to PS5 on April 30th.

Wonder why HiFi Rush isn't coming to Switch. I would have ordered a physical copy.

Technical considerations, if I had to guess. Maybe we'll see it on the Switch's successor?

This may be an unpopular opinion but I really think Nintendo has set them self up well for long term success by not chasing the graphics route but pacing their hardware while finding other ways to "enhance" gaming. Now some of this is just a by product of creating (essentially) a very power handheld vice a stand alone console. But in doing so they don't have the higher production cost that Xbox and Sony have. They also have very strong first party games which tend to hold value longer. Which means they don't have to rely on DLC to recoup production cost.

I don't believe the future of gaming is sitting in front of a tv. I've said this in other forums before but any future console that isn't a hybrid console is a step back and I don't think will do well. Even PC gaming is starting to go the hybrid route with all the new Steam variants that are out there.

Ha, it's what I said in the first reply. But unlike Sony and Microsoft, Nintendo has a vested interest in not losing a ton of money in investing in new hardware or software since gaming is their bread and butter, similar to their old rival Sega. Yes they could probably do quite well if forced to just be a third party publisher but that's obviously not what they want to do. And the reason their first party games hold value longer is because of their strategy as well, you almost never see a significant discount on their titles, even digitally, so there's almost no use waiting for the price drop. They are completely behind in things like subscription and online services/gamine but they also don't really stray away from their core.

Not sure how skipped over your response, but yea exactly haha. I do hope Switch 2 pushes us a bit closer to mid cycle PS4 graphics though. I also hope they figure out the joycon issue (and forget about motion controls).

Another bloodbath, this time at Sony Interactive Entertainment:

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