(Bloomberg) — Designers of the world's best-selling video games gathered in San Francisco this week, but the atmosphere at this year's game developer conference was at times somber.
Gaming companies have dealt with layoffs, mergers, and product cancellations. Although 2023 brought some big hits, many executives roaming the Moscone Center believe that rising development costs, slowing growth and pressure to deliver winners have led major companies to play it safe. He said that some of the innovativeness of the company has been lost as a result of the company's aggressive approach. industry.
“It's become harder to take risks,” said Tencent Games vice president Martin Civil, who previously worked for Electronic Arts for 15 years.
Popular titles can cost up to $300 million to develop, which is the same as a blockbuster movie. And just as the movie industry provides a plethora of superhero footage, video game makers are relying on big-name franchises to keep up with expanding budgets, executives at top companies say.
Slow growth explains a certain wariness. Market research firm NewZoo predicts the $184 billion industry will grow less than 1% this year. More than 6,000 workers have recently lost their jobs due to spending cuts by major companies.
Under new owner Microsoft Corp., Activision Blizzard has discontinued “Odyssey,” a survival game it had been developing for six years. Tencent's Riot Games division, Sony Group's PlayStation Studios, Bandai Namco Holdings and Embracer Group AB are among the companies that have canceled dozens of unreleased titles. Electronic Arts has halted development of a new first-person shooter game in the Star Wars universe as it lays off 670 employees.
Players' ever-increasing demands for graphics and gameplay, combined with the continued popularity of “service” titles that have persisted for years, are raising the barrier for new entrants.
“The video game industry isn't growing at the budget level. People are going to get what they perceive to be safe. No one wants to play it safe. It’s a good, predictable match.”
At some point, he said, costs can become prohibitive even for well-known franchises. Insomniac Games, the studio behind the award-winning Spider-Man 2, laid off staff this year despite selling 10 million copies of the $70 game that cost him $300 million to develop. did.
Investors have other options, including platforms that allow users to create their own games, like Roblox Corp. and Epic Games' Unreal Editor for Fortnite. That's because, for big-budget games, “the hit rate is too low, it's too unpredictable, it's too far-flung, and too many things can or can go wrong,” Persson said.
Indie publisher Devolver Digital Inc. is one of the few companies that hasn't reconsidered its approach amid industry pressures. The company works with game budgets ranging from $1 million to his $5 million, including hits Cult of the Lamb and Hotline Miami.
“Our strategy is to weather what's going on,” chief marketing officer Nigel Rowley said, adding that the small developer hasn't bankrupted the company yet. “There are still risks, but… It's not catastrophically high.” ”
At the conference, a studio chief's blatant departure from trends drew praise from his peers. Larian Studios founder Swen Vincke told attendees that the company has no intention of producing a sequel to last year's hit Baldur's Gate III. The Dungeons & Dragons themed game will be the last in the series.
“We want to do something big and new. We don't want to rehash what we've already done,” Vincke said during a panel discussion.
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