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Going (for) Broke

AJ Dellinger | 9 Mar 2012 13:00
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It is no secret that America's economy has been reeling for the better half of the decade. Although the gaming industry has been referred to as "recession proof" thanks to regular growth and expanding revenue, the pockets of gamers and game makers alike are ever tightening. Consumers are looking for the best value for their dollar, and studios are looking for the same. A quick glance at the news feed of one's choice would reveal layoffs nearly across the board for major game developers and publishers. It's hard for consumers not to equate such developments with an inevitable drop in quality, but this sudden restructure within the industry seems to be leading to just the opposite.

There's no denying that the gaming industry has been an economic force for the past ten years.

There's no denying that the gaming industry has been an economic force for the past ten years. While the United States economy has sat nearly stagnant since 2005, the gaming sector has seen a 10.6 percent growth. The problem this has caused, though, is oversized companies. It's the same issue that brought the dot com boom and bust in the late nineties, and the effects are starting to show. Even successful game developers have been unable to maintain their staffs under the current model. Companies like Electronic Arts have been seen profits in the red despite over $3.5 billion in revenue last year. Some major developers have cut staffs by over 25 percent in attempts to keep their heads above water and their profit in the black. Nearly every press release that announces another desk emptying or door closing contains a common phrase: "Restructuring."

If there is any clear indication that the old model of game development isn't working, it's the events of LA Noire developer Team Bondi. The group created one of the top-selling games of 2011, the fastest selling new intellectual property of all-time in Europe and a chart-topper in the United States for over two months. Now the company is being liquidated for parts while their employees wait to receive over £1 million in unpaid wages. If one of the best-selling games of the year can't recoup enough to pay the employees who made the game, how does any company expect to maintain this failing model?

To put it simply, they can't. That's where the restructuring is taking place. The model of spend big money to make big money doesn't apply any longer. Gamers are starting to make decisions with their wallets. When they do make the decision to open their billfolds and fork over their money, they want to make sure they're getting the most out of what they're spending. If the past few years have taught anything, it's that the best way to loosen the pockets of gamers is to give them quality content and value. There's perhaps no better indication of this than the success of downloadable content. It's something that all gamers are familiar with at this point, whether they have made a purchase or not. It explains why the average Call of Duty: Black Ops player has spent $76 on the game and FIFA 10 generated more revenue from downloadable content than sales of the physical disc. It should come as no shock to anyone that if gamers like a game, they usually want more of it.

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