The credit freeze is burying us in.

Think of the recession as a long winter storm. If we’re going to outlast this period of circumscribed finances, we’ll have to entertain ourselves. Forget dinners, movies, vacations in warmer climates. It’s time to rely on the fun we stashed away in the closet for emergencies.

At the Biltmore Hotel in Providence, R.I., in February, several hundred players of dozens of varieties of games huddled together against the New England cold. In the Garden Room, a chandeliered ballroom replete with candelabras, thick rugs and a velvet-curtained stage, a belly dancer wove her way between long tables laden with miniature figurines for Warmachine, a popular tabletop wargame. For a few minutes, the 50 or so players looked up from the white metal armies they’d arranged on foam and plastic landscapes to watch her gyrations, but they soon bent their heads to the business of rolling dice, determining positions with retractable tape measures and crushing each other’s tiny forces.

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This is TempleCon, an annual gaming convention held in Providence. Unlike most such conventions, TempleCon is ecumenical. It brings together players of miniature wargames, collectible card games, roleplaying games, videogames and board games. TempleCon’s gaming line-up constitutes a healthy assortment of products expected to fare well through the recession.

Financial analysts argue that games will weather the economic downturn better than other entertainment media. Though games tend to have a high buy-in price, they offer good value for the money, often providing hundreds of hours of diversion rather than occupying a mere evening. The Economist says so, as does Forbes. Naturally, game companies themselves are quick to echo the sentiment.

The first booms in games – both the pen-and-paper and electronic varieties – occurred during the recessions of the mid-’70s and early ’80s. A number of investment analysts advise betting on the game industry now. Yet we’ve recently seen huge losses, cutbacks and even bankruptcies affect several of gaming’s biggest companies. The business model for profiting from games has changed considerably over the past 30 years. It’s unclear whether the industry really knows what it’s doing today, even without the uncertainty of a global economic collapse.

But crisis breeds opportunity, and TempleCon isn’t wasting theirs. The convention provides an example of a gaming community benefiting economically and culturally from broadening its audience. How does the videogame community compare in its handling of the crisis?

Spring Snow
In early March, the New England Games Special Interest Group at MIT held a conference on the state of the game industry in the recession. Of the panel discussion at the event, Michael Cavaretta, a lawyer and founder of NE Games SIG, says, “If you left before the end of the night, your takeaway would be ‘Oh my God, the industry is in such terrible shape!’ But at the end of the night they all agreed that, even though the game industry is not immune to what’s going on in the economy, it is in a much, much better position than just about any industry you could think of.”

The causes for simultaneous optimism and pessimism are clear. NPD figures from February show that game industry revenues grew 10 percent over last year. Both hardware and software sales increased. Also in February, Midway, a giant name in gaming, filed for bankruptcy, the latest in a string of write-offs and closings at publishers and development studios. What’s the deal?

For the panelists, videogaming’s financial turmoil results from a shift in the business model that has dominated the industry for decades. Console gaming relies on a loss-leader scheme: Companies break even or even lose money on hardware, but turn a sizable profit on software. Robert Ferrari, a VP at Sanrio Digital and a member of NE Games SIG’s steering committee, clarifies how this works: “For a while, the videogame business was all about big licenses for large franchises.” Companies made huge long-term investments in games of ever-increasing complexity. “All of a sudden,” he says, “you start getting into these movie budget environments where it’s taking three to four years to build them – and twenty, thirty million dollars.”

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“That’s a huge barrier,” he says. “You have to have a very huge success, commercially, to balance out those costs.”

Each year the videogame industry bets on a few key games keeping the business solvent. Big titles for the Xbox 360 and the PlayStation 3, as well as games like Crysis made for high-end PCs, double down on a traditional gamble. Unfortunately, two factors are now decreasing the odds of a payoff. One is a market force, the other a neurosis.

Since the advent of the home console, the average age of its players has steadily increased, which suggests that a single cohort – the first generation of kids to grow up with consoles – has largely driven the industry’s growth. Game developers still cater to the tastes of this demographic, tastes that you could succinctly characterize with one word: upgrades. These players want the same gaming experience they enjoyed as kids: macho action with awesome visuals. Their demand for a narrow range of game experiences is a market force that stultifies innovation in all areas but graphics. Yet satisfying the nostalgia for awe requires increasingly expensive technology. Games made for this group simply can’t draw enough revenue to justify their production costs.

That’s the story of the economic troubles of videogames. Let’s hold these thoughts in our heads as we return to the Garden Room.

Shelter from the Storm
“The Biltmore does not come cheap,” says Grant Garvin, one of the creative minds behind TempleCon. Indeed not. The same architects who designed Grand Central Station designed the Providence Biltmore in 1922, and their common origins show in their ornate, gilded décor. Garvin and his partner, Ximon Dunedain, started TempleCon in 2006, eventually choosing to hold it at the Biltmore partly to distinguish their convention.

Many game conventions take place “in sad, cheap hotels,” says Ximon. She doesn’t see the point of moving a gaming session out of someone’s basement and into, effectively, another basement.

Leveraging the Biltmore aesthetic costs money, but they’re investing in hopes of changing the cliquish mood they’d found at other game conventions. “People would show up in their own little groups and only interact with people they knew,” says Garvin. “We asked ourselves: What kind of atmosphere would crack that shell?”

For them, the Biltmore’s grand interior liberates conventioneers from the school-hall, cinder-block folkways they’re used to. “Your interactions in places of beauty are going to be different,” says Ximon.

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TempleCon’s broad selection of games serves the same purpose. Typically, conventions rely on volunteers to run games, but a person devoted enough to donate his time often focuses too narrowly on a particular game or brand. “We try to attract people who are passionate about their games,” says Ximon, “but we also want people who want to experience new things.”

You can see the effects of TempleCon’s approach in the players. In the Garden Room, they look just like you’d expect: 90 percent white dudes; lots of fedoras, lots of ballcaps; many shaved-bald’n’goatee arrangements; plenty of paunch. But the Super Smash Bros. and Gears of War tournaments mean you’ve got black and Latino kids as well. The Penny Dreadfuls, a steampunk theatre troupe, and various burlesque acts bring women into the mix – women whom you’ll also find playing games.

TempleCon aims to diversify not only players, but also their taste for games. They do this logistically, placing the ever-popular videogame room at the end of the Magic: The Gathering hall, for example, but also through showcase events like tournaments.

Last year, Garvin observed a Gears of War player, a member of a team of teenagers competing in TempleCon’s GoW tournament, shyly cross over into wargaming. “These guys had never seen a miniatures game,” says Garvin, but “one kid kept checking out the Warmachine games.” Warmachine players present a spectacle. They confront each other on foot, across a small battlefield, one on one. This intensity impressed the young GoW competitor. At the end of the weekend, he bought a Warmachine set.

Back to the Cash

They’re sitting out there waiting for you to take their money! Are you gonna take it? Are you man enough to take it?

-Blake, Glengarry Glen Ross

TempleCon benefits from its diversity of players, games and revenue streams. The videogame industry is struggling to follow suit.

The struggle comes from inertia. “These legacy companies that built these legacy platforms, they can’t change their business model overnight,” says Ferrari. The old model of investing heavily in a game based on what sold well in the ’80s and ’90s and relying on Generation Nintendo holdovers to revisit the power fantasies of yesteryear continues to dominate.

In contrast, innovations in gameplay and diversity of subject have made non-traditional approaches huge economic winners. “Time and time again,” says Cavaretta, “things that turn out to be blockbusters tend to be new, either original IP or new devices.” Without the Wii, Guitar Hero and Rock Band, the games industry would be floundering. And the iPhone, says Cavaretta, is becoming the biggest distributor of games in the world, adding 165 games a day to its application store. Social networking sites like Facebook have also become platforms for gaming. None of these innovations caters exclusively to the traditional audience of mid-30s, male, largely white, lifetime players of videogames.

The question now is: Can videogames find a TempleCon of their own, a way for a diversity of games to coexist to their mutual benefit? At the moment, it seems it will be traditional games coming in from the cold to snuggle up with non-traditional ones. Eventually, iPhone titles will have to fund the next Gears of War sequel.

Don’t get me wrong: Traditional console games will always make money. I suspect that, as with booze and porn, there a few million dudes out there who account for half of all sales of these titles. They will always provide game companies with some revenue.

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But someone beyond this core base of gamers is going to have to pay for better graphics, for voice actors, for motion capture, for really bad screenplays. That someone will be non-traditional gamers. The future of the videogame industry may be a kind of massive subsidy program in which players of all ages, genders and races pay for a dizzying array of inspired, innovative games, the revenues from which will supply developers with the capital to make games that suit the tastes of white men in their 30s.

For legacy companies, then, the way to seize the opportunity this economic crisis presents is to convince the newer companies to share their profits, to persuade them of the value in appealing to a core group of gamers. TempleCon is evidence that conversions between disparate games and gameplay styles are not only possible, but also profitable. If this doesn’t happen, traditional games may find themselves home on a snow day with no one to play them.

Ray Huling is a freelance journalist living in Boston.

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