Episode 23 - The “Annualization” of Gaming

As the gaming industry has grown and evolved over time, we’ve seen a dramatic change in the ways that game franchises have been introduced and re-introduced to the public, sequel after sequel. What was originally a very simple model has morphed into a number of distinct approaches, some effective and some not. Do traditional “every few years” models do better than the annual franchise release popularized by Call of Duty, Assassin’s Creed, and Madden? Or are less traditional, subscription or free-to-play models more effective than the tried-and-true approaches? In this episode, Aaron and Chris debate the positives and negatives of multiple release models, touching on what works and what falls flat with gamers. Is the trend to “annualize” franchises into 12-month iterations a cop out, or is there something to the approach that advances the state of the industry? In the game assignments segment, Chris gives his impression on Civilization 6, and Aaron decides whether you should, indeed, touch something in Please, Don’t Touch Anything!

Show Notes:

  1. BCG Discussion Topic - The "Annualization" of Gaming
    -Intro:  We’re going to talk about the games business evolving from the “once every few years” release schedule to a landscape where big budget games need to generate big revenue every year to justify their existence and development costs.  This episode will be a continuation or next step in the discussion we had in Episode 12 where we discussed when to retire franchises or games.
    -The landscape when we started playing video games:
      -While games were relatively simple, there was almost no such thing as a game franchise      much less an annual release of any game series
      -Game concepts were so new and fresh, that you never got tired of seeing a sequel (i.e.       hard to get burned out on “another Mario” when there have only been 2 of them)
      -The best sequels represented quantum leaps forward in terms of functionality, gameplay   options or graphical power in many cases because the sequel was developed for a new       system.  Examples of Mega Man 1 to 2 and Super Mario Bros to Super Mario Bros 3
      -No way to iterate or add features to an existing game, so developers had no choice but       to release a new standalone title or sequel
    -Techniques/Business Models that game developers/publishers are using to try and maintain sales and interest for their games
      -Traditional “Once Every Few Years Model” - Example: Grand Theft Auto, Final Fantasy,         Diablo, Starcraft
        -This model has become increasingly difficult to justify due to high budgets, years of           development time and no guarantees of high sales in a crowded market
        -The best of the best franchises usually have this model as they produce big returns for       publishers, but are also hotly anticipated by gamers because they are “scarce” and               something to look forward to
        -Usually requires partnership with a major publisher as no smaller developers have the         resources to front the development time/money without generating revenue for years
        -Seems to be a sweet spot for indie developers, but it is often difficult to get noticed and     make enough money and impact to build momentum for the next release
      -Annual Franchise Flat Fee Release - Example: Madden, WWE, COD, Guitar hero
        -Highly lucrative for the publishers, especially if there isn’t a license involved.  The                  development time is shortened and scope of new features is reduced to accommodate        an annual release schedule.
        -Runs a much greater risk of developing player burnout as the new features have to be         very targeted and incremental to ensure that release dates are met
        -Runs the risk of franchises losing their identity as many of these games are built by             different teams (Call of Duty) or pieced together based on work from multiple studios         (Assassin’s Creed)
        -Seems like the business model that may be first to be disrupted as digital downloads         become a greater percentage of the market
      -Subscription Model - Example: World of Warcraft, Final Fantasy 11/14
        -“This thing prints money!” - clearly the gold standard and most lucrative model for             publishers if the game can sustain a player base - WOW and FF11 are two of the most           profitable games ever released
        -The success of WOW caused tons of publishers to rush into subscription based games,       many of which failed to capture player attention.
        -Double-edged sword as committed players get value because they are hooked on a           single game and only pay to play one game, but makes it difficult for new games to pry       away players since they are already “invested”
        -Seems to be a dying business model with the possible exception of “season passes”           that allow you to pre-purchase future DLC
        -Could this model be resurrected if the subscription was much less in cost (say $2 per         month) with the trade-off that the scope of the game was smaller
      -Initial Flat Fee purchase followed by occasional new paid content - Example: Fighting         Games (initial roster with multiple rounds of roster updates and supporting DLC)
        -Increasingly popular technique as publishers can get all players to pay something while     the “power users” end up spending lots of money over the life of the game
        -Generally more accepted by users as they can spend less money if they don’t love the         game or just want to play casually
        -Runs the risk of fracturing the franchises’ player base into haves and have-nots.  Also,         can make it difficult to transition to a new release (Street Fighter 4 to 5) as games have       been well supported and players are reluctant to walk away from a game they’ve                   cumulatively paid a lot of money for
      -Free-to-play with high volume of DLC paid transactions:  Example:  Mobile Games
        -Can accumulate tons of players quickly if the game concept is a hit
        -How do you get the player to spend that first dollar of real money?  Biggest question         facing the free-to-play model
        -Tends to rely on a few “power users” to spend a ton of money to compensate for the           number of players who have no intention of moving beyond the free content
    -Could there be another model on the horizon?  
    -How do companies deal with accessing games across multiple devices (Microsoft PC vs. XBox support)
  2. Game Assignments
    -Last Episode's Assignments: 
    Chris - Civilization 6 (PC); Aaron - Please, Don't Touch Anything (PC/Steam)
    -Next Episode's Assignments: Chris - Jinsei Owats (Flash); Aaron - Valkyria Chronicles Remastered