There's a great article up at Smartcompany.com.au on Infinite Interactive CEO and designer, Steve Fawkner. Steve talks about some of the serious challenges that lay ahead for Infinite Interactive, and pretty much every other game company in the industry. With the issues like publisher funding, the rampant piracy, and the downturn from the current global recession, Steve says 2010 is going to be one tough year...
(Steve Fawkner) "The sales last year were great. They call it a recession proof industry because it's a real value for money industry, so when people don't have much money they will play games.
"However, games get made because investors put money into them, and if they don't have money those games aren't going to get made. What is on the shelf will sell, but getting money to put your game on the shelf is going to be harder," he says.
"To shield ourselves against that, we're looking to sign up the work now before everybody else. This year will be fine, but 2010 is going to hurt, and it's really important to get work in place nice and early."
Steve also mentions the importance of publisher relations, maintaining relationships with clients and publishers, was one harsh lesson that Infinite Interactive learnt, and that our long proximity away from the big publishers plays at a disadvantage for our developers.
Read the full article over at Smartcompany.com.au!
2010
It's frightening to think how fast things have fallen, or how it can be any worse than the current climate is now. All the top publishers are downsizing from 15% to 25% and are closing many internal studios and games. Even the console giants are doing their bit to cost cut (that is, Sony and Microsoft). Midway are filing for bankruptcy, Square is looking to buy out Eidos, Namco Bandai are buying out D3 etc, and I'm not sure how Atari has managed to scrape by all this time. The industry is rapidly downsizing and consolidating like I have never seen before.
Like Steve said, funding is going to get even tighter and harder to get by, and we're inevitably going to have to see much worse.
Not necessarily due to the climate
I agree that 2010 will be a very interesting year, and maybe even a little scary. But I also don't think that all of these measures are due to the current economic climate. The points in the article about game sales persevering, yet game financing becoming more difficult to obtain are certainly valid and a contributing factor. But my opinion is that a great deal of the downsizing and consolidating is actually much needed restructuring after the transition to the current generation of consoles - too many companies ballooned with massive, expensive teams that had little hope of even breaking even. It just happens that a recession is going on at the same time, and now we're reaping the consequences of hasty expansion.
Most of the companies and publishers you've mentioned were having big problems before recession came a-knocking. So while Steve's interview is very insightful and contains a lot of nuggets of wisdom, I think we can still afford to be a bit optimistic about our chances. We might be far removed and thus 'riskier' than dev houses down the road, but the plummeting exchange rate actually makes us cheaper, and if it's a few million dollars less that they're risking...
Just some thoughts.
Games getting too expensive to make
You know, you're probably right. Slate has put out an article just this week which echos your thoughts exactly and it's driven home particularly with the point that game sales are ever increasing (and passing DVD sales for the first time) but companies are still losing large chunks of money. If anyone's interested, it's well worth a read:
What's Killing the Video-Game Business? Hint:It's not the economy.
http://www.slate.com/id/2210732/
Some of the losses mentioned in there are truly astounding (EA lost 2/3rds of a billion last quarter?!).
It's interesting that they put forward the idea of following the Hollywood style of production where studios hire "temporary production companies, which then hire temporary crews with one-project contracts" to make movies. My friend has been saying the same thing for years. I wonder how realistic that would be for games development however.
The Danger of "Cheaper"
Hey,
Steve here...
I thought the article actually came across with a lot more doom & gloom than I had intended. I guess that dire predictions of ultimate destruction made better reading than the optimistic stuff that I had also covered in the same interview.
Most of the people I work with know that I pretty much walk round with a big optimistic grin on my face all day :-D That article contained more negative stuff than I usually spout in an entire month. Or maybe I was having a bad morning...
You are quite correct that a lot (though obviously not all) of what we are seeing right now is that painful consolidation period that comes along every 5 years or so, and that's not a cause for industry-wide alarm, though it IS tough on the folks who lose their jobs at this time.
My main point of commenting here though was to say that if we pitch ourselves as cheaper NOW, I believe that it solves the problem of short-term work (which I KNOW is always the most important problem for dev studios to solve). However, in the longer-term, I think that pitching ourselves as a cheaper option makes us less attractive for some of the really interesting projects that go around.
I believe we should be aiming to get the message through that in Australia we are creative and smart, not merely cheap and reliable. And I find that these two messages are often mutually exclusive.
Cheers
-Steve Fawkner
True, can't forget about image
That's a valid point - I was merely thinking in terms of survival. As is everyone else these days I guess. But certainly there's a risk in building that sort of image as 'cheap and reliable'. It would be, as you suggest, much better to build a 'creative and smart' image instead... but only if we can rise to the occasion. Either way, I'm glad to see some people still thinking about the long term, whether positively or negatively - it's very easy to just burrow in and adopt short term survival habits when it looks like the house is coming down around you.
Heh, sorry, I didn't mean to paint you as a pessimist... I thought the interview was still very good, even if they might have only chosen the gloomier quotes (as expected from journalists).
I think the biggest shock
I think the biggest shock for most of us in the industry in the last year has been the downfall of pandemic australia. Pando has always had such a strong reputation, I even applied there back in 2006 but got knocked back and took up a position at another brisbane studio.
The news came without warning for those of us sitting from the fences.
In terms of the local companies surviving at the moment, I see two traits in the companies that remain and doing well. Treat employees well and good financial management.