This week the Game Developer Conference took place in San Francisco, which brought together representatives of the gaming industry from around the world. This year the mood of the event participants was not the most cheerful. This is due to the continued rise in game development costs, slow market growth and the need to rely on time-tested franchises, forcing even large companies to be more cautious.
Caution on the part of developers is largely due to the slow growth of the market. The $184 billion gaming industry is expected to grow less than 1% this year, according to research from NewZoo. In addition, companies are forced to continue reducing their workforce in order to optimize their own costs. Recently, more than 6 thousand employees in the gaming industry have lost their jobs due to companies seeking to cut costs.
The cost of developing major games can reach $300 million, which is comparable to the production of a blockbuster movie. Just like the movie industry, which is overloaded with superhero films, video game makers are forced to rely on established franchises as the cost of producing games steadily rises. The industry crisis is also forcing studios to cancel games that have been in development for a long time. For example, after purchasing Activision Blizzard, Microsoft canceled the Odyssey game, which had been in the works for six years. Previously unannounced projects were canceled by Riot Games, Sony, Bandai Namco, Embracer, and others. Electronic Arts stopped work on a new first-person shooter in the Star Wars universe, firing 670 employees.
Against this background, Epic Games Vice President Saxs Persson said that gamers should expect the emergence of “safe” projects, since none of the game manufacturers want to take risks. Even established franchises could become prohibitively expensive in the future, he said. Insomniac Games, the studio behind the award-winning Spider-Man 2, cut staff this year despite selling 10 million copies of the $70-a-play game that cost $300 million to develop. Investors have other ideas options including investing in platforms where users can create their own games, such as Roblox or Unreal Editor.
Only a small number of developers break out of this strategy. For example, the independent publisher Developer Digital Inc. continues to rely on small developers and projects worth $1-5 million, since if the game fails the situation will not become catastrophic. Recent projects from this publisher include Cult of the Lamb and Hotline Miami.
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