RJ Layton

Today is also a day when I read an article promoting Game Developer Research's report on a survey conducted on "almost 2,000 video game professionals from North America and beyond who read Gamasutra.com or subscribe to Game Developer magazine."

Since I read both things in a short window of time, I wanted to take this opportunity to compare the results.

US Hardware sales numbers for the month of August, as provided by NPD, are:

Certainly this table presents a grim forecast for the highly-touted "HD Gaming" front. Xbox 360 and Playstation 3 lag behind while more affordable systems (with arguably more creative and innovative libraries) storm the sales charts. What's worse for HD-supporters is that without the numbers of the Wii and DS, the industry would be shrinking. We're already seeing developers struggle and get wrapped up into other big companies. From NPD analyst Anita Frazier, "Across hardware, software and accessories, products for the Wii platform contributed 28% of total industry dollar sales for the month of August."

For somebody who follows these charts with a passion, this is actually a down month for the Wii, which makes this all the more impressive.

Earlier this year, the Wii surpassed the Xbox 360 as the best-selling console in the US. In the last four months alone more than 1 million more Wii consoles have been sold than Xbox 360 consoles. Looking worldwide, the question is not if but when the Wii will have outsold both HD consoles combined. It's not far off now.

All told, the Wii is the fastest-selling console of all time, and the Nintendo DS has a definite chance to surpass even the Playstation 2 in terms of units sold.

A repeat of the headline: Wii have spoken, but are developers and publishers listening?

Let's take a look at the results of the survey:

"Overall, 70% of those replying are making games on the PC or Mac, with 43% creating for console and 28% for web platforms - with just 16% making games for handheld platforms such as the DS or PSP."

It is interesting to me that the platforms doing almost 45% of the hardware sales in the country are receiving only 16% of the developer support. Let's look more closely at the console development environment:

"Of the surveyed console developers, which represent a notable cross-section of the entire industry, 73% are creating games for Xbox 360, 58% (including some of the same respondents) for the PlayStation 3, and 42% for the Wii - with 15% still creating games for the PlayStation 2."

To put it in perspective, 42% of developers are making games for the Wii, which has 42% of the current hardware market share in the US. That seems to add up.
The Xbox 360, in comparison, has 73% of developers making games for it despite only having 38.81% market share. It's impressive, and no doubt a testament to Microsoft and their willingness to make the 360 an attractive development platform. Not surprisingly, the PS3 has fewer developers making games for it than the 360. The surprise is that more are making PS3 games than Wii games. The simple answer to this is that PS3 games are basically identical in scope to 360 games and so companies are porting between them. This is true, but it's interesting to look at why this occurred in the first place.

Last generation, the Playstation 2 gathered the lion's share of development, and while plenty of games were ported between the consoles, the GameCube received paltry third-party support due to its relatively low market-share (though it was on pace with the original Xbox for much of its life).

I remember talking to people at EA when the Wii's controller was announced. I was impressed with the bold move and thought that Nintendo was making great strides at shaking up the market. However, the guys at EA had a different take: "Nintendo's done for." "They've basically accepted third place." "Sony is definitely gonna win."

Obviously, that didn't happen. So why are publishers, theoretically the money-focused ones, still so insistent on supporting Sony? What we're seeing is their best attempts to fix their mistake of supporting the HD consoles with so much of their resources. To illustrate this, let's look at these charts:

As the chart shows pretty clearly, Nintendo is completely dominating the industry as far as profits go. Sony, Microsoft, EA and the like generate plenty of revenue, but the ever-increasing costs of making blockbuster titles and technology that is too advanced and expensive for the market costs them so much that they're bleeding money. This forces publishers to end exclusivity deals and port their HD games to as many platforms as possible to try and make a profit. A prime example of this was the "shocking" announcement that Final Fantasy XIII, long thought to be an ace up Sony's sleeve, would be arriving on the Xbox 360 console. The truth is that Square-Enix can't afford to wait for Sony to live up to its promise of grand hardware sales driven by the Playstation brand and Blu-Ray technology. They need to cover their costs now in order to make games tomorrow.

In comparison, the typical strategy for console manufacturers has been to lose money up front and make up the money in profits on game software. Bucking that trend, Nintendo has made an estimated $50 profit on every Wii sold since launch and is raking in cash on software sales as well. Publishers such as EA aren't accustomed to this type of positioning, of course. Losing $454 million in one year isn't exactly good business, and they can't rely on software royalties to bail them out later down the road.

Still, publishers and developers have used every excuse in the book to not develop for the platform. The "third-parties can't succeed" line was destroyed when Activision released Guitar Hero III on the Wii and saw it become a best-selling version. And hey, look -- they generated a healthy profit.

The obvious takeaway is that publishers are going to look at that big new pie Nintendo has and want some of it, but it has taken a long time. The influx of Hollywood types that are in love with the idea of the big, artsy game with the latest tech as well as developers that want to be rockstars working on the biggest thing ever has slowed the transition. There are still a lot of developers who view working on the Wii as a step down, as uninteresting and boring. In short, making Wii games isn't "sexy." Publishers seem to put their worst teams on the platform and the quality shows in the games, nearly proving the "third-parties can't succeed" line, one horrible example after another.

Indeed, the events of the previous generation have made things more difficult. The GameCube was a pretty specialized device, and because few developers made games in-house for the platform, the Wii (which is basically a super-charged GameCube) has caught publishers and developers without the talents and years of experience needed to make top-quality games on the platform.

Still, things seem to be changing. From EDGE: “Our stock hasn’t moved as much as we’d like,” Riccitello told one investor during a Q&A. He admitted that EA was on the “wrong horse” by concentrating mainly on the PS3 and Xbox 360 while throwing less resources towards the Wii during the console transition.

Will other publishers and developers realize this as well? For their sakes, I hope they do. This post is a call for more short games, for smaller budgets and faster turnaround times. This is a call for truly taking games to the next level and making them for everybody, not just the typical "core gamer." It would be ridiculous to advocate the end of the blockbuster titles. The inevitable Halo 4 will surely be a profitable affair, and sales of Madden this month have shown that some demographics are looking for the big-budget, HD experience. But not all developers can have a Madden or a Halo in their back pocket. If anything, this generation is a call to the industry that maybe it's time to slow down and not get ahead of ourselves, and maybe a warning that a potential industry crash was looming ahead if budgets and technology increased faster than the market could sustain. Most of all, if the past couple of years have proven anything, it's that it's sink or swim in Nintendo's big blue ocean.