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Video Game Industry: Made Of Money?

money.jpgA comprehensive article at SeekingAlpha by Bruce Everiss, who was part of both Imagine and Codemasters in their start-up days, calls the video game industry "one of the most attractive areas to invest," a worthy commendation given the arguably challenging state of the U.S. market. Everiss says that even in tough times, the game industry is set to keep growing:

And the industry is still at its very beginning, it will grow to be bigger than movies and TV combined as it leverages its key advantages of interactivity, connectivity and non linearity.

Notably, he also opines that from a market perspective, both Xbox 360 and Playstation 3 are "both a fair way from peaking in their product cycles" - but at the same time, he also states the Wii is "not worth developing for," and "near the end of its lifecycle." Ouch.

Video Game Industry: One of the Most Attractive Areas to Invest [SeekingAlpha]

5:20 PM on Thu May 15 2008
By Leigh Alexander
1,625 views
47 comments

Comments

  • I heard it was made of candy!

  • 'ouch' indeed. i agree that the xbox and PS haven't peaked yet, as there's huge potential still untapped for both consoles, but i disagree about the wii 'not worth developing for'. they all have something to offer

  • I'm thinking the 700,000 people who just bought a Wii will be interested in buying a few games to go with those consoles. So this guy is full of ....

  • And I guess he thinks the DS died last year in reguards to his wii comment. I'd say stick to making games, but he sucks at that aswell.

  • @Spartan1308: I think he's referring to the powerhouse aspects of the systems. I'm sure if he was interested in making Boom Blox 2, it'd be on the Wii.

  • The comment about the Wii is true, screw the Wii. That thing is a backwards move.

  • Perhaps someone should show him last month's NPD numbers...

  • Is piracy really such a problem for the DS? R4s are out there, sure, but software sales are still pretty good for a lot of games.

  • It's not Nintendo's fault that third parties are making crap games for the Wii. I'm not a fanboy, but I feel that the Wii has more staying power than either the PS3 or 360. WiiWare, Virtual Console, and soon full on connectivity to the DS, yeah, this "analyst" is just eating sour grapes.

  • Image of DaveKap DaveKap at 05:55 PM on 05/15/08 *

    Tell this to the developers who still get snuffed when the paycheck comes in the mail.

  • I'm a pretty big Nintendo booster, but there is some sense in which he's right about the Wii's lifecycle...at least, from a relative point of view. I've been saying for years now that the PS3 would hit its stride around Christmas 2008, maybe mid-2009. As Blu-ray adoption increases, Sony will close the gap and we'll really see the PS3 shine. The Wii is only good for another 12-24 months before it hits end of life--at most, it's got another three years. The PS3, more like 5 to 8. Which is not quite the same as "not worth developing for," but certainly that time is nearing.

    The thing is, Nintendo knows this. Microsoft knows this. As HD adoption increases, Nintendo will release the next thing--HDWii or whatever. And Microsoft recently started turning a profit on the 360, so they'll be prepping their next offering as well. Sony will make up its losses eventually, mostly in terms of owning a share of the dominant media format for the coming decade.

    Different business plans. All, ultimately, successful, though for different reasons and in different ways. It's interesting to watch it unfold, even when people exaggerate the outcomes in order to grap headlines (and page impressions).

  • Maybe he was one of the first people to smash a big expensive LCD TV with his Wiimote and has hated it since.

  • @patfacecatface: No. Here is what he said in the article:

    "The Nintendo (NTDOY.PK) Wii is not worth developing for. It is nearer the end of its life cycle than the other two consoles and it is mainly first party games published by Nintendo themselves that sell. Third party titles from other publishers are mainly low quality shovelware that have now frightened the consumer off."

    He's saying that it isn't worth developing games for the system b/c people won't buy the games. That's why he's full of ....

  • What's the name of the insect with a 24 hour life cycle?
    It seems an analogy to it would be appropriate here but it's name escapes me.

    Anyway...I kind of disagree with him(about the Wii, not the main point of the article), but it could be more my hopes for the Wii(that it wasn't too much for too little) rather than the facts.

    To me the Wii hasn't been worth it so far. I would be disappointed, and more or less angry about the purchase if they killed it.

    But, if you look at it, it is already waning, at least in the games department, and with Nintendo having torn through most of its franchises already.

    But, in one final argument with myself, the Wii has a large number of purchasers who wouldn't buy the next generation. To me, the more casual gamers seem like the type of people to not want to buy a replacement console every three years, as they obviously aren't worried about graphics. Really it could be a terrible business decision.

    Let the argument not actually based on the main story begin. (or continue since someone has probably already posted...)

  • Well lets look it like this the gaming industry is one of the few industries NOT outsourcing to India and China.

  • @Kenny: Coming from a man with a Halo symbol. Huh.

  • LOL another knock at the Wii's wildly successful sales!

  • Get this man a Cold Coors Light

  • For the most part, this man speaks the truth.

  • I have more Wii games and VC games than either of the other two consoles this generation. Games like RE4 did great because they took advantage of the system's capabilities, despite it originally being a Gamecube game. On the other side, the half hearted attempt at SC Legends was a failure because of bad design.

    The naysayers don't bother me, however. I'll be laughing yet again as Nintendo surprises everyone yet again.

  • I hope that the wii2 comes soon. I'm tired of not getting the good cross platform games, but at the rate the wii is selling, I don't think it's going anywhere too soon. Has this guy seen the Japanese numbers on wiifit? And why is the PS2 still selling so well hmm...? If its all about having the best technical specs that thing should have been buried when the 360 came out, but its still going strong.

  • @Furysetzer: Wasn't Zack & Wiki a good third party game that didn't do so well?

    For the most part, the Wii is for Nintendo-published games. Aside from an occasional title (I know RE4 did really well), it's mostly Nintendo that dominates the sales charts over third party titles for the Wii.

    It's a matter of taste, really. The Wii is great at what is does. Innovative controls, great price, great first- and second-party games, games that appeal to lots of people (older people, games for parties, etc.).

    However, it doesn't do what the 360/PS3 do. It's not made for a lot of online content (see storage space limitations). It's not made for online play (see ultra-restrictive NES-era Nintendo parenting).

    I'm not a fan of the Wii, but I see why it does so well. It makes me sad because it would not have taken much for them to really appeal to core gamers. I was a huge Nintendo fanboy back in the day; now I mostly play 360.

  • I had no other desire to hear what he had to say after I read his comments on Wii here, near the end of it's life cycle? Uh... last time I checked Wii was selling like water in hell, with no signs of slowing down.

    As for the other two? Hmmm... mabye I feel like once the whole online/interactive thing gets sorted out we'll be able to paint a much clearer picture.

  • @Kenny:
    No, Kenny, it's not a backwards move. It's a FORWARDS move, just as 360 and PS3 are. It simply moves forward a little to the left as opposed to the right facing modes of the "competition".

    The analyst is an imbecile, clearly.

  • I really think he's discounting the Wii a bit too much. Yes, there is a kernel of truth to it, but he makes it sound as though the thing is knocking on death's door.

    But what really makes me call BS is his DS/PSP piracy comment. "Vastly more people will steal your game than will pay for it."

    Sources? Sources? Does the man have any proof to back up this claim. Oh, he probably got it from here:
    [kotaku.com]

    Really, making baseless claims about piracy is just as bad as making baseless claims about morality in games. Especially when games like Pokemon Diamond/Pearl, released during the "golden age of piracy" sell $14 million units.

  • I hear there's this company called "Infinium" that knows what to do with your investment money.
    /evil snicker

  • I'd say he's dead on with the Wii. Look at how terrible MOSt of the games are. And some of us tire of buying GCN games with waggle forced on us.

    There are a few gems, but by far the crapware is drowning them out.

  • @braagh: Mayfly comes to mind.

  • I'd hope the wii would die out soon.. to a degree..I expect the next Nintendo console in a year or two with the Wii still strong... or else nintendo is screwed..

    less horsepower means that the Wii can run as long as the bigger dogs

  • I see no viable reason to believe that the Wii will only last 1-2 more years. No one's expected what has happened up to this point, and there's no telling what can continue to happen/change in the months/years to come.

  • It's the casual users that keep extends the life of a console. Look at all the best selling PS2 games right now, they are almost all casual and sports games. The casual users don't care as much about graphics, so they don't feel the urge to upgrade once something new comes along.

  • @JokesJokes: @Spartan1308: @NunianVonFuch: YEAH! Because Animal Crossing, Wii Fit and good ol' classic VC games are just the thing to keep the Wii going! And Madworld! And...

    Wii2! Because after two years, the casual gamers will really want a new console!

    And...

    Ok, my sarcasm has run out. Anyone else want to whack some realism in some fanboys?

  • wow, I saw this coming, the wii is not a console with a long life cycle, ps3 and 369 are, oh well, and I was about to get one for brawl but maybe I will just wait for emulation. how? simple directional buttons are forward, backward, left, right while "w" amd "s" are up and down

  • @Gaff: You're blind yourself if you think those are the only things that are coming out for the Wii in the future.

  • doesn't this guy realize that all of that money in the pic was printed from a wii, or maybe a DS.

    Sometimes I wish to see Benjamins sliding gently out of the little glowing blue slot. that would be, very, very awesome.

  • @Spartan1308: Lots of people who buy the Wii dont buy many games at all. Sure those who visit gaming sites buy games but not the casual gamer that is scooping the system up.

    3rd party game sales are dismal compared to the 360 and even the PS3. Publishers dont care so much about total pieces of hardware sold. They care about how many games sell and right now the Wii has a ton of horrid games and a handful of good ones. If you want to make a quick cheap game then Wii is the system to do it on because there is less chance of big loss. If you want to make a AAA title and you're a 3rd party you are going to hit up 360 or PS3 because thats where the real money is.

    Also its not the casual gamer that will force Nintendo into making a new console. Its the hardcore who is tiring of its terrible graphics, physics and audio. We also need more storage for VC and Wii Ware games.

    Nobody is saying the next Nintendo system needs to be a $400 powerhouse. It just needs to be a Wii with a bigger drive, and graphics that can match a mid range PC. Easily do able for $250...hell Nintendo could have done it when Wii first came out but they wanted to make profit on each console sold when they should have had the goal of breaking even in mind.

  • Well forget the NDP numbers let the attach rate do the talking. Even though there are A LOT of Wiis and retailer's can't keep em in stock that doesn't mean anything to developers if none of those console buyers are actually buying games. Who knows how many PS3s have been regulated to cheap-BluRay-player duity but even with that the PS3 has a higher attach rate and the crap-flood of poor or downright bad non-first-party titles on the Wii does little to bolster consumer confidence in the system.

    Who cates about system sales if the games are crap, the attach rate is crap, and the market is flooded with crapity crap crap.

    That being said... I have all 3.

  • @Not-Witzbold: do you have numbers or are you just talking? The Wiis total attach rate is really strong, with extra controllers, wiiplay, and the strong 1st party titles out there. Plus with its low pricepoint, people can get more adding without breaking the bank. The problem is that all that attach is going into Nintendos pocket, leaving very little pie left over for 3rd partys

  • Some people really piss me off. Honestly the wii has the most staying power of this generation. Its got mass appeal and it will ALWAYS have that HUGE consumer base already laid out for it.

    Secondly any developer is an idiot it they think the money is in the PS3/360. Sure it has its huge blowouts and gratuitous returns as seen from the likes of Halo 3, GTA4, etc etc. BUT hardly is it worth it when a company creates losing properties that require HUGE amounts of income and hope they sell enough to cover their asses. The development costs and rate of return on the wii is tremendously high, and ridiculously high in some regards (carnival games). Companies dont need to spend that much money investing in it (though they should if they are any worthy developer) and then still come out with a good return, the same cannot be said about development on the proclaimed "next gen" consoles.

    learn where the money is, and go for that.

  • @pyropetey:
    Fail sir fail, The only games that sell on the wii are first party games, even then though the sales aren't that impressive for the huge user base. Really a third party would invest in 360s because they have a 7.6 attach rate, highest in video games history. And these developers that make carnival games might sell 100k units in a few month looking at sales numbers. Small dev teams like 10-30 man teams could make better games then the mounds of shit on the wii right now.

  • I'm sorry I couldn't hear you over the sound of another million GH3 units being sold for Wii.

  • I just it doesn't make everybody who is anybody start making games.

    It will becoming something of poor quality and overcrowded mess.

  • @parad0x360:Name one 3rd party AAA title for the Wii. I'm talking at least $30 million spent on the game. If companies would make AAA titles for the Wii then they would sell.

  • The Wii is still being called a fad? Ugh. We're now over 2 years into this generation (I chose that number as a sort of halfway point between the launch of the 360 2 1/2 years ago and the launch of the PSWii 1 1/2 years ago) and the Wii just outsold the PS360 by more units than ever before. The sales gap is widening, and the Wii is selling more, and more, and more.

    It just amazes me that people can still show such unwavering disbelief. How long into the generation does the Wii have to clobber the competition before such people as this acknowledge it? 2 1/2 years? 3? Or will we need to wait through the entire generation and then say "oh yeah, I guess the Wii did great after all."

  • I disagree, Wii development costs are far less, and though 1st party titles do tend to be the big sellers, that doesn't discount 3rd party games from selling really well. See: [kotaku.com]

    It is definately worth developing for.

    That said, it's obvious that the wii should have a shorter life span than the other two. When we start seeing lots of great games that push the PS3/360 to the limit the Wii's limitations will become more apparent.

  • Well I agree with this guy for the most part. At the beginning of the console lifecycle I was thinking HD DVD would win and the Wii would end up being a flop, so take my opinion with a grain of salt. Ultimately, Blu ray obviously won and I know people who bought a PS3 soley for Blu ray. Sonys got a lot going for them right now but they still need work. As for the Wii, I was a Wii60 guy at the beginning so I bought one mainly for Zelda and also for a few other games that I thought would explore the controller well, like Trama Center. I bought it thinking it the Wii wouldn't make it past 2-3 years but it was only 250 and I thought it would be used by my family members who don't normally play games.

    I was right, my dad likes it and my mom likes it (they both want a DS) and even my grandma was having fun with it. My girlfriend likes it and likes playing some game on the VC she used to play when she was little (Alex Kidd). Anyway, my point is that the Wii has captured the market of nongamers, which it wanted to do. However, being the gamer that I am I feel a little left out, but there are some great games like Zelda, Mario, and I still want to play Metroid. I also notice how my family and girlfriend will actually want to play games now, like Mario Kart or Wii Play and Wii Sports.

    The problem lies in the Wii being appealed to a large majority of non-gamers who don't buy many games for their system. Look at the attatch rate. Right now I have at least 10, probably closer to 15, non-arcade or downloadable games (discs). For my Wii I have Mario, Wii Sports, Wii Play, and Zelda. Seeing as how 1 game came with the system and the other was only 10 more dollars than the controller it came with I only really bought 2 games. I think that the Wii is kind of a crappy place for developers unless they have a game with a brand on it that non-gamers are appealed to.

    Having said all that, I think that all systems will be successful. If the PS3 wins I honestly think it is purely because of Blu Ray because I would say that the 360 edges out the PS3 on number of quality, blockbuster games, although MGS and GT and FF are guarentteed to sell a huge number to fans. But all systems have their own advantages I just think that the Wii is sweeping the charts now but when people realize that button mashing was replaced by wrist flicking they'll realize that there really isn't much of a difference in most games, although for some games the Wiimote is perfect.

  • Yeah, Bruce, or BruceOnGames, is probably one of the most worthless analysts I've ever seen and for some reason hates the Wii more than anyone could every imagine.

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