The Most Popular Games The Bubble Has Burst
A contradiction is now gripping the video gaming business. Given the amazing variety of consoles, portable devices, and PCs available to gamers thanks to gaming subscription programs like Xbox Game Pass and PlayStation Plus, one could argue that we are living in one of the best gaming eras. However, from the standpoint of the industry, the situation is really severe. Large numbers of game developers, programmers, artists, and animators have been released, studios appear to be closing more frequently, and original intellectual properties are being abandoned in the middle of development. The AAA video game bubble has finally burst, to put it simply.
More than 23,000 jobs were lost in the video game sector in the last two years, with 6,000 of those losses occurring in January 2024 alone. Arkane Austin, Volition, and most recently Firewalk Studios are among the more than 30 video game development studios that have shut down. Even worse, there are indications that this tendency is simply going to continue rather than slow down. How did we arrive here? Some observers have come to the conclusion that these layoffs and closures are a necessary cure for businesses that overextended themselves during the COVID-19 pandemic in response to exaggerated market demand. Although that is unquestionably a contributing component, I think the real problem is with other long-standing problems in the AAA project bubble.
The average budget for AAA projects was between $50 and $150 million just five years ago. These days, $200 million is the minimal average. Activision acknowledged in the Competition & Market Authority's report on AAA production that it now requires the work of one and a half studios to finish the annual Call of Duty game, setting a new standard of $300 million.
Call of Duty isn't the only game with skyrocketing expenses. An unidentified publisher acknowledges in the same CMA investigation that $660 million was spent on the development of one of its franchises. That's a $1.2 billion game, plus $550 million in marketing expenses. To put that in perspective, the best-selling video game in the world, Minecraft, barely made $3 billion last year. Launched in 2011, it took 12 years to attain that number.
Due to the realities of these expenditures, entire publishing houses are severely overburdened and are now frantically dealing with the fallout: they will have to shut down if their developers' large projects don't generate revenue right away. After seven years of development at Creative Assembly, Sega's sci-fi shooter "super game," Hyenas, was canceled just as alpha testing made it available to the general public. Why? Sega came to the preemptive conclusion that Hyenas was unable to return its investment.
Odyssey, Blizzard's survival project, followed a similar path. Given the popularity of games like Rust and Minecraft, Odyssey would have been the studio's first new IP in eight years. As such, it should have caused a stir. After Activision Blizzard was acquired by Microsoft, the project was quickly abandoned for no apparent reason other than the hassle of switching engines to boost the number of players on the servers.
Publishers may be more risk adverse than ever to venture beyond of their established IP safety bars, as evidenced by these instances of the current AAA publishing cull, which reveal a deep-seated anxiety to interact with anything novel and innovative. However, even well-known intellectual property that may generate millions of dollars in sales and income is being neglected. Sony CFO Hiroki Totoki recently asserted that the company does not have enough original intellectual property to establish itself as a legitimate gaming giant, even though it owns titles like Infamous, Jak & Daxter, Killzone, Resistance, and Sly Cooper, to mention a few titles in PlayStation's vast dormant catalog.
Totoki might be implying that Sony's older library IP does not match the mold of the next major live-service money printer, which is what every publisher has been blindly pursuing for the greater part of ten years. If Bentley and Murray are purchase-to-play, huge heists are season pass extras, and planets are presented in half-baked rather than completely developed shape, it's hard to imagine much fanfare for a Sly Cooper revival. Unquestionably, the live-service model has permanently altered the video game industry on some degree. In addition to having to contend with fresh competitors, new video games must also find a place in a market that is getting more and more saturated and dominated by games that have been there for ten years, like Grand Theft Auto: Online and Fortnite.
The recent demise of Firewalk Studios in Concord is a microcosm of the increasingly dire predictions for video game creation over the coming years. In many respects, Firewalk's debut game, Concord, was its baby. After eight years of development and a reputed $200 million+ funding infusion from a Sony acquisition, PlayStation apparently thought it had the next Star Wars-style brand. However, the game suffered greatly throughout both beta testing and launch, and Sony quickly shut it down entirely. Firewalk also shut down soon after. More quickly than any other failing game during the live-service period, Concord fell from grace.
However, just ten years prior, Blizzard's Diablo 3 was experiencing a similar catastrophe; the game was rendered unplayable due to the devastating "Error 37" notice, and fans all over the world lamented its complete failure to launch. Players soon had a bad taste in their mouths due to the game's real-money auction house, and Diablo 3's reputation was in ruins. Instead of giving up on it, however, Blizzard not only fixed the game and eliminated the Auction House, but also radically improved and transformed it into Diablo 3 2.0 with its Reaper of Souls expansion, solidifying its resurgence as a fantastic game. We've seen a similar tale with CD Projekt Red's arduous effort to win back Cyberpunk 2077 enthusiasts.
It's not difficult to think that Concord would have found its audience with some Blizzard or CDPR-like guidance from Sony if the project's rumored $200 million+ budget had been cut and its focus had shifted from a Big Bang to a spark for a new cosmos. If not for the financial snags these publishers have found themselves in, many Concord-like initiatives could be the medium-sized successes they deserve to be.
It's not that publishers should always try to avoid such financial pitfalls. Interest in these one-dimensional projects is starting to decline among gamers. All you have to do is glance at the list of the best games of 2024. While 2023 award lists were crowded with AAA productions from 500 companies, 2024's list demonstrates a renewed desire for a more independent, smaller company. Throwback to arcade machines The Metroidvania-like UFO 50 Animal Well, roguelite poker Balatro and pixel-art adventure with text Some of the games that frequently appear on these lists are The Crimson Diamond. Notwithstanding their many distinctions, they have one thing in common: a more intimate, sophisticated gaming experience that harkens back to past times when technological cunning was crucial in fusing mechanics and narrative.
instead of actual gaming worlds the size of a country. The core of their development is the nostalgia they evoke for earlier generations of video game players: they simply want you to pick them up and occasionally enjoy yourself. Publishers are receiving a clear message from the gradual but noticeable shift in video game audiences toward a possible indie game renaissance: if everything is "bigger and bolder," who has the leisure to play more than one or two games annually?
This is not to minimize the challenges of producing those independent titles. While Animal Well and The Crimson Diamond both had similar tales of being created over many years by lone devs, Billy Basso and Julia Minamata, respectively, UFO 50's Mossmouth LLC team was made up of six developers who worked together for many years. Even the popular game Lethal Company began as a one-man band, with Zeekerss learning how to make games on Roblox before learning more. Every one of these developers dedicated years of their lives to making these games, not for financial gain but out of inspiration. Because of this, these games seem like lean pleasure machines and don't require massive worlds or more than 300 side quests to complete.
There seem to be two options available to the upper end of the video game industry right now. The first is the status quo; it can either desperately pursue the live-service train that left the station more than five years ago, with late passengers wondering why the money isn't rolling anymore, or it can keep indulging in larger budgets with impossibly open but incredibly empty worlds filled with 80+ hours of content that have roughly ten hours of meaning for its players. The likelihood of these billion-dollar bets succeeding is decreasing. Alternatively, they might choose the second route and learn from the works of Julia Minamata, Billy Basso, and Zeekerss, which entails a greater variety of projects that are more focused.
Perhaps the studios are aware that we used to enjoy playing video games, not because of their larger-than-last-year maps covered with denser, higher-resolution grass that you have to stroll across to complete another piece of side content that brings you one step closer to finishing the game.
