[ad_1]
(Bloomberg) — The designers of some of the world’s best-selling video games gathered this week in San Francisco, but the atmosphere at this year’s Game Developers Conference was at times dour.
Gaming companies have been dealing with layoffs, mergers, and product cancellations. And while 2023 brought big hits, many executives milling around the Moscone Center said rising development costs, slow growth and pressure to produce winners have led to a play-it-safe approach at larger companies, eliminating part of the nervousness of the industry.
“It’s harder to take risks,” said Martin Sibille, vice president of Tencent Games, who previously spent 15 years at Electronic Arts Inc.
Top titles can cost up to $300 million to develop, the same as a blockbuster movie. And just as the movie industry has loaded up on superhero movies, video game makers are relying on well-known franchises as budgets soar, according to executives at some of the industry’s top companies.
Slow growth explains some of the caution. Market researcher NewZoo predicts the $184 billion industry will expand less than 1% this year. More than 6,000 workers have lost their jobs recently as major companies cut spending.
Under new owner Microsoft Corp., Activision Blizzard canceled its survival game Odyssey, which had been in development for six years. Tencent’s Riot Games unit, Sony Group Corp.’s PlayStation Studios, Bandai Namco Holdings Inc. and Embracer Group AB are among companies that canceled dozens of unannounced titles. Electronic Arts has stopped work on a new first-person shooter in the Star Wars universe and laid off 670 workers.
Players’ increasingly high graphics and gameplay demands, coupled with the continued popularity of “service” titles that remain for years, have raised the barrier for new entrants.
“The video game industry has not grown to accommodate budgets,” said Saxs Persson, vice president of Epic Games. “You’re going to get things that people perceive as safe. No one wants to play safe. No one says, ‘This is a good, predictable game.'”
At some point, he said, even the best-known franchises could become cost-prohibitive. The studio behind the award-winning Spider-Man 2, Insomniac Games, laid off its staff this year despite selling 10 million copies of the $70 game, which cost $300 million to develop.
Investors have other options, such as a platform where users can create their own games, such as Roblox Corp. or Epic Games’ Unreal Editor for Fortnite, because, for big-budget games, the “hit rate is too low, it is It’s too unpredictable, it’s too long-term, and a lot of things can go wrong, not right,” Persson said.
Independent publisher Devolver Digital Inc. is one of the few companies that has not rethought its approach amid industry pressure. The company works with game budgets in the $1 million to $5 million range, such as hits Cult of the Lamb and Hotline Miami.
“Our strategy is to weather what is happening at the moment,” said marketing director Nigel Lowrie, who says small developers have not yet failed the company. “The risks are still there, but they are not so high as to be catastrophic. ”
At the conference, a studio director’s sharp departure from the trend drew praise from his peers. Larian Studios founder Swen Vincke told attendees that his company will not make another sequel to last year’s hit Baldur’s Gate III. The Dungeons & Dragons-themed game will be the last in the series.
“We want to do big and new things,” Vincke said on a panel. “We don’t want to repeat what we’ve already done.”
More stories like this are available at www.bloomberg.com
©2024 Bloomberg LP
Unlock a world of benefits! From informative newscasts to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Sign in now!