I wouldn’t call it crushing feedback if 2/3 of the reviews on Steam are positive. A large part of the negative ones are also poorly justified. Some probably had no idea what kind of game it is, tested it for less than two hours, and then refunded it. Then they complain about how it’s not fun with random players. Some multiplayer games simply require communication with friends. That’s a feature.
Nightreign was divisive during testing, and it remains so in the final version. This isn’t a game for everyone, like Elden Ring. I don’t believe the core fans are worried at all.
Half a year has passed, so I quickly reviewed the situation of gaming companies. Roblox’s strong rise has at least passed me by. Surprisingly lively growth in other companies too. Swedish companies had a weak start to the year, maybe they will rise next?
Company
YTD
US:Roblox
82%
JP:Square Enix
74%
PL:CI games
63%
GB:Frontier Development
58%
JP:Konami
56%
FR:Atari
53%
JP:Nintendo
50%
PL:Starward industries
47%
JP:Capcom
44%
PL:CD projekt red
42%
GB:everplay (Team17)
38%
JP:Bandai namco
36%
US:Take two
31%
PL:Ultimate games
29%
JP:Nexon
25%
SE:Modern times
24%
CN:Tencent
23%
SE:Mag Interactive
20%
PL:11 bit studios
20%
PL:Bloober team
17%
IT:Digital Bros
15%
JP:Sega Sammy
12%
PL:Playway
10%
US:EA
7%
FI:Remedy
3%
FR:Nacon
−2%
GB:Devolver
−4%
SE:Starbreeze
−7%
GB:TinyBuild games
−9%
SE:Thunderful
−9%
SE:Paradox
−10%
SE:Stillfront
−17%
SE:Enad global 7
−18%
FR:Focus Entertainment(PullUp)
−20%
US:Gamestop
−25%
PL:People can fly
−25%
FR:Ubisoft
−27%
US:Playtika
−31%
FR:Dont Nod Entertainment
−32%
SE:Embracer
−40%
SE:Maximum Entertainment
−52%
A lot has happened in half a year: Nintendo announced a new console, Sony’s GAAS strategy failed, and Xbox believes that in the future, every toaster and coffee maker will be an Xbox. There has also been a lot of talk about rising prices, and this seems to be the first generation where the prices of devices and games are increasing, when usually they have decreased over the years. Only 2500+ employees have been laid off during the beginning of the year, but the number will double once Microsoft completes its latest efficiency program.
There have been hits and misses. Ubisoft’s Assassin’s Creed Shadows might have been the worst financial disaster of the beginning of the year, but Mindseye, with its 500 million budget, edged past it in the final stretch.
There is no doubt about the best game of the year, and although Blue Prince, KCD2, Split Fiction are getting votes, Clair Obscur: Expedition 33 will win everything possible, even though there’s still half a year ahead.
I don’t envy those working in the gaming industry.
I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we’re seeing currently is based on tough decisions we’ve made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.
Loose translation of Phil Spencer’s email to staff:
4% is a “healthy layoff” level. Companies of this size just do these things every few years. Primarily, poorly performing teams are cut (for the Candy Crush group, the question is why running that product took so many people) and game projects that are considered to have gone awry. Sometimes it’s worth calling it quits if things aren’t progressing as they should, or if the market has changed significantly.
The bigger the company, the bigger these tend to be, and they don’t have an automatic “move the team to the next project” system; in practice, the team is kicked out, and truly skilled individuals are hired on the fly elsewhere. Sometimes they keep the management/planning level, which then gets the task of developing the next game project and hiring people for it once it’s in a state where people are needed again.
Employees of these companies should know how the game works. It might only come as a bit of a shock if one has joined Microsoft’s payroll through studio acquisitions and moved from a small company to a giant company this way. The first time it happens is always unpleasant. Those who go to work for these companies understand - or at least should understand - how things work. Time to move on. If you’re truly skilled, you’ll likely find work in other Microsoft projects easily. If you weren’t that skilled, then this is how big companies trim underperformers…
The biggest tragedy in this operating model is that it practically prevents “institutional knowledge” from being created and/or staying within the company. One of the best examples of this is Activision Blizzard. It’s pointless to have high expectations for new releases when the people who made the original Diablos, Starcrafts, and WOWs have long been working somewhere else entirely.
Diablo is actually probably the sharpest example. The entire ARPG genre was practically created by Blizzard, and yet, exactly the same problems and the relearning of exactly the same things from scratch happened for both Diablo 3 and 4.
The same information is also lost through natural development. People behind successful original game series usually receive good compensation and leave the company or even the entire industry. People also advance in their careers and move on to do other things. It must also be remembered that what worked 10 or 20 years ago does not work today, meaning expertise and knowledge may not necessarily help create a new successful sequel.
Therefore, that constant cleaning up and re-recruiting by large companies is not necessarily a big problem. That operating model practically tries to grind out new magical teams that succeed in hitting the jackpot.
Larian’s Baldur’s Gate 3 succeeded as well as it did specifically because they have been making these types of games for a very long time, and by being a very good employer, they managed to retain key personnel for an exceptionally long time.
Thunderful published a couple of announcements. The CEO is being dismissed, they are launching yet another efficiency program, and they arranged a directed share issue to a company that appears on the stock exchange as Atari, meaning, in practice, to avoid bankruptcy, the company was practically sold, and shareholders are certainly pleased. A cautionary example of how a company is completely destroyed in just a couple of years.
“Atari” has entered into an agreement with Thunderful Group to acquire approximately 82 percent of the outstanding shares and votes of Thunderful Group for approximately €4.5 million
If the Directed Share Issue is completed, the Company’s current shareholders will have their shareholding diluted by approximately 82 percent.
A small anecdote I stumbled upon online: Old School Runescape, a game essentially released back in 2001, reached its all-time highest player count at the beginning of August.
Yeah - a momentary player count doesn’t necessarily reflect the game’s long-term state, but in RS’s situation, the game has continued to steadily gather players. I don’t play the game, but apparently new features are released for it from time to time.
This example supports the current market state where the big ones are big. New games practically have to steal players from these games that have been polished, optimized, and loved for years.
This accumulating competition in the game market is one factor that has made me more cautious about the industry in recent years.
In most industries, there is a cyclical change between supply and demand. For example, if too much is invested in factories during a boom, they are closed during a downturn, and thus capacity eventually meets demand, and companies’ profitability recovers.
What about the gaming industry? Every game is like a factory, and running it doesn’t require much money. That’s why even a poorly selling game (unless it’s a multiplayer game and its servers need to be run) essentially remains “standing” on platforms like Steam forever. In addition to the fact that supply (the number of games + their playability) constantly grows, accumulating on top of the old, faster than demand (the number of players and available time), players increasingly stick to playing these same long-established games!
A breakthrough for a new IP is still not impossible, but it is increasingly difficult. Old IPs perform well, but growth can be hard to achieve without clear differentiation.
An example from my own life. This spring, I finally played the acclaimed game Alien Isolation. It’s from 2014! This playtime and money were taken away from some other game. And it didn’t feel outdated at all; quite the opposite.
When you combine this with the fact that graphical development in games has matured (PS3/PS4/PS5 graphics are, at least for me, ~on the same level), new games also find it difficult to sell based on technology. For fewer and fewer people, they are the selling point.
Penetrating old genres is also difficult. For example, how could a new FPS game capture market share from COD, BF, or CS?
In practice, what remains is the creation of new genres (e.g., Battle Royale, Soulslike, or Auto Chess), or clearly bringing new twists to old genres (e.g., Roguelike à la ER: Nigthreign).
I also played Bloodborne in winter. No complaints about a 10-year-old game!
The small slice by which the gaming market might nominally grow in a year practically flows to these 5-10+ year old “evergreen” games. To put it bluntly, the only way for a game company to gain market share is by taking it from a similarly sized (small) competitor.
The only niche at the moment seems to be moderately budgeted “AA½” high-quality, focused “sidequests” – that is, quality games with limited budget, content, and audience, which get players to briefly try something outside their evergreen games. If built on an existing IP, good execution is enough (e.g., Space Marine 2). If there’s no IP, it practically requires a masterpiece (e.g., Clair Obscur: Expedition 33).
Realistically, the size of the gaming market is still -12% from its COVID peaks, and game unit prices in real currency have been falling for 40 years straight, while games and the amount of playable content grow almost exponentially.
At the same time, consumers’ wallets in the US are getting tighter for anything other than essential goods/services. Perhaps GTA VI will be a title of such magnitude next year that some might even cut back on essential expenses for it, but in the current macro environment, I wonder if even Switch 2 and GTA VI will manage to bring the industry back to growth.
On a positive note, Switch 2 has somewhat succeeded in leveraging its brand’s pricing power with the new console. It remains to be seen whether consumers will accept an increase in game unit prices outside of Nintendo and GTA. On the console side, even if GTA VI were priced at 100 USD, its production value and replayability are likely so immense that it’s not a given that consumers would accept a +10 USD unit price increase to around 80 USD from other publishers.
Microsoft/Xbox, after strong marketing at Summer Games Fest, rolled back its 80 USD pricing for Outer Worlds 2 to 70 USD, presumably because pre-orders didn’t meet expectations. On the other hand, the Outer Worlds IP isn’t particularly strong anyway.
It remains to be seen if five decades of declining real unit prices for games will be completed by the end of this decade
A similar example from me: I once decided not to buy a Switch even though Zelda Breath of the Wild interested me, because I felt the device was an underpowered dud with poor build quality, and the game ran too weakly. Secretly, I waited to see if a Switch Pro would come out to fix the situation. The Switch OLED came out, I considered it for a moment, but the lack of performance still left it in the store.
Finally, a little over 8 years after the original game (and Switch) was released, Nintendo decided to put out hardware that runs Breath of the Wild smoothly at 60fps, upscaled to a 4K TV, and looks great. An immediate purchase. And it doesn’t bother me much that the game is 8 years old – it has held up surprisingly well over the years, and if it were released as new today, it would still be a mega-hit. A few other old Switch games that received a Switch 2 update also ended up in my hands. This also takes away from “modern” games.
The problem with the game business is roughly this:
Almost anyone with a basic grasp of a game engine can start making a game. Even solo developers have the opportunity to put something together that can be sold, at least on Steam, but also consistently on consoles now that the barrier to publishing games on their digital stores has lowered.
Because the risk/reward ratio with a unicorn hit is insane – 10x the budget in sales isn’t even a bad hurdle; for a cheaply made game, even 100x can happen – risk-takers are plentiful. In addition, a huge number of indie projects start from completely unrealistic premises. Yes, in theory, a small team can make the next Minecraft and rake in insane money, but this is extremely unlikely.
This leads to a fierce oversupply. The vast majority of released games practically don’t sell at all. I saw statistics from 2020 some time ago which showed that the median game on Steam sells $4000 worth of copies. Yes, there are insane mountains of shovelware, but the fact is that a very small percentage of games sell any significant amounts. Historically, publishers and platform owners acted as a rather crude filter that limited supply, and thus the business was healthier. Nowadays, the barrier is too low, and consumers are so overwhelmed by the supply that few even bother to browse what’s coming out. Interest only arises if a game crosses some kind of news threshold and is truly good and/or unique. Perhaps a dozen of these fit the market per year.
And when we have these truly good games from the last 5-10 years available on current platforms, and they generally don’t look technically too weak, this also “blocks” new games from succeeding. Why play something new, half-finished, and buggy if a mega-hit from the same genre from five years ago is still unplayed and is certainly good? This also partly explains the remaster craze. With little money, a guaranteed popular and well-selling game can be given a new run.
There is really only one solution to the problem: Curation and quality control are needed. Products must be properly polished before release. Bad products should be killed off early, game stores and platforms should again become interested in what is sold on their platform and at least what the discoverability of truly good content is. I wouldn’t mind if every single person who can get Unity running couldn’t even sell their game on Steam, PS Store, etc., but had to cross some kind of threshold indicating that they are truly serious and that the game is in any way interesting. This might prevent a few rare miracle games from reaching the market, but at the same time, it would prevent thousands, even tens of thousands of junk games from flooding the entire market so badly that casual players no longer even bother to try to find anything.
Well, free markets will correct the situation in the long run. However, it may cause a significant dip in supply at times, with a conveyor belt of stories about people being laid off and some game developers certainly going bankrupt. A bit like now. Although money was loose for a long time, no game team can endlessly burn money without commercial success.
I would still say there is plenty of money for game entertainment, but consumers have become wiser about the market being full of junk, so large masses completely ignore almost everything that comes to market. That’s why the first experience and early word-of-mouth are so important. No matter how much money you burn on marketing and thereby get some people to try your product on release day, if the initial reaction is negative, digging yourself out of that hole is usually an impossible task.
An article from the beginning of last month came across on Reddit. The latest generation of us, i.e., Gen-Zoomers, has reduced their spending on gaming by ~25% compared to the previous year.
As Wolfe’s report notes, young consumers are expected to spend heavily in the entertainment sector, given college students and recent grads traditionally have low financial responsibilities.
The sequel to the Hollow Knight game series, Hollow Knight: Silksong, created by the Australian indie garage firm, Team Cherry, was finally released yesterday. It is literally a 2D platformer created by about 10 people and has been polished for about 7 years.
Sometimes “cults” form around these indie games, which then expand into viral phenomena. Silksong can definitely be said to have expanded into a viral topic, as even Yle reported on it.
The game then shattered all expectations upon release, as the launch ultimately led to the temporary collapse of Steam and apparently console marketplace platforms.
At its peak yesterday, 535 thousand players were registered for the game on Steam This left other game hits of this year, such as Clair Obscur: Expedition 33 and Kingdom Come: Deliverance II, thoroughly left far behind.
The game’s release was interesting for two different reasons, in my opinion:
The game’s sequel generated such immense hype that the first installment of the series also broke its maximum player count with a huge leap. This is likely the hockey stick (growth) that even the Remedy bulls have dreamed of while awaiting the sequels to AW and Control
Unlike Microsoft and other money-hungry studios, the indie firm isn’t very interested in money. The game was put on sale with a meager 20 euro price tag. Relative to the hype, the game could have been sold (imo) for three times the price, and it still would have sold tremendously. I argue that the low price tag indirectly supported the momentum generated around the game.
I don’t think I’ve witnessed a situation before where consumers ask why they can’t pay more. I read a discussion about it yesterday, quite astonished, but I couldn’t find good links anymore. Here’s one thread, however, where people were wondering about the same thing. And this discussion was already taking place before the game was released
It’s not that exceptional in the gaming world, as you can get, for example, hundreds of hours of gameplay for 20 euros, and the player feels like they’re getting a bit too much value for money.
Just yesterday I witnessed on Reddit when someone praised No Man’s Sky and said they wanted to pay the devs more because the game was so dear to them and they had spent a lot of time with it. The next commenter stated that you could just gift me the game. The situation ended with the original guy gifting the game to 5-10 users.
The game industry has run into the problem that games no longer develop technically at nearly the same pace as before, which means that even a 5-10 year old game can still be perfectly viable. And they are sold, milking that long tail, with big discounts (excluding Nintendo, whose philosophy these don’t fit, and a couple of odd special cases like the “never on sale” Factorio), which has almost trained players to expect that for 10-20 euros they can get a polished, high-quality game, as long as it’s a few years old. As a result, the latest 70-80 euro mega-games are selling worse and worse. A certain group of fans and those who aren’t short on money still buy them, but the broad masses of players pick up endless entertainment from the bargain bin for next to nothing. And on top of that, the even stingier ones pay for Game Pass and play the content that’s offered “for free.”
Then people wonder why the game business isn’t generating profits like it used to.
That hits the nail on the head, that very few games actually bring anything revolutionary or new anymore. Existing games from 2010 onwards can be so well made that 15 years later it’s not easy (or even possible) to surpass their gameplay. Why would you then pay 80 dollars for a “new”, presumably buggy and worse copy?
Try making a real-time world-based adventure game for a phone: you’re up against Pokémon Go, which was made in 2016. The maps are ready and in some parts more complete than Google Maps itself.
A new RTS game? Well, it just has to be better than Starcraft II, from 2010. No game in today’s world comes close to such smooth unit movement.
I think this also shows in the fact that there’s no need to invest more in games. People are satisfied with the old ones (WOW never seems to die) and there might not even be time to try new ones, in addition to the cost. Something truly revolutionary would have to come, but it’s hard to imagine what, because the existing best games are just so incredibly well made.
There’s no real need for new games; there’s certainly enough to play.
This left other game hits of this year, such as Clair Obscur: Expedition 33 and Kingdom Come: Deliverance II, thoroughly left far behind.
