Gaming's Broken Business

Epic Games veep Mark Rein delivers a controversial keynote at the Develop Conference in Brighton, England

During his keynote, Rein also talked about the economics of next generation console development, offering useful tips to developers and pubs, and in an entertaining tirade, he tore into Intel, saying the chip maker “ruined the PC gaming business.”

Regarding the hot topic of episodic, he said, “I’ve heard a lot of insane talk about episodic content. Very little of it makes any actual sense. It’s a broken business.“

He explained, “Customers are supposed to buy half a game for $20, then wait six months for an episode? When I put a game down, I want to try a new one. Episodic games that offer faster turnaround will inevitably be using a lot of recycled content, walking through the same environments and shooting the same enemies with the same weapons.”

He said that episodic games could never compete will full-priced products. “They’re competing against massive marketing budgets. Distribution without marketing is worthless. You can’t buy retail marketing with a wholesale price of $15.” He added, “Full-price games have a cohesive start, middle and end.”

Rein acknowledged that the game industry already has an episodic model through game sequels, such as Madden, Zelda and Final Fantasy. He said these work because they are full-price and backed by marketing.

However, his opinions did not go down well with all the audience in this busy seaside town.

“Mark, you are a dinosaur, you are wrong,” yelled one delegate. Another exclaimed, “Your brain is locked,“ and yet another accused him of self-serving arguments, saying that promoting the full-priced model best serves a company selling game engines such as Epic’s Unreal Engine 3.

Rein retorted, saying that Epic offers a variety of models including ones for Xbox Live Arcade.

Turning a profit

Rein began his speech talking about how developers can succeed in the next generation business environment. He started off with some fundamental economics:

  • A game selling 400,000 units on three different platforms at $35 average wholesale is $42 million revenue, take away $5 million in marketing, $8 million in development and another $8 million in platform holder fees leaves you with $21 million profit for the developer.
  • Prototype a lot. Have an anchor vision, but iterate like crazy.
  • Get the core elements to the fun stage before completing design.
  • Optimize your content pipeline at the prototype stage.
  • Self-fund your game to the playable stage if you can.
  • Outsource intelligently, but don’t rely on it too much.
  • Hire the right people and don’t just fill seats.
  • Be market aware; do what sells.
  • If you don’t love playing your game, you’re making the wrong game.
  • Execution is more important than ideas. An idea won’t buy you a cup of coffee.
  • Publishers will put up big money. You need a deal that is profitable.
  • There can’t be a long drought between games.
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