The Media is Reporting the Game Industry is Over: Why are They Such Babies Edition

My posting continues to move at a glacial pace. For a while, there was nothing new to say. Then, all of sudden, the world exploded with new ideas and I had no time to write. I attribute the plethora of new ideas - things other than marketing gaffes, publishers' hosing of developers, the need for independent finance and the folks who are saying they have it or xBox becoming cable - as a reflection of increased sensitivity attributable to too much travel and too little sleep. But bubbles are growing, companies are reacting, and CEOs seem to be turning into either Chicken Little or ostriches with heads in the sand.

Some of the new stuff floating around in my head is:

- The abandonment of seasoned game designers in favor of metric driven design - catering to metrics let you keep more players, but are those players worth keeping?

- The complete lack of game sales data for XBL and PSN - Do the platforms really think they are helping us by cloaking sales in a shroud of mystery?

- The matriculation of Japanese developers to the west and Japanese publishers to western developers - Does this mean we figured it out?

Before I get to those truly useful topics, I am going to display a gross lack of maturity and focus instead on something that pisses me off. I talked about issues with the gaming press in the past, and I am not the only one. But what happens when unwarranted attacks on the industry come from financial analysts and mainstream press? We are enjoying great success as an industry. Call of Duty showed year to year growth, Rockstar launched a new franchise, Bethesda proved successful with an externally developed game, two hardware companies successfully launched peripherals and Nintendo showed a resurgence in sales without a new introduction or material change to the Wii. Additionally, Kinect took the "fastest selling electronic device" title away from the iPad. With all this going on, I am amazed by the number of people covering the industry who covet and highlight failure - even when they have to build their own gray cloud around a silver lining. After questioning the success of Kinect Michael Pachter announced the PSP2 will be dead on arrival? While we can take solace in the fact he is wrong more often than he is right, how can you announce the death of a platform yet to even be announced? He cites market saturation. On this logic, we should stop making new mobile devices. There are almost as many cell phones in the world as there are people so there cannot be a market for new ones. No room for that facebook thing either with Myspace having tens of millions of users. No need for itunes either because all the world's music exists in digital form on disks. He also points to iOS's pricing model as an advantage. Did someone tell him the unannounced pricing strategy for games on the unannounced platform? Are they necessarily going to be the same price as they are now? Sony is sitting on years of games developed for four different platforms. I watched my kid and four of his friends put down Call of Duty and every other recent game to spend an afternoon playing Parapa and loving it. Would Pachter be right if Sony unlocks the vaults and makes those games available at iTunes prices? Isn't he also assuming no freemiums, micro-transactions, Zynga bucks or other models? But no one asks these questions. The media eats this up like a baby in front of a birthday cake and spreads it all around the web only to be re reported to by even lazier web site managers. Looking at the re links of the Pachter story, you will see a modern day game of telephone with each new link losing a bit of the context and pointing only to the subsequent link and not the originating post.

It may be fun to pick on Pachter -some may even call it sport - but it is not so fun when someone who is held up by his employers as an accurate view into the industry, like Ben Fritz, puts out this kind of story. It showed up on the front page of the Business section of the Los Angeles Times, and was linked all over the web and distributed through outlets Industry Gamers and even mainstream business sites related to financial results. In an "if it bleeds it leads" kind of way, the headline, " Once-Hot Nintendo Wii Now Struggling for Sales" makes us think Nintendo, and perhaps the game market, is down. The day it came out I got a bunch of calls and emails from people outside the game business questioning whether they should buy Wii for their kids. They were afraid to invest in a dying platform. While this is an interesting headline it belies any research for the article beyond the anecdotal support afforded by a visit to his local independent video game retailer. Is it really a surprise to see the retailer who caters to core gamers not selling the platform targeted at the mainstream? If the writer performed any research, the headline might have read "In Critical First Week of Holiday Shopping Season Nintendo Defies Logic by Moving Back to the Number One Home Console Position by Making the Console Red." Wii sales are in fact down from last year, but only because the last few years Nintendo beat Microsoft and Sony by light years. This holiday season, Nintendo slowed down to beating units sales only by miles. The week of the article, as well as the week before, Nintendo was ahead of both Microsoft and Sony in sales. Nintendo actually sold over 30% more units than either of the others and is growing to a pace of one million units a week in world wide sales. Sony and Microsoft spent billions of dollars to develop and release new hardware and Nintendo's only new innovation was Red. No price reduction, no hardware, just color and when the family shoppers went back to the stores for holiday shopping, they outsold the other two consoles. Even if Sony and Microsoft move back into the sales lead, it will be years before they erase Nintendo's thirty million unit lead. A bit more research would have shown five of the top ten titles for home consoles in America were for the Wii - more than both Sony and Microsoft.

Had our writer chosen to acknowledge any of this data, or asked for a copy of the deck Reggie Fils Amie presented at the BMO Conference the writer references but substantively ignores (Fils Amie pointed out the Wii's trajectory, even with the slow down outpaces the PlayStation 2 which remains the best selling console in history), he would have used the telegraphed quote from the game industry NPC who identified the Wii as a fad as dissent rather than support for the article. I may be way off base here, but to me, the Pet Rock is a fad. A 77 million unit installed base and growing, with five titles in the top ten is a business - granted they are all from Nintendo, but we will talk about that later. A fad descriptor is an easy justification by reporters who are too lazy research and game executives who are too complacent to innovate. Brian Farrell, CEO of THQ, knows this. While the other publishers were reducing Wii exposure, THQ invested in, and innovated with the Udraw tablet. Some business books call this leveraging a blue water opportunity. THQ simply calls it the thing that drove the stock price up over 25% in less than a month. Farrell said it in the article, but it was buried. "If you make unique and innovative games that speak directly to the Wii audience, you succeed." Amen to that.

I would not be so concerned if this article existed in a vacuum and evaporated into the dank, dark oblivion in which it belongs. But this type of lazy reporting comes from blind faith reprints of executive comments with little or no research. The writer does not have be our answer to Mike Wallace, but come on. Use more than a single source within walking distance. He lends support for people like the CEO of Disney to announce the market conditions, not product choices, are driving them from the console business. He blamed the shortcomings on the console on the console business itself, as one "that's obviously facing challenges." I guess this is true, if you read the LA Times, but the announcement came the same day Activision Blizzard announced the largest one day sales event in the history of entertainment - and went on to generate USD 650 million in five days. An amount great enough not only to wipe out all of Disney's USD 234 million in losses on the year - with a profit - but to prove Iger's assessment of the market completely wrong. Activision Blizzard out Disneyed Disney. Activision started treating games like movies while Disney continued to treat them like lunch boxes. Disney could dominate the market if they could figure out how to deliver a high quality branded experience into an existing fan base - like very other aspect of their business. Not to mention the rising significance of the brand extensions Disney created and mastered in every other form of media. We have not even begun to scratch the surface of the USD 29 direct download game and publishers already created downstream revenue windows by converting games like GTA 4, Red Dead Redemption, Call of Duty and others into platforms for follow on sales. Like film, block buster games are turning into the gift that keeps giving. Disney is in a position to eat our lunch and instead they are leaving the meal on the table.

The truth is Disney wanted out after years of losses. Nothing wrong there, just don't blame the market. Acknowledging a robust market would have forced Iger to admit the losses were caused by disastrous product choices, lack of brand leverage and poor marketing support. Instead reports by folks like our pal at the LA Times allow Disney's CEO to ignore the decision to put the best known character in the world in the company's most ambitious game on the single platform dominated by first party - remember those five top ten Wii titles I mentioned, they are all from Nintendo. Every other publisher hedges a bet like this by releasing on every platform available. They also made big budget investments in original IP when the company's very DNA is leveraging its beloved, engrained, content library. Hindsight may be 20/20, but looking at this year's lineup, foresight would prove equally clear. The major titles were the Wii exclusive Epic Mickey, Split Second and Toy Story 3. Split Second was a solid title, but how many consumers look to the Disney brand for quality racing? In a world of Gran Turismo, Forza, Midnight Club and Need for Speed, a racing game is enough of a stretch. But a racing game without licensed vehicles? Disney chose to not even extend the warmly received "Pure" brand from the year before. When the company did come up with a strong game and released Toy Story 3 on all platforms, they chose not to tell anyone. Relying on the film promotion to sell the game, the game's campaign was the antithesis of Disney's normal promotion.

Disney executives are not alone, in response to abysmal Harry Potter sales, a senior EA executive is quoted all over the place for positing the movie license business is falling apart. Not a single outlet reprinting the story or accompanying post pointed to the game's 37 on Metacritic - clicking on "metacritic" in the tag cloud to your left will show you how little regard I have for Metacritic, but EA still believes in it. His statement also ignores multiple millions of units sold of Lord of the Rings games from EA with Metacritic scores in the mid eighties as well as the dramatic decline in perceived quality of the Harry Potter franchise itself since EA's mid 70's sold over 10 million. It also ignores the more recent success of the Scott Pilgrim game which actually did better than the film, and even closer to home, the strong selling, high 70's Lego Harry Potter game released by Warner Brothers. Of course he acknowledges the need for quality and polish when addressing Mirror's Edge and Dead Space "if you’re going to be bold with that kind of concept, you need to take it as far as it can go in development." If this is a way of saying the movie games they released - and Activision's recent Bond title for that matter - are crap, I must agree. But why are polish and a movie game mutually exclusive? He starts to accept responsibility but immediately makes a u turn and blames the market “there were issues with the learning curve, the difficulty, the narrative, and then there was no multiplayer either." Learning curve, difficulty and narrative, absolutely right. EA blew it. But using Mass Effect and Dragon Age as a control group of games with smooth learning curves, balanced difficulty and strong narrative, he would quickly see multiplayer is not as significant as he may believe. Then again, this is the guy who last May said:

"I think any franchise that's been around for a long time, they get in a rut, they become over-annualized. They run out of innovation. The team pounds on a game every year, and they get tired, they run out of time and effort to be innovative and try and take some new risks. That was my view on how the franchise has fallen."

Tell that to the folks up at Ubi whose third Assassin's game in three years is selling better than the first two. Perhaps this is because they have smooth learning curves, balanced difficulty and strong narratives. The only thing for this guy to do is take a quick read through this and write:

"Mr. Consumer of EA Games, we are sorry we let you down. We apologize for Mercenaries 2, Medal of Honor: Airborne, for getting your hopes up about Medal of Honor again this year, and for expecting you to buy a Harry Potter game we believe is best used as a pooper scooper. As you can see from this year's Need For Speed and anything with the Bioware name on it, we can deliver quality every once in a while. However, somewhere along the way, we forgot how to do it on a regular and predictable basis. We are now going to buckle down, make great games and re earn your trust. Thank you for your patience, we will tell you when it is time to buy."

While there are some bright spots in the executive ranks, the fail to receive anywhere near the coverage. If the reporters choose to blindly reprint something and place their by line on it, how about following this guy? Just about the same time Disney came out and blamed the industry, Viacom announced it was putting Harmonix on the block, or in business parlance, "reclassifying it as a discontinued business unit." CEO, Philippe Dauman, said the sale was because "the console game business requires an expertise and scale that we don't have." There is no question where the buck stops and where responsibility is allocated. Having conquered every form of other media, Viacom does have the expertise and perhaps misapplied it, or chose not to use it, but that is another story. Instead, of delving into why games continue to elude a bunch of really smart people at one of the world's largest media companies, the very same writer chose to speculate and write a "story" that may or may not even exist.

I am certainly not a reporter, just some guy who decided to start posting on blogger. But I can not be the only who is frustrated by the continuous attacks on our industry. "Viral" as a description of these stories has never been more apropos. They are infecting our business and creating the conception in the finance and media world that entering the game business is slightly more costly and slightly stickier than declaring ware on the ground in Afghanistan. A presumption of loss must be faced by every game proposition seeking support. If you are frustrated by these reports, write about it. Post in the comments, write to the reporter, start your own blog. Do anything, just let people know we are not dead yet.