Video Games - The Video Game Industry: Formation, Present State, and Future - page 28

publishers can, somewhat exaggeratedly, be described as a game of Follow
the leader or Simon says , where any successful game title gives rise to a tor-
rent of sequels and plagiarizing competitors—i.e. a “video game genre” is
born. Although this behaviour exists in other cultural industries, few can
demonstrate such path-dependent and persistent behaviour in terms of con-
tent strategies as the game industry. With drastic rises in development bud-
gets these content strategies become even more solidifi ed because they are
preferred in place of riskier development projects (such as new/original IP)
as these alternatives substantially increases the risk level of the publisher's
entire product portfolio.
6) Video game product reaches retail. When the product fi nally arrives to
retailers, target audiences and game medium have been shaped and for-
matted through several steps. A title is required to instantly “make it” at
retail—usually between three to six months before it is removed from dis-
tribution channels. There are no second chances, i.e. other revenue sources,
as other “media-type” cultural industries have managed to develop. The
“mono-window sales” model remains intact while the development bud-
gets continuously rise, thus increasing publishing risk.
7) Market information feedback to industry. Sales statistics provide an
information feedback loop to the industry. Demand is extremely uncertain.
A vast majority of released video games titles do not make a profi t, only
between 4 per cent and 20 per cent make a profi t (Alexander 2008; Lara-
mée 2003). Those titles that become profi table are immensely profi table—
the essential characteristic of hit-driven industries. The industry achieves
its own self-fulfi lling prophecy: statistics will show that the historical hard-
core-based content strategies (action, sport, racing, shooter/ FPS, RPG, etc.)
will generate most sales. The hardcore gamer genres constitute the bank-
able and lucrative target audience. The historical, and contemporary, foun-
dation for this process is the hardcore gamer segment.
8) Process is repeated. During a game console's life cycle steps 4 through 7
are repeated for every published title. When a new game console is intro-
duced, the entire process from step 1 to 7 is repeated.
What this eight-step process describes is the general dynamics of the con-
sole-based game industry. It obviously does not fully describe the dynamics
of the (formerly) competitive PC game platform, or other types of open
platform such as mobile phones/Java games, Web/Flash games and others.
Their dynamics are, however, very similar. Furthermore, the game console
has been the cash-cow profi t generator of the industry since the arrival of
the Famicom in the 1980s, and continues to do so in this age of the seventh
console generation.