MIGS_2011: The Blockbuster is Dead. Long Live the Blockbuster!!
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MIGS_2011: The Blockbuster is Dead. Long Live the Blockbuster!!

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There has never been greater competition for the hearts, minds and wallets of players. Most publishers have responded to these new realities by massively increasing focus around the development of ...

There has never been greater competition for the hearts, minds and wallets of players. Most publishers have responded to these new realities by massively increasing focus around the development of smaller titles that exploit social media and online monetization models. On the other end, many publishers are also pouring resources into fewer big bets, recognizing that our hit-driven business rewards a smaller number of titles with a much greater piece of the revenue pie. In the midst of this turmoil, many developers talk about the death of the middle-class game. But there will always be an audience for the blockbusters. In this talk, van Lierop touches on the realities of the game business, the development process, and opportunities for creative expression to show there is a future for smaller big games, and in fact, that embracing a focus on delivering smaller big experiences to our players is necessary for the ongoing success of our exciting medium.

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  • Welcome.
  • I’m the founder and creative director at HELM Studio, a creative and production consultancy for video games and transmedia IP development. I’ve worked in the industry for about 12 years, and have had the good fortune to work on some very cool games with some amazingly talented people.
  • Games I’ve worked on and companies I’ve worked for.
  • Although I have been a gamer for over 25 years, this game completely changed the way I viewed the possibilities of the medium. It’s the game that convinced me that I needed to stop what I was doing, and focus all my energy on learning how to make games, and to break into the industry.
  • We’re at a crossroads right now. This is something I care a lot about and that’s why I’m here today.
  • You’re probably a Canadian, definitely a gamer, and maybe want some beard-growing tips. You’ve come to the right talk.
  • Not many people know that Steve Jobs and Steve Wozniak got their start in the games industry, at Atari. Woz created ‘Breakout’ in 3 days.
  • Discuss the breakdown of the typical $60 game. Notice how less than half of the revenue goes to the publisher – who funds and takes all the risk in creating the game. The developer would get a very small slice of the publisher’s piece. More than half of the cost goes to entities that don’t really add value.
  • Look at the evolution in visual fidelity and richness of worlds over nearly 30 years. GTA4 probably cost about 1000x as much as Star Raiders, though ($100M vs. $100k?)
  • Obviously, this is unsustainable.
  • This is just mind-boggling.
  • Use Guitar Hero as an example of how franchises are getting killed. This is just a clear example – there are many others, and I’m putting several key blockbuster franchises ‘on notice’ for this.
  • Pulled this out of the talk at MIGS because I needed to trim due to length, but if I had had more time I would have discussed how game reviews and metacritic are helping to perpetuate a whole bunch of unhealthy dynamics around the perception of game value.
  • These are all Blockbusters, according to my definition. I’m not talking about really successful ‘indie’ games like Minecraft, which have blockbuster-like sales but are not blockbusters as I’ve described them here.
  • Here I talk about how each of these 3 games was a blockbuster, but also defined or redefined an entire genre. GTA3 pioneered open world. Halo brought FPS to the console and popularized a bunch of control and gameplay conventions that continue to this day. Half-Life pioneered the highly-scripted linear game that kept the player in the story, which has given us entire franchises like Call of Duty, etc.
  • Game blocksbusters are like hollywood blockbusters – they signal a seasonal shift every year, and are ‘events’ in their own right.
  • (Didn’t include this during the talk because it felt a little highbrow.)
  • We all remember the moment we learned that Vader was Luke’s father. My face looked like this kid’s when I played the “No More Russian” level in MW2. 10+ million people played that level, and far more heard about it. This makes it a relevant cultural compass point for our generation.
  • Felt like beating a dead horse so I skipped this during my preso, but I think it’s relevant.
  • Beowulf as a legend perpetuates a belief system and communicates it very efficiently in the form of a story that we passed along verbally, so that members of a society can internalize the ‘rules’. This story still has relevance today. Maybe some of our games can become as culturally relevant as Beowulf?
  • Really hard to find good examples from existing games, but the HL2 episodes are close. High-quality blockbusters, short (around 4-6 hours), around $25-30.
  • By reducing the amount of content you need to create, you can create a less expensive game. Duh.
  • Delivery methods have not really enabled the possibility of a high-quality game, with less content, selling at a lower price point.
  • My suggestions on what this kind of game might look like, in terms of budget and amount of content.
  • I could even see entire publishers, or ‘sub-labels’ emerging to support this new part of the market.
  • Wow, look at all the sequels. Stagnation? I think so.
  • Since I didn’t dig into the reviews/metacritic thing earlier on, I also skipped this slide, but I do think it’s very true. I also especially think reviews should provide a score based on the quality of game content, and then separately include the number of ‘average play hours’ a game offers. This way consumers can decide for themselves if they think the game provides good value at a certain price.
  • No longer guessing based on ‘gut’ or developer opinion (we’re often way too close to really know what the best decision is). Playtesting serves this, but having live telemetry is incredible, allowing us to also tweak ‘on the fly’ based on what players enjoy.
  • Players all want innovation, but are scared to take a chance on something new because the price is too high. “Risky’ games end up rented or bought second hand, which hurts sales.
  • iTunes has taught the world about buying content digitally.
  • This is ultimately the Holy Grail of this whole thing – to open up new possibilities for exploration and innovation in our industry. If you build it, they will come.
  • Thanks fro your time, hope you found this interesting, and feel free to contact me as I’d love to hear from you!

MIGS_2011: The Blockbuster is Dead. Long Live the Blockbuster!! MIGS_2011: The Blockbuster is Dead. Long Live the Blockbuster!! Presentation Transcript

  • The Blockbuster is Dead: Long Live the Blockbuster! Raphael van Lierop Founder & Creative Director HELM Studio Montreal International Game Summit November 2nd, 2011
  • PREAMBLE
    • The thing that comes first
    • Some existential questions.
      • Who am I?
      • What have I done?
      • Why am I here?
      • What is the meaning of this talk?
      • Why are you here?
    Raphael van Lierop Creative Director HELM Studio
      • Who am I?
      • What have I done?
      • Why am I here?
      • What is the meaning of this talk?
      • Why are you here?
      • Who am I?
      • What am I doing?
      • Why am I here ?
      • What is the meaning of this talk?
      • Why are you here?
    Half-Life (Valve, 1998)
      • Who am I??
      • What have I done?
      • Why am I here?
      • What is the meaning of this talk?
      • Why are you here?
      • Who am I?
      • What have I done?
      • Why am I here?
      • What is the meaning of this talk?
      • Why are you here ?
  • THE THREAT TO BLOCKBUSTERS
    • You never hear the bullet that kills you.
    • The market has become polarized
      • Massive triple-A hits
      • Huge casual games
      • Not much viable in between
  • The Truth, Pt. 1
    • The boxed retail business model and $60 price-point
    • have helped kill the “middle class” game,
    • & have strangled the PC games market so that retail is basically unviable .
  • The Truth, Pt. 2
    • Bigger investment in blockbusters
    • means higher risk for publishers
    • means less risk-taking.
      • We face a future with much less choice in the “high end”
        • Fewer franchises releasing less often and with less meaningful advancement between iterations
    • This is a recipe for stagnation and ultimately, failure.
    • (…that would be bad .)
  • ECONOMICS OF SAME
    • How did we get here?
    • For a long time, the games industry was synonymous with pioneering exploration and a glory-seeking, cowboy attitude.
    • It was the haven of mavericks and iconoclasts .
    • There is still innovation and risk-taking,
    • but the economic engine of the industry is the boxed-product retail-driven console cycle ,
    • and this fuels an unhealthy dynamic for publishers, developers, and gamers.
    • CONTENT WARNING:
    • The next slide is one of the most disturbing images you will see today.
  •  
  • PROBLEM
    • Physical boxed product enforces scarcity economics :
      • Supply/demand
      • Access/availability
      • Marketing spend & promotions
      • Short sales cycle (price pressure!)
  • Current Trend
    • So far, the hardware improvements with each console generation have enabled vast possibilities that have resulted in a massive increase in project budgets.
    Star Raiders (1979) GTA4 (2008)
    • Blockbuster budgets by generation :
      • PC/SNES/PS1 era = ~$500k
      • Xbox/GameCube/PS2 era = ~$5M ( 10x )
      • Xbox 360/PS3 launch = ~$15M ( 3x )
      • Xbox 360/PS3 current = ~$50M-$75M ( 3x )
      • Next gen = ??? ~$100M-$150M? ( 2x? )
  •  
    • But, overall profitability has not really kept pace:
      • Top sellers in industry are from last-gen
      • Console install base has shrunk
      • 2-3x development cost but not 2-3x the revenue
  • Some Loose Numbers
    • Total unit sales for top-5 games on PS2/Xbox = 70M units
    • Total units sales for top-5 games on PS3/Xbox360 = 57M units (81%)
    • Install base for PS2/Xbox= 169M consoles
    • Install base for PS3/Xbox360 = 111M consoles (65%)
    • Top-seller for last gen* = GTA: San Andreas (19M units)
    • Top-seller for this gen* = Call of Duty: Black Ops (13M units)
    • *non-bundled games; single platform
  • Conclusions
    • Games cost (on average) 3x as much to develop than last gen, but we’re selling fewer copies to fewer gamers .
    • Also, blockbusters are much more prominent this gen vs. last
    • RESULTS:
      • Publishers doubling-down on fewer, bigger bets
      • Risk-aversion increases
      • Failures hurt a lot more (company killers)
    • SAFE BET STRATEGY: Sell more of the same.
  • Recap
    • Blockbuster games cost more to make,
    • are riskier to market and sell,
    • and sell less than they have, historically.
  • TOO HIGH A PRICE/CANNIBALS
    • Money, Money, Money…
  • Pssst…Games Cost Too Much
    • $60-dollar price point = Too expensive!
      • Not an impulse buy
      • Validates rental & resale
      • Evokes risk-aversion from consumers
      • Discourages experimentation
      • & purchase commitment
    • RESULT:
      • Consumers stick with brands they know
      • Rental and pre-owned are viable value propositions
      • Save money for ‘sure bets’
    • Rentals/resales dynamics
      • Hurting the publishers/developers
      • Value-add for the consumer
      • We need to find a way to add value to the consumer but still get paid for it !
    • Still more rental/resale dynamics:
      • Higher retailer profit margin on resold game
      • Direct cannibalization of sales
      • No revenue for publisher/developer
      • Forces unpopular defensive measures
      • Gamestop 2008 : $1B from used (32% rev/44% profit)
  • Lions Become Lambs
    • No other industry allows its primary retail channel to cannibalize its sales so thoroughly, viciously, and efficiently,
    • and at point of sale!
  • But, The Customer is Always Right
    • Existence of rental/resale tells us some interesting things about what our consumers want:
      • Easy access to a wide variety of games
      • Low-cost ‘try-before-you-buy’ opportunity
      • Fling vs. Relationship
      • Flexibility is more valuable than ownership
      • Sales of second-hand games show an interesting pricing trend: ~$30
      • Renters/second-hand buyers don’t want to feel second-class!
    • We must learn from this stuff!
      • Another unhealthy dynamic: “Release Fatigue” AKA “Sequilitis”
      • Def’n:
      • An economic condition whereby an industry, out of fear , invests in the “tried and true” at the expense of the new, until innovation is starved and the consumer becomes bored and abandons the industry in search of a better value proposition .
    • Contributing to the rise of social/casual/mobile?
      • Surprising overlap in audience% and spending habits between core and casual gamers
      • (need data)
    • Free2Play
    • Def’n: Giving the game away for free, and generating revenue through in-game monetization.
      • Exciting business model…
      • … not always natural
      • Superior to full-product retail (in many ways)…
      • … but often adopted out of desperation.
      • Switches emphasis from experiential engagement (i.e. escapism) to psychological engagement (ex. gambling & addiction psychology)
    • Game reviewing (“Journalism”)
      • Much greater meaning for games than for film
      • Most reviewers are not acting like critics, but “value police”
      • Reviews currently incorporate content quantity in evaluation of content quality
        • Should be separated, so consumers can decide
    • Example: Metacritic “value” dynamics:
      • High-quality game gets ‘dinged’ for lacking MP
      • Low Metascore can negatively impact sales
      • RESULT: Add MP to all games
      • Often non-rigorous evaluation of product, often based on opinion not knowledge or information
        • (esp. from bloggers and smaller sites)
    • Metacritic is now part of the value system, used by consumers and publishers
      • It’s become a thing that has to be ‘gamed’
  • Recap
    • State of the Industry:
      • Massive change and ‘turmoil’
      • Huge, but uneven, growth (mostly outside console)
      • Boxed retail is threatened (frightening for conservative publishers)
      • There be monsters!
  • WHAT IS A BLOCKBUSTER?
    • Def’n:
    • A big-budget experience emphasizing epic action, grand spectacle, and the best production values.
    • Highly realized visuals, music, audio, etc.
    • Offers an escape through adventure
    • Narrative-driven action
  •  
    • Historically, have been:
      • Games that have pushed the boundaries
      • and (re)defined genres.
    • Current trend:
      • Massive marketing push behind
      • relatively safe iterations on existing formula.
  •  
    • A big part of gaming’s adoption by popular culture can be attributed to the success of the blockbuster.
  • WHY SAVE THE BLOCKBUSTER?
    • Blockbuster games are modern mythology.
    • Main cultural compass point for Generation Y/Generation “Me”.
    • Blockbuster games take us out of regular life,
    • connecting us to something vitally important to our existence as human beings .
    • “ The myth is the public dream and the dream is the private myth.
    • If your private myth, your dream, happens to coincide with that of the society, you are in good accord with your group .
    • If it isn’t, you’ve got an adventure in the dark forest ahead of you. ”                            
    Joseph Campbell Mythologist, Writer, Lecturer
    • Blockbuster games are the public dream, the private myth, and often, our dark forest .
    • Blockbuster games are becoming a replacement for ancient rites of passage (to adulthood) our society no longer permits.
    • Exorcise our demons and refine our identity as humans.
      • The Iliad, The Odyssey, Gilgamesh, Beowulf
      • Halo, God of War, GTA, Call of Duty
    • Provide common cultural ‘compass points’
    • Serve a purpose beyond simple entertainment:
      • Catharsis
      • Expression of shared values
      • Exert control over a chaotic world
    • blockbuster games  organized sports
    • … allow for a socially-acceptable outlet to exercise vital formative experiences in the form of escapist fantasy.
  • Cultural Resonance
    • They are the modern, interactive equivalent of the Anglo-Saxon ‘skop’*, telling and retelling Beowulf around the campfire.
    • *storyteller
  • Recap
    • Blockbuster games perform an important role in cultural definition and expressions of shared values.
    • They are a ‘safe’ place for modern individuals to experience rites of passage .
  • DEATH OF THE MIDDLE CLASS. RISE OF THE MID-CORE
    • We’ve formalized the notion of a player and consumer that falls between hardcore and casual – Mid-Core .
    • Def’n: Mid-core gamer
      • A gamer with a wide range of tastes
      • Owns and plays on multiple platforms
      • Purchases multiple games per year, but not many
      • Will not invest the same time or $$ as hardcore gamer
      • Huge and growing audience
    • What might a mid-core blockbuster look like?
    • A lower price point (~$30-40)
    • Shorter , and/or more compartmentalized experience
    • Made easy to get in and out (retention)
    • A “smaller, big game” .
  •  
  • HOW TO MAKE A SMALLER, BIG GAME
  • Typical Phases of Development
    • Concept Development
      • “ What are we making?”
      • ~5% of budget
    • Preproduction
      • “ How are we making it?”
      • ~20% of budget
    • Production
      • “ Make it!”
      • ~75% of budget
    • $40M budget
      • Concept Development = $2M
      • Pre-production = $8M
      • Production = $30M
    • What else is going on?
      • Concept development = Low-cost, High-risk
      • Pre-production = Med-cost, Med-risk
      • Production = High-cost , Low-risk
    • Result: Risk is front-loaded. Lion’s share of budget is spent on high-cost, low-risk content.
    • Q: How do you build a mid-core blockbuster?
      • A: Make a smaller game .
        • Less content, shorter, and sell for a lower price.
    • Historically, the retail boxed-product paradigm has made this impossible.
      • Price-point = need to deliver $60 of value
      • Arms race for content breadth & fidelity
      • Consumers discouraged from taking risks
      • Avenues for risk-taking actually cannibalize the industry (ex. rental/resale)
    • But as digital becomes more prevalent:
      • Direct relationship with consumer
      • Pricing flexibility (absolute + interval)
      • Atomistic content (DLC, microtrans, etc.)
      • The iTunes model (song vs. album)
    • What would a mid-core blockbuster game look like ?
      • $10-15M budget
      • Heavy reliance on middleware
      • Highly optimized production methodology
      • Sub-2 yr dev cycle for first iteration
      • 1-yr dev cycle for subsequent iterations
      • Sub-50 team
      • 3-6 hours of play time
      • $20-$30 price point
    • What would a mid-core blockbuster franchise look like?
      • High frequency incremental iteration
      • Yearly installments
      • Digital-only
      • Online marketing only; emphasis on grassroots social
    • Revised market breakdown:
      • Triple-A Blockbuster
        • $60- $120 (!!) price point
      • Mid-core Blockbuster
        • $20-$30 price point
  • Recap
    • There is a market opportunity for a mid-core blockbuster game, that delivers a high-quality experience but is shorter and costs less to make and purchase.
  • ROADMAP TO A BETTER FUTURE
    • Stagnation is a real risk, perhaps even a truth, in the mainstream blockbuster games market.
    • We need to find different ways to assign value to experiences.
      • We need a healthier body of criticism to help advance the state of the art
      • We need to abandon or tweak the Metacritic valuation system
      • We need to divorce game length from critical scores
    • Going to an all-digital world is incredibly exciting!
    • Direct access to consumers will empower creators .
    • Reducing costs = higher profits !
    • Gradual ‘drip-feed’ monetization can help promote health of independents & industry.
    • Playtest metrics & live telemetry are taking the guesswork out of development
    • Objective vs. subjective
    • All-digital permits widespread pricing flexibility :
      • Rentals and ownership transfer
      • Atomistic content purchase (ex. MP-only)
      • Subscription (weekly, monthly, annual, etc.)
      • Free trial
      • F2P
      • Sale dynamics (ref: Valve Steam sales)
    • We need to find ways, through technology, process, and business models, to emphasize exploration and sales success for innovation & experimentation .
    • At $60 , players want innovation but are scared to pay for it
    • Current digital distribution platforms are habituating a new generation and normalizing away from boxed product.
    • Cloud-based gaming promises a platform-agnostic future.
      • Emphasis on content vs. platform
      • Streamlined development process
      • Ideal: Should help drive dev costs down while increasing access to market
    • A viable mid-core blockbuster games market could be great for dev teams :
      • Shorter dev cycles
      • Higher-frequency iteration
      • Production momentum
      • Process ‘hardening’
      • Larger individual body of work
  • Recap
    • The all-digital future is awesome
    • and will help save the blockbuster game!
  • FUTURE OF RISK-TAKING
    • New types of gameplay and new experiences?
    • New characters, stories, and subjects?
    • Content with more ‘mature’ themes?
    • Games that push social awareness?
    • New ways of interacting with the game?
    • New ways for the game to interact with the player?
    • New ways for players to interact with each other?
    • … in general, experimentation !
  • In Conclusion
    • We are at a turning point.
    • The current model isn’t sustainable.
    • We need experiences that fall between GTA and Farmville.
    • Those with the means – and the courage – need to blaze a new path.
    • Countless new opportunities lie just over the horizon…
  • Questions & Thank You! Raphael van Lierop Creative Director HELM Studio CONTACT & SOCIAL Email: [email_address] Twitter: @RaphLife LinkedIn: www.linkedin.com/in/rvanlierop www.helm-studio.com