How will game studios beat the rising cost of development?

With the cost of game creation set to rise as the next gen arrives, are studios starting to look at how they can continue to make a profit?

2013 sees the videogame industry at a crossroads. Not only is the next generation beckoning, but developers are beginning to look again at the way games are thought of, created and delivered.

Kickstarter is providing a new platform for those just making a start in the industry – and, more controversially, veterans looking for alternate sources of funding for their projects. Mainstream publishers such as EA are beginning to introduce microtransactions in order to provide additional revenue streams for their games, while the forthcoming online shooter Defiance is an ambitious collaboration between MMO dev team Trion Worlds and the Syfy Channel.

All of this leads up to one simple yet vital question: as the cost of producing videogames continues to rise – and the increased power offered by consoles such as the PlayStation 4 will inevitably see them jump again, at least for the developers of so-called triple-A games – how will they be funded?

There are rumours that the next generation of games will see a rise in retail prices, but with much of the world still in financial turmoil, a considerable hike doesn’t look too likely. And given that the price of videogames has dropped in real terms over the past 20 years, it’s unsurprising that developers are beginning to look at other ways of making a profit from their games.

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One suggestion, offered by Metal Gear Solid creator Hideo Kojima, is to introduce pilot episodes – a phenomenon we see all the time in television – into videogame creation.

“I think there’s a different way of tackling this problem,” Kojima said in an interview with Edge Magazine, “something similar to a TV series, where you can use pilot episodes to test the waters before you jump completely into the project… It can be distributed via download channels, so the player can try it out before production continues. Something like that wouldn’t take that long to create, maybe a year, and if it’s successful, you can continue.”

This is the logical progression from the episodic approach to games such as Telltale’s Walking Dead, and that series’ critical and commercial success could see it become more widely adopted than ever. 

That developers should take a less front-loaded approach to making games is a sentiment echoed by Trion Worlds’ VP of development, Nathan Richardsson. We spoke to him earlier in March about his studio’s forthcoming Defiance, and he voiced his doubts about the traditional approach to creating full-priced games for retail.

“I also have my doubts about the huge investment up front, retail-driven games in the future,” Richardsson told us. “I’m not going to say they’re going to die – I think they’re going to hang around for a long time. The pricing might change, and there might be the odd tweak during development, but long term, you’ll see that there’s going to be an array of business models on games.”

Instead, Richardsson foresees a more back-and-forth approach to videogame creation, more akin to the way MMOs are made, with an iterative approach to development, and regular feedback from the public via beta tests.

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“The process is now more iterative,” Richardsson said. “[Developers] used to make games in a very serial way at the start, and almost didn’t have a playable version until shortly before launch. Now you expand upon it, and test new features. It’s fine to course-correct, but you course-correct early on, so it doesn’t cost a fortune to fix. Then you open up for alpha or beta, to get more customer feedback. So what you essentially have in the end, as the game, has been tried and tested, so you know what you have in your hands. You’re not just putting stuff out and hoping for the best. So there’s a certain philosophical change there.”

As time goes on, we’re seeing the innovations from MMOs employed more and more by developers working in other game genres; in some instances, these are less than popular, as seen with SimCity’s requirement of an internet connection in a largely single-player game, or Dead Space 3’s mildly controversial introduction of microtransactions. But other innovations have proved more successful; the more collaborative approach to game creation, where players have more say in how games are funded – through initiatives such as Kickstarter – or how they’re improved – through alpha- and beta-testing – are widely regarded as a positive step forward for the medium. 

And while the terms ‘downloadable content’ and ‘free-to-play’ provoke varying responses depending on who you speak to, they’re becoming an increasingly common and viable answer to one of the eternal conundrums in game development: providing a compelling experience for players, while at the same time turning enough profit to keep a studio in production.

While the traditional approach to game creation – that is, putting a game on a disc and selling it – will be unlikely to disappear soon, it’s almost certain that we’ll see developers and publishers exploring more avenues in the future, whether it’s free-to-play, a ‘pilot episode’ followed by monthly instalments, or a hybrid of old and new ideas.

As Nathan Richardsson said himself, the creation of any major game is something of a high-stakes gamble, and studios are beginning to look again at how they can improve their odds of winning:

“…things are changing, and the industry should have seen by now how many game studios have killed themselves in the current model, and should be thinking, ‘Let’s do it different somehow.'”

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