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KAOS Studios Postmortem

Gamasutra has a postmortem on the rise and fall of KAOS Studios, the developer formed by the team that created the Desert Combat modification for Battlefield 1942. An interesting element of the story is how the studios expansion resulted in hiring developers with more complete resumes than the managers they were working for and other hurdles they had to overcome to succeed in an increasingly competitive FPS genre.

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40. Re: KAOS Studios Postmortem Jul 8, 2012, 13:50 ASeven
 
Kajetan wrote on Jul 8, 2012, 13:39:
Growth will be only possible by fusions and takeovers. For example EA swallows THQ, ActiBlizz buying Take2, EA swallowed by Disney, Ubisoft is new entertainment division of some east asian corporation trying to get in the western video game market. There will be rough times high up, where the majors tread. There will be no crash, but a constant market consolidation until only three or four majors remain. Including Sony, Nintendo and MS.

The end result will be the same as a crash though, a couple of the big ones survive while Indies prosper unhindered. Consolidation or crash will lead to the same end for this industry.
 
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39. Re: KAOS Studios Postmortem Jul 8, 2012, 13:46 ASeven
 
Beamer wrote on Jul 8, 2012, 12:57:
ASeven wrote on Jul 7, 2012, 18:37:
AnointedSword wrote on Jul 7, 2012, 17:47:
Funny, they sold millions of copies yet still was a failure.

Gaming industry today.

KAOS was based in Manhattan. They were isolated from the rest of THQ, especially the main office THQ was trying to build, and their occupancy costs were far, far above industry average.

This is the primary reason they were closed. Homeland's sales made THQ plenty of money, but the studio wasn't well structured and cost a small fortune to run. THQ wanted any reason to shut it down, move the talent to a better location, and ditch the poor structure.

Quick: what other developers are based in Manhattan. A few small social ones with Bloomberg picking up most of the tab, Take2's marketing operations, and that's it. There's a big reason no one makes games in Manhattan.

That does not invalidate in any way AnmnointedSword's point.
 
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38. Re: KAOS Studios Postmortem Jul 8, 2012, 13:46 ASeven
 
theyarecomingforyou wrote on Jul 8, 2012, 12:48:
ASeven wrote on Jul 8, 2012, 11:56:
CoD is not the milking money cow it was once and that started this year. See this article. Kotick, if he's smart, should start to get real worried. This is the first time since CoD4 that sales for the series have strongly declined so soon after the release of the game and this points to an obvious market fatigue of the same IP.
True, but how much of the difference has been made up by the extra DLC, especially COD Elite? If they're increasing the profit margin on each sale then that's still a viable business model, especially given that we haven't seen any major changes to the format in half a decade. Don't forget that some of that will be fatigue related to the current generation of consoles, which have seen an equal decline. All they need is to invest in a definitive next-gen engine and throw in a few twists and they're back on top.

It ain't much. If people aren't buying CoD anymore then they sure aren't buying DLC and Elite for it anymore either. As such I'm willing to bet that CoD Elite for consoles, where the DLC is all distributed there, as made a lot less money today comparatively to the amount of DLC sold for past CoD titles in the same timeframe. Activision was proud of sending press releases about the tremendous amount of DLC sold for CoD but with people stopping buying the game then the CoD DLC market has shrunk a lot and not even a monthly subscription from Elite will probably make up for the gamers that are leaving CoD for good and will not buy one more CoD title. And as was said here before, another alarming sign is that people are not excited about the next gen consoles. Making a next gen CoD also won't solve anything because in the end it's still CoD with the same gameplay style. People still won't buy it.

theyarecomingforyou wrote on Jul 8, 2012, 12:48:
ASeven wrote on Jul 8, 2012, 11:56:
Advertising and marketing budgets are way off anything realistic in the industry but the gaming developing costs is far worse. We're reaching a point where developing a game, even one with an IP used to death, is starting to hit values that were once reserved to the movie industry. In other words mainstream games are starting to carry with them insane, unsustainable developing costs that, as was said in this thread, will destroy the market since only a small handful of all mainstream games released get anything close to a profit.
Considering that the top games generate more money than the top films it's not surprising that budgets would exceed that of the industry. Is it excessive? Absolutely. But it generates results. Don't forget that the movie industry has just as many flops - just look at Disney's John Carter. That doesn't mean the entire movie industry is going to collapse.

Do they? CoD may have at one point, no doubt but I don't think there's been many games to generate close to the profit a good movie generates when it's profitable. Another problem is that making AAA games no longer brings the results it once brought. AAA games are competing with themselves, on a shrinking market, and only very few of them even break even let alone become profitable. The difference between the gaming and movie industries is that the movie industry actually produces a lot more product and often at a reasonable price of sorts, at least compared to the gaming industry, and also it has a vaster and much larger market of moviegoers compared to the shrinking gaming market where casuals are leaving to other pursuits, leaving a small core of hardcore gamers with a higher expectation of quality that sees publishers regularly fail them with that expectation. The movie industry won't crash because the size of its market and consumers literally dwarfs the size of our own gaming market. Couple that with the fact that gaming, at least AAA gaming, has become hellishly expensive and you have one more problem the gaming industry won't or can't handle. And leave the inflation argument behind, games may be as expensive as they were years ago if we compare the price of money back then and now but games have also become a hell of a lot shorter and less engaging and much more derivative and the actual value of a game is a lot less than in the past. We are served with less of a game today than we were years ago and this is specially true with single player games.

theyarecomingforyou wrote on Jul 8, 2012, 12:48:
ASeven wrote on Jul 8, 2012, 11:56:
Also mobile games are not profitable. Like AAA games a small handful of them are, the rest are not. If publishers move to mobile platforms a problem will arise which is the price of games. Mobile gamers are used to pay $5 top for a game, if publishers start pushing for mobile games costing $20 or more then they will meet with utter failure of sales since demand for such high priced games on mobiles is none when far cheaper games also offer quality gaming for a mobile.
The point is that the market is expanding and those that can create quality products and successfully monetise them will do well. My point wasn't to suggest that mobile gaming was a magic sector whereby even terrible products can make money. However, we haven't even seen the real start of tablet gaming yet - Microsoft is investing heavily in Windows 8 and tablets and Google is starting to build momentum at the lower end with products like the Nexus 7.

The tablet market is expanding alright along with the mobile market, the question that remains to be answered is if the mobile market is a viable gaming market or not and to be honest successful games in that market are still the exception rather than the rule presently.

theyarecomingforyou wrote on Jul 8, 2012, 12:48:
ASeven wrote on Jul 8, 2012, 11:56:
As for publishers many of them are in deep trouble, even big names like Nintendo who for the first time in its history had a very worrying and big loss in the past fiscal year.
Nintendo is struggling because they failed to capitalise on the incredible sales figures for the Wii. The attach rate is appalling and the console was underpowered, even for the casual market. They also completely misread the market with the 3DS, when mobile and tablet gaming was where everybody was heading. Both the Wii and the 3DS lack decent internet connectivity and digital distribution markets, which is an especially problem for the 3DS when mobile phones and tablets are designed around such market places. Some of the losses are related to development and production costs for the Wii U, though that looks like another product that has misread the market. As for Sony, that was their arrogance in pushing Blu-ray at a time when people are moving to streaming solutions - it made the PS3 dramatically less profitable than it should have been.

I'm not suggesting there aren't some major problems with the way the industry is currently operating but I don't consider them terminal. I buy more games than ever thanks to Steam and I can see digital distribution doing a lot for the next-gen of consoles. Like the movie industry, the gaming industry can survive numerous high profile flops - they may take out some of the weaker players or those that over extend but that's standard for all markets. Markets change, that's just par for the course. Look at Pepsi and Burger King - two brands that have suffered immensely. Yet McDonald's, Subway and Coke continue to thrive. Mismanagement will run any company into the ground. Valve is one of the current winners.

EA is currently somewhat vulnerable - it posted just $76m net income on $4.1bn of revenue. Activision Blizzard is not - it posted $1bn net income on $4.8bn. But EA's trend is upwards, from the huge losses it posted a few years back - based on those trend you'd expect to see them hit $300-400m net income next year. I certainly understand people's concerns but look how many times people have predicted another dot com crash. I see considerable change ahead but not an outright collapse.

It's not only EA, just look at EA's stocks, they're at a 15-years low which is frightening enough as it is. The fact is publishers and manufacturers are in deep trouble. You are correct about the reasons of Sony and Nintendo but what we can't do is discard that they and many other publishers are in deep trouble regardless of the reasons, what is important is that they are in trouble, period, and with weak prospects of returning to form.

The truth is the same mistakes of 83 are being done all over again. Mediocre titles, consumer abuse, oversupply of games to a dwindling demand and market, betting on failed IPs that are not much different from past titles (TOR, Homefront, etc) or using the same IP to utter exhaustion (CoD, etc) that makes gamers shrink away from such games, rising development and marketing costs. Coupled with that the fact that publisher CEOs are utterly blind to what happens in the market and keep making the same mistakes and milking the same games until gamers had enough of it and its abusing practices and, worse of all, having publishers serve to shareholders and investors who understand nothing about gaming instead of serving and meeting the demands of the gamers themselves. All this has taken its toll for years and years and now we're seeing the results of that. Even the big analyst houses like Moody and S&P are advising clients and investors to flee from the gaming market and this alone is a fucking red flag that should scare shitless anyone working within the publishers.

Not even the most ardent of fanboys and apologists can save the industry from what its coming and the publishers deserve all of it since they were the ones who created the conditions for their own downfall in the first place. This is the free market working at its best, you don't innovate and you abuse consumers and sooner or later you will pay the price.
 
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37. Re: KAOS Studios Postmortem Jul 8, 2012, 13:39 Kajetan
 
theyarecomingforyou wrote on Jul 8, 2012, 12:48:
Don't forget that the movie industry has just as many flops - just look at Disney's John Carter. That doesn't mean the entire movie industry is going to collapse.
True. But they have had always enough movies, which were so profitable that they can cover the cost of the flops and still grant the studio a decent overall profit. EA was a master in perfecting its release efficency, therefore dominating the whole industry for a whole decade. Now look at them.

In the gaming industry this profit margin is shrinking year for year, because budgets go up, markting costs go up, but revenue isnt growing as strong as needed. The market is saturated, there is not enough growth to sustain the increased budgets. Publisher are terrified of the new console generation instead of welcoming it. Because they all know, that this new generation will produce not enough market growth to cover the increasing budgets necessary to make games for these consoles.

Growth will be only possible by fusions and takeovers. For example EA swallows THQ, ActiBlizz buying Take2, EA swallowed by Disney, Ubisoft is new entertainment division of some east asian corporation trying to get in the western video game market. There will be rough times high up, where the majors tread. There will be no crash, but a constant market consolidation until only three or four majors remain. Including Sony, Nintendo and MS.
 
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36. Re: KAOS Studios Postmortem Jul 8, 2012, 13:22 theyarecomingforyou
 
Beamer wrote on Jul 8, 2012, 12:57:
KAOS was based in Manhattan. They were isolated from the rest of THQ, especially the main office THQ was trying to build, and their occupancy costs were far, far above industry average.

This is the primary reason they were closed. Homeland's sales made THQ plenty of money, but the studio wasn't well structured and cost a small fortune to run. THQ wanted any reason to shut it down, move the talent to a better location, and ditch the poor structure.
Exactly. Reading the article it's clear that there the management structure was fundamentally lacking, even more so when the main manager left at the end. It wasn't a viable studio. As for the occupancy costs, it's just bizarre that you'd base a studio in such an expensive city when - unlike most other industries - there isn't any advantage to doing so and a major financial disadvantage. THQ just can't justify such a venture given their vulnerability in the market place.
 
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35. Re: KAOS Studios Postmortem Jul 8, 2012, 12:57 Beamer
 
ASeven wrote on Jul 7, 2012, 18:37:
AnointedSword wrote on Jul 7, 2012, 17:47:
Funny, they sold millions of copies yet still was a failure.

Gaming industry today.

KAOS was based in Manhattan. They were isolated from the rest of THQ, especially the main office THQ was trying to build, and their occupancy costs were far, far above industry average.

This is the primary reason they were closed. Homeland's sales made THQ plenty of money, but the studio wasn't well structured and cost a small fortune to run. THQ wanted any reason to shut it down, move the talent to a better location, and ditch the poor structure.

Quick: what other developers are based in Manhattan. A few small social ones with Bloomberg picking up most of the tab, Take2's marketing operations, and that's it. There's a big reason no one makes games in Manhattan.
 
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34. Re: KAOS Studios Postmortem Jul 8, 2012, 12:48 theyarecomingforyou
 
ASeven wrote on Jul 8, 2012, 11:56:
CoD is not the milking money cow it was once and that started this year. See this article. Kotick, if he's smart, should start to get real worried. This is the first time since CoD4 that sales for the series have strongly declined so soon after the release of the game and this points to an obvious market fatigue of the same IP.
True, but how much of the difference has been made up by the extra DLC, especially COD Elite? If they're increasing the profit margin on each sale then that's still a viable business model, especially given that we haven't seen any major changes to the format in half a decade. Don't forget that some of that will be fatigue related to the current generation of consoles, which have seen an equal decline. All they need is to invest in a definitive next-gen engine and throw in a few twists and they're back on top.

ASeven wrote on Jul 8, 2012, 11:56:
Advertising and marketing budgets are way off anything realistic in the industry but the gaming developing costs is far worse. We're reaching a point where developing a game, even one with an IP used to death, is starting to hit values that were once reserved to the movie industry. In other words mainstream games are starting to carry with them insane, unsustainable developing costs that, as was said in this thread, will destroy the market since only a small handful of all mainstream games released get anything close to a profit.
Considering that the top games generate more money than the top films it's not surprising that budgets would exceed that of the industry. Is it excessive? Absolutely. But it generates results. Don't forget that the movie industry has just as many flops - just look at Disney's John Carter. That doesn't mean the entire movie industry is going to collapse.

ASeven wrote on Jul 8, 2012, 11:56:
Also mobile games are not profitable. Like AAA games a small handful of them are, the rest are not. If publishers move to mobile platforms a problem will arise which is the price of games. Mobile gamers are used to pay $5 top for a game, if publishers start pushing for mobile games costing $20 or more then they will meet with utter failure of sales since demand for such high priced games on mobiles is none when far cheaper games also offer quality gaming for a mobile.
The point is that the market is expanding and those that can create quality products and successfully monetise them will do well. My point wasn't to suggest that mobile gaming was a magic sector whereby even terrible products can make money. However, we haven't even seen the real start of tablet gaming yet - Microsoft is investing heavily in Windows 8 and tablets and Google is starting to build momentum at the lower end with products like the Nexus 7.

ASeven wrote on Jul 8, 2012, 11:56:
As for publishers many of them are in deep trouble, even big names like Nintendo who for the first time in its history had a very worrying and big loss in the past fiscal year.
Nintendo is struggling because they failed to capitalise on the incredible sales figures for the Wii. The attach rate is appalling and the console was underpowered, even for the casual market. They also completely misread the market with the 3DS, when mobile and tablet gaming was where everybody was heading. Both the Wii and the 3DS lack decent internet connectivity and digital distribution markets, which is an especially problem for the 3DS when mobile phones and tablets are designed around such market places. Some of the losses are related to development and production costs for the Wii U, though that looks like another product that has misread the market. As for Sony, that was their arrogance in pushing Blu-ray at a time when people are moving to streaming solutions - it made the PS3 dramatically less profitable than it should have been.

I'm not suggesting there aren't some major problems with the way the industry is currently operating but I don't consider them terminal. I buy more games than ever thanks to Steam and I can see digital distribution doing a lot for the next-gen of consoles. Like the movie industry, the gaming industry can survive numerous high profile flops - they may take out some of the weaker players or those that over extend but that's standard for all markets. Markets change, that's just par for the course. Look at Pepsi and Burger King - two brands that have suffered immensely. Yet McDonald's, Subway and Coke continue to thrive. Mismanagement will run any company into the ground. Valve is one of the current winners.

EA is currently somewhat vulnerable - it posted just $76m net income on $4.1bn of revenue. Activision Blizzard is not - it posted $1bn net income on $4.8bn. But EA's trend is upwards, from the huge losses it posted a few years back - based on those trend you'd expect to see them hit $300-400m net income next year. I certainly understand people's concerns but look how many times people have predicted another dot com crash. I see considerable change ahead but not an outright collapse.
 
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33. Re: KAOS Studios Postmortem Jul 8, 2012, 12:07 Elf Shot The Food
 
All that blood sweat and tears over a four-hour game. And even though most people liked the multiplayer, that wasn't even done by Kaos Studios but by Digital Extremes.

As for the enemy originally being China, the Chinese government threatened to ban THQ from doing business in China if they didn't change the nationality of the invading force.
 
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32. Re: KAOS Studios Postmortem Jul 8, 2012, 11:56 ASeven
 
theyarecomingforyou wrote on Jul 8, 2012, 10:58:
Dr. D. Schreber wrote on Jul 8, 2012, 00:35:
I don't see EA surviving any kind of major shake-up; it's pretty common knowledge now that their business practice amounts to "hemorrhage as much money as possible for as long as possible without actually imploding" and they never really make money no matter how many big earners they push out.
I very much dislike EA as a business but they have substantial investments in casual gaming and despite the fact that Origin is just getting up to speed I'm sure it will be making them some decent money, as the margins are huge. I'd love to see them collapse and be bought up by a company like Valve.

Jerykk wrote on Jul 8, 2012, 03:36:
I wouldn't be so sure. At one point, Codemasters was trying to compete in the AAA game market except they failed, so now they only make racing games. Same applies to Majesco, only they've switched to mobile/casual games. THQ will likely follow suit within the next couple of years.
Codemasters made some pretty poor non-racing games and then went back to their strengths, which was a sensible strategy. Majesco isn't a major publisher and they have a particularly poor selection of games, which reflects on them not the industry. And THQ has made a series of incredibly poor investments in games projects - Homefront being an obvious one - and has been struggling to compete on quality for a long time. Just like any industry, if you make bad products and bad investments you're unlikely to survive as a business. I don't expect THQ to survive. The difference is that although EA and Activision make plenty of shitty moves they're design to make them more money (Origin for EA; rehashing CoD to death for Activision) - heck, Modern Warfare 3 is still in the top 20 on Steam (and has been there since launch 7 months ago), at a higher than market average price, with a huge selection of overpriced DLC and is the 8th most played game on Steam. As much as I HATE CoD for being utterly derivative and lacking innovation there is absolutely no doubt it's a huge money making product.

Advertising budgets are the biggest issue with gaming at the moment. For instance, I've seen a lot of TV ads for Spec Ops: The Line which looks shit and is backed up by a score of 75 on Metacritic. It used to be only major games like Bioshock and GTA4 that received advertising like that. However, with digital distribution likely to play a bigger role for the next generation - and Steam and Origin already going that for PC sales - advertising budgets will be better spent on social media, gaming websites and digital distribution sites themselves. Publishers need to be a lot more clever with advertising budgets and because they have investors they cannot afford to keep making bad decisions.

I'd love to see a huge shake-up in the gaming industry and to see shitty companies like EA or Activision goes bust or be forced to change their business practices but people shouldn't be too happy at that prospect. PC gaming is likely to be hit first, followed by a huge number of developers moving into the more profitable social / mobile gaming market. Afterall, Epic stated that their recent mobile game was the most profitable product - relative to investment made - they've ever made.

PS - I really wish that Valve would invest in game development more. Considering the amount they must be making from Steam - and that they're a private company - it's disappointing that their approach to development is so casual. They're one of the few companies that can afford to go crazy with game design and not worry about making a loss (which would be virtually impossible given they own the distribution medium).


To address some of your points:

CoD is not the milking money cow it was once and that started this year. See this article. Kotick, if he's smart, should start to get real worried. This is the first time since CoD4 that sales for the series have strongly declined so soon after the release of the game and this points to an obvious market fatigue of the same IP. And remember that CoD sells way more on consoles than on PC so MW3 being on the Steam charts does not account for much compared to the lost revenue from the consoles. This is a major, huge warning sign and anyone who willfully ignores this is not worth anything as an analyst. When the hugest IP in gaming industry starts to decline people should take notice and it's more alarming Activision still supports this IP, which means when the sales of it really crash it will catch Activision unprepared since they keep pushing CoD over and over again and do not show any signs that they have a contingency plan or a new IP to replace CoD in case the sales crash suddenly.

Advertising and marketing budgets are way off anything realistic in the industry but the gaming developing costs is far worse. We're reaching a point where developing a game, even one with an IP used to death, is starting to hit values that were once reserved to the movie industry. In other words mainstream games are starting to carry with them insane, unsustainable developing costs that, as was said in this thread, will destroy the market since only a small handful of all mainstream games released get anything close to a profit. The industry is cannibalizing itself and apparently they don't care. AAA games today sell more on hype than the quality of the product itself and gamers are starting to get fed up of falling for the hype only to receive a mediocre game at best that does not fit the hype at all. Marketing is, in a sense, killing its own industry by setting unattainable, false expectations that can never ever be met while indies rarely attain such levels of hype and therefore people don't expect much from them and are often pleasantly surprised when an indie game does a lot more than gamers were expecting.

Also mobile games are not profitable. Like AAA games a small handful of them are, the rest are not. If publishers move to mobile platforms a problem will arise which is the price of games. Mobile gamers are used to pay $5 top for a game, if publishers start pushing for mobile games costing $20 or more then they will meet with utter failure of sales since demand for such high priced games on mobiles is none when far cheaper games also offer quality gaming for a mobile. The mobile market is not in any way or form any sort of salvation for publishers, quite the contrary in fact, if they jump to mobiles than the demise of publishers will happen even faster. PC gaming meanwhile has been experiencing a huge growth and with the indies and the F2P models it means that a crash would virtually have no consequences for a healthy game environment to continue on the PC, it's the consoles, whose only purpose is to play games, that will suffer since publishers are responsible for the vast majority of the games on consoles with an indie scene that still is very tiny, hence unable to keep consoles afloat if publishers vanish. PC will be fine since it's an open platform with all the advantages that it brings. Consoles, even mobiles however should be the platforms that get hit hard the most in case of crash.

As for publishers many of them are in deep trouble, even big names like Nintendo who for the first time in its history had a very worrying and big loss in the past fiscal year. Sony is even worse and rumors say Sony is walking a very fine line to save itself from bankruptcy and I doubt they'll make it. THQ is just an example of what's happening to middle tier publishers right now, they are getting pushed aside by the huge budget giants like EA and Activision throw at their games, also having had a terrible CEO helps for THQ's position right now. But THQ's plight is exactly the same of all middle tier publisher's plight today, like Codemasters.

As for Valve, crash or no crash I don't see them going away at all, they'll stay around since they were smart enough to make Steam, assuring them of their continued existence for a long, long time.
 
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31. Re: KAOS Studios Postmortem Jul 8, 2012, 10:58 theyarecomingforyou
 
Dr. D. Schreber wrote on Jul 8, 2012, 00:35:
I don't see EA surviving any kind of major shake-up; it's pretty common knowledge now that their business practice amounts to "hemorrhage as much money as possible for as long as possible without actually imploding" and they never really make money no matter how many big earners they push out.
I very much dislike EA as a business but they have substantial investments in casual gaming and despite the fact that Origin is just getting up to speed I'm sure it will be making them some decent money, as the margins are huge. I'd love to see them collapse and be bought up by a company like Valve.

Jerykk wrote on Jul 8, 2012, 03:36:
I wouldn't be so sure. At one point, Codemasters was trying to compete in the AAA game market except they failed, so now they only make racing games. Same applies to Majesco, only they've switched to mobile/casual games. THQ will likely follow suit within the next couple of years.
Codemasters made some pretty poor non-racing games and then went back to their strengths, which was a sensible strategy. Majesco isn't a major publisher and they have a particularly poor selection of games, which reflects on them not the industry. And THQ has made a series of incredibly poor investments in games projects - Homefront being an obvious one - and has been struggling to compete on quality for a long time. Just like any industry, if you make bad products and bad investments you're unlikely to survive as a business. I don't expect THQ to survive. The difference is that although EA and Activision make plenty of shitty moves they're design to make them more money (Origin for EA; rehashing CoD to death for Activision) - heck, Modern Warfare 3 is still in the top 20 on Steam (and has been there since launch 7 months ago), at a higher than market average price, with a huge selection of overpriced DLC and is the 8th most played game on Steam. As much as I HATE CoD for being utterly derivative and lacking innovation there is absolutely no doubt it's a huge money making product.

Advertising budgets are the biggest issue with gaming at the moment. For instance, I've seen a lot of TV ads for Spec Ops: The Line which looks shit and is backed up by a score of 75 on Metacritic. It used to be only major games like Bioshock and GTA4 that received advertising like that. However, with digital distribution likely to play a bigger role for the next generation - and Steam and Origin already going that for PC sales - advertising budgets will be better spent on social media, gaming websites and digital distribution sites themselves. Publishers need to be a lot more clever with advertising budgets and because they have investors they cannot afford to keep making bad decisions.

I'd love to see a huge shake-up in the gaming industry and to see shitty companies like EA or Activision goes bust or be forced to change their business practices but people shouldn't be too happy at that prospect. PC gaming is likely to be hit first, followed by a huge number of developers moving into the more profitable social / mobile gaming market. Afterall, Epic stated that their recent mobile game was the most profitable product - relative to investment made - they've ever made.

PS - I really wish that Valve would invest in game development more. Considering the amount they must be making from Steam - and that they're a private company - it's disappointing that their approach to development is so casual. They're one of the few companies that can afford to go crazy with game design and not worry about making a loss (which would be virtually impossible given they own the distribution medium).
 
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30. Re: KAOS Studios Postmortem Jul 8, 2012, 08:52 Kajetan
 
ASeven wrote on Jul 8, 2012, 08:34:
"Moodyís Investors Service and Fitch Ratings warned Vivendi this past week that its debt ratings could be threatened if it doesnít reduce liabilities. Fourtou on June 28 ousted Chief Executive Officer Jean-Bernard Levy, who had resisted major changes in Vivendiís structure.

A shifting market for video games may limit Activisionís attraction to buyers."
Yep, this is most single reason to be alarmed. To be told to sell Activision (!!) & Blizzard (!!!), because right now there is no economic future in making and selling AAA games.

And what is more disturbing (from a business view) ... the next console generation isnt seen as the upcoming saviour.
 
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29. Re: KAOS Studios Postmortem Jul 8, 2012, 08:34 ASeven
 
Also, to paraphrase Moody:

"Moodyís Investors Service and Fitch Ratings warned Vivendi this past week that its debt ratings could be threatened if it doesnít reduce liabilities. Fourtou on June 28 ousted Chief Executive Officer Jean-Bernard Levy, who had resisted major changes in Vivendiís structure.

A shifting market for video games may limit Activisionís attraction to buyers."

Despite what people may think of Moody, rightfully I must add, they do have good analysts that can do what many can't, see the writing on the wall and the above is one of the worst damnations of the industry right now. They call the industry a liability. A profitable industry is never a liability and what Moody is telling Vivendi is to cut short the losses while it can.

The gaming industry made its own bed a long time ago and now it must lie on it. Whatever happens it is their own fault and nobody else's.
 
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28. Re: KAOS Studios Postmortem Jul 8, 2012, 07:15 ViRGE
 
Jerykk wrote on Jul 8, 2012, 03:36:
If EA needs Dead Space 3 to sell at least 5 million units, they're going to be in for a disappointment. If any publisher expects any of their games to sell that much, they're setting themselves up for failure. Games that sell that well are the exception, not the rule, and spending ridiculous amounts of cash on marketing doesn't guarantee success.
So actually that's an interesting point. Does EA need to sell 5mil copies of Dead Space 3 because it costs 150mil+ to make, or do they need to sell 5mil copies because the break-even point on dev costs is 2mil copies, and they're spending the revenue from another 3mil copies on advertising?

It seems to me that everyone is spending entirely too much on advertising, and they keep having to spend more to stay afloat. Not entirely unlike a junkie that keeps having to do stronger drugs to get the same feeling of euphoria.
 
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27. Re: KAOS Studios Postmortem Jul 8, 2012, 06:41 Dev
 
developed an incredibly successful and acclaimed Battlefield 1942 mod called Desert Combat. The mod's success led to the team forming Trauma Studios, which Digital Illusions CE quickly bought up in 2004 to help develop Battlefield 2.

The relationship with DICE was short-lived, as Trauma got shut down less than a year later in 2005.


Good ole EA. They bought out the mod team basically to get the assets to use in BF2, then fired them.

Jerykk wrote on Jul 8, 2012, 03:36:
Blizzard doesn't release games on a regular enough basis to sustain a publisher.
Depends on the size. The continuing monthly income they make from WoW is plenty to sustain a small publisher. A large one like activision? Nope.

This comment was edited on Jul 8, 2012, 06:48.
 
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26. Re: KAOS Studios Postmortem Jul 8, 2012, 05:54 Trevellian
 
I'm all for the crash myself. It will hopefully get rid of companies like Activision and EA who just whore out the same series over and over. I cannot take another COD game every year for the rest of my life. If there is any series that has fully ruined the current market I lay sole blame on it. It is so successful that every other company has a "Me Too" Mentality about it and the problem with it is no one wants their copy cat game because it's not COD. And the series doesn't get BETTER it gets worse and people still pay for it. This is a huge problem for the other Publishers/Developers out there, when a mediocre game that is released yearly is the best selling game out there it's a problem.

Besides the PC Gaming industry will live on with F2P and Indie games, and Sony and Microsoft would bounce back after a few years.
 
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25. Re: KAOS Studios Postmortem Jul 8, 2012, 03:36 Jerykk
 
theyarecomingforyou wrote on Jul 7, 2012, 23:39:
The games industry isn't in any danger of collapsing. Just look at Blizzard Activision - they have WoW, Diablo III, Starcraft II and the CoD series. All premium products that have seen little in the way of price drops. The rest of their studios may get heavily affected but there's plenty of money making games to keep them going. Valve will keep going because of Steam and if any major publishers or developers start to struggle they'll be there to snap them up. EA - despite all the shit they pull - still has plenty of money making games, like The Sims, their sports franchise, DICE / BF3, Crysis, Dead Space, etc. And with Origin they'll be making a greater profit per sale, which will continue to improve. And they're invested heavily in the mobile sector, helped by their acquisition of PopCap Games. Again, it's entirely possible we'll see dramatic cuts made but they'll survive. Ubisoft posted improved profits and has mega franchises like Assassin's Creed, the Tom Clancy games and Far Cry 3. And Take-Two plods along with money earners like Civilization, GTA, Borderlands, Bioshock, May Payne, etc.

Don't get me wrong, it's entirely possible we'll see one of the major players start to struggle but there are enough other publishers to snap up the attractive licences and move on. And there are a huge number of much smaller independent studios - like Codemasters and CD Projekt RED - ready to take advantage. We've already had a major economic collapse and all the major players survived and are still posting decent profits. Even with the double-dip recession coming / present I think predicting a collapse is more wishful thinking than likely.

The games industry was in its infancy in the 80s. It doesn't even compare to today.

I wouldn't be so sure. At one point, Codemasters was trying to compete in the AAA game market except they failed, so now they only make racing games. Same applies to Majesco, only they've switched to mobile/casual games. THQ will likely follow suit within the next couple of years. As for Activision, people will eventually lose interest in CoD and WoW. See Tony Hawk and Guitar Hero for reference. Blizzard doesn't release games on a regular enough basis to sustain a publisher. Activision needs to diversify and expand their portfolio if they want to survive. Vivendi is trying to sell Activision, which suggests that they see the writing on the wall as well. If EA needs Dead Space 3 to sell at least 5 million units, they're going to be in for a disappointment. If any publisher expects any of their games to sell that much, they're setting themselves up for failure. Games that sell that well are the exception, not the rule, and spending ridiculous amounts of cash on marketing doesn't guarantee success.
 
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24. Re: KAOS Studios Postmortem Jul 8, 2012, 00:35 Dr. D. Schreber
 
theyarecomingforyou wrote on Jul 7, 2012, 23:39:
The games industry isn't in any danger of collapsing. Just look at Blizzard Activision - they have WoW, Diablo III, Starcraft II and the CoD series. All premium products that have seen little in the way of price drops. The rest of their studios may get heavily affected but there's plenty of money making games to keep them going. Valve will keep going because of Steam and if any major publishers or developers start to struggle they'll be there to snap them up. EA - despite all the shit they pull - still has plenty of money making games, like The Sims, their sports franchise, DICE / BF3, Crysis, Dead Space, etc. And with Origin they'll be making a greater profit per sale, which will continue to improve. And they're invested heavily in the mobile sector, helped by their acquisition of PopCap Games. Again, it's entirely possible we'll see dramatic cuts made but they'll survive. Ubisoft posted improved profits and has mega franchises like Assassin's Creed, the Tom Clancy games and Far Cry 3. And Take-Two plods along with money earners like Civilization, GTA, Borderlands, Bioshock, May Payne, etc.

Don't get me wrong, it's entirely possible we'll see one of the major players start to struggle but there are enough other publishers to snap up the attractive licences and move on. And there are a huge number of much smaller independent studios - like Codemasters and CD Projekt RED - ready to take advantage. We've already had a major economic collapse and all the major players survived and are still posting decent profits. Even with the double-dip recession coming / present I think predicting a collapse is more wishful thinking than likely.

The games industry was in its infancy in the 80s. It doesn't even compare to today.

While I agree that expecting an 80s-like crash is utter nonsense, I don't see EA surviving any kind of major shake-up; it's pretty common knowledge now that their business practice amounts to "hemorrhage as much money as possible for as long as possible without actually imploding" and they never really make money no matter how many big earners they push out. The whole thing with THQ's insane expectations for UFC is like how EA's for the past ten years. They're like the Donald Trump of videogames.

 
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23. Re: KAOS Studios Postmortem Jul 8, 2012, 00:26 DangerDog
 
TheVocalMinority wrote on Jul 7, 2012, 23:10:
I thought the most interesting thing about the article was that the decision to make North Korea the enemy was imposed an EVP with a "Hollywood" background. Never played the game but from what I heard about it that seemed like a blatent piece of propaganda, particularly given that the American doctrinal system was using that country as the big bad guy at the time.

Oh yes and the great video game crash of 2012 can't come soon enough...

The only real problem is that they would need to have the invasion from the Chinese perspective instead of being a rouge group of US military trying to stop it.

From the money that was blown on this game they could have had both versions in the box, would have at least been an interesting twist.
 
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22. Re: KAOS Studios Postmortem Jul 7, 2012, 23:39 theyarecomingforyou
 
The games industry isn't in any danger of collapsing. Just look at Blizzard Activision - they have WoW, Diablo III, Starcraft II and the CoD series. All premium products that have seen little in the way of price drops. The rest of their studios may get heavily affected but there's plenty of money making games to keep them going. Valve will keep going because of Steam and if any major publishers or developers start to struggle they'll be there to snap them up. EA - despite all the shit they pull - still has plenty of money making games, like The Sims, their sports franchise, DICE / BF3, Crysis, Dead Space, etc. And with Origin they'll be making a greater profit per sale, which will continue to improve. And they're invested heavily in the mobile sector, helped by their acquisition of PopCap Games. Again, it's entirely possible we'll see dramatic cuts made but they'll survive. Ubisoft posted improved profits and has mega franchises like Assassin's Creed, the Tom Clancy games and Far Cry 3. And Take-Two plods along with money earners like Civilization, GTA, Borderlands, Bioshock, May Payne, etc.

Don't get me wrong, it's entirely possible we'll see one of the major players start to struggle but there are enough other publishers to snap up the attractive licences and move on. And there are a huge number of much smaller independent studios - like Codemasters and CD Projekt RED - ready to take advantage. We've already had a major economic collapse and all the major players survived and are still posting decent profits. Even with the double-dip recession coming / present I think predicting a collapse is more wishful thinking than likely.

The games industry was in its infancy in the 80s. It doesn't even compare to today.
 
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21. Re: KAOS Studios Postmortem Jul 7, 2012, 23:29 Asmodai
 
killer_roach wrote on Jul 7, 2012, 22:05:
Goodie. So you, in a fit of juvenile pique, would rather pretty well immolate the entire industry for the next 5-10 years just because you're not seeing the games you like?

I'm sorry, but you're what is wrong with the industry, not the publishers.

When you're full of shit, the best solution is usually to take a dump...

If you keep rewarding failure, things aren't going to get better. You're going to end up with more retreads, less innovation, stagnation.

Sad story, a lot of people who aren't directly to blame will be caught up in the turmoil. That's the cost of having an industry worth supporting rather than seeing the industry entrenched in it's mediocrity like most major film studios are...
 
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