Hidden Value

Hidden Value

By Ed Fear

April 30th 2008 at 3:49PM

No matter what country you're in, the economic climate is a cloudy one - and getting stormier by the day. But does that mean that tighter purse-strings will mean less people willing to shell out for games? Not so, says

Banks are in trouble everywhere, from London to Zurich and New York. The pound is soaring against the American dollar. The global economy is either in a recession or fast approaching one and consumers are being squeezed by the mystifying combination of higher gas prices and taxes while the official inflation measures and salary increases remain low. Does this mean that the game development industry is in for some difficult times like so many other industries appear to be? Not necessarily.

As one can see from comparing the economic history of the last 25 years with the game development industry, there is far from a perfect correlation between boom times in the games business and general economic good times. The recession of 1980 to 1982 coincided with the great classic videogame era of the Atari 2600, the Mattel Intellivision and the Coleco Colecovision. This golden age was followed by the videogame crash of 1983 that took place when the rest of the economy was well into its recovery.

The 1987 Black Monday crash that nearly leveled the City and Wall Street took place just eleven days before NEC kicked off the glorious 16-bit era that brought us everything from Sonic the Hedgehog to Star Fox. And the dotcom collapse coincided closely with the smashing twin successes of the PS2 and Xbox.

There are two reasons for this lack of correlation between the health of the games industry and the greater economy. The first is that games are one of the cheapest forms of entertainment around. If measured in pounds per hour, playing Tabula Rasa or FIFA is incredible value that simply can’t be beaten by anything except amateur pornography, free hotel Bibles, or kicking a football around with your mates.

Your individual mileage will vary, of course, depending upon your tastes, athletic abilities and moral standards, but the fact is that despite the relatively high cost of games, their extended playability renders their cost per hour extraordinarily low.

For example, I am a Madden NFL football junkie. Every year, I celebrate Madden Day with the latest edition in the series, which costs around £50 (I prefer the PS2 version for playability reasons, even though the graphics aren’t as flashy.) Since I have played it for at least 150 hours in the last year, my cost of Madden-playing is about 33 pence per hour.

Compared with nearly any activity in which one can engage these days, that’s an amazing value, and since I’ll probably play another 150 hours before the 2009 edition comes out, my real hourly cost of gaming is probably around 16 pence.

And while it’s obvious that not all games are capable of providing this level of extended entertainment, MMOs such as the World of Warcraft offer even better play-value than the best console games. I don’t know how many hours I’ve put into WoW – I really don’t want to know, to be honest – but I’m confident that in light of the 12,000-plus battleground kills by my character, the hourly cost of WoW is even lower.

So, no matter how bad the economy gets, most gamers will be able to afford to continue playing their favourite games. They may buy fewer games in an economic contraction, they may put off purchasing a new console or adding a peripheral to their system, but they simply will not stop gaming.

The second reason is that unlike food, fuel and shelter, games are an optional purchase. This means that game sales are primarily driven by the desire of gamers to play particular games. Despite the large numbers of games being produced, the usual 80/20 rule applies in which 20 per cent of the games draw 80 per cent of the revenues.

The great crash of 1983 was primarily due to the fact that the games being produced at that time simply weren’t very good compared to the games that preceded them; the industry tends to slump when publishers get too caught up in either chasing each others’ tails or relying on marketing instead of focusing on developing genuinely new game ideas while continuing to refine the series-oriented cash cows. When we’re smart and innovative, we do well. When we’re lazy and derivative, we don’t.

This means that the health of the industry is in our collective hands. We control our own destinies. That’s a very good thing, because otherwise it would be in the hands of a bunch of clueless bankers who think it’s safe to bet trillions on the idea that American housing prices can escalate forever. And that’s just not very good design.

The Alpenwolf is a professional game designer who has been active in the industry for 17 years and designed games for some of the largest American and Japanese publishers. He has been known to visit Ironforge in the company of a large white wolf.