Bill Roper, creator of Diablo & Warcraft, paints a very dark future for the videogame industry: "AAA games are dead"

[Cyan]

He sends a message through LinkedIn where he assures that the "consensus from DICE is that things are not going to get better in 2025".

The consensus coming out of DICE is that things aren’t going to be getting any better in 2025. In fact, there’s more investment pulling back and more layoffs and studio closures to come. AAA is dead and Indies and AA studios are on the rise.

There is a huge divide to make this a reality. There is now talk of more advertising, but it has been the reality that some of us have experienced in recent years.

He tells the story of how they started Lunacy Games in the summer of 2022 after losing the foundation of their studio, they wanted to create a game with a deep design that, precisely, was born from what was played in COVID.

It reminded me at the time of how we approached development in my Blizzard days, so we started working on something to attract publishers,

After bringing together a veteran team and talented newcomers who had already worked together in other years, they came up with a concept and project where by the end of 2022 they already had three interested editors.

Two of them were interested in financing the game [...] and the third proposed to us to be a fully financed first studio. We exchanged deals and figures when the terrain changed

All stakeholders backed down, explaining that they were 'reassessing their investment stance' or 'shifting focus to existing projects and studios.

By the end of 2022 we had no deal on the table and it seemed that we were back to square one. Little did we know that we were about to enter negative numbers in terms of opportunities for studios and developers.

Nobody signs for games that do not have fully playable demos [...] while, at the same time, no one finances demos.

A very dark future for the video game industry?​

And it doesn't end here, he was told that he would have funding opportunities, but...

I need a trailer, an active and engaged Discord community and a Steam page with at least 10,000 people that added the game to their Wishlist.

And that's before they spend a dollar. All risks fall on those who can least bear them. And a lot of what developers 'must do' now is not create their game.

The rise of indies is because their development cost is a race to the bottom. [...] 1-4 creators who live at home or share a flat and create a great game for less than a million dollars.

 

[Dominik D]

I'm no Bill Roper but I wrote exactly that before.

[So who suffers when games don’t hit sales projections?] Developers. Salaries are stagnant, and consequences of failures always result in workforce being fired to minimize cost. People investing in games (whether publishers or VCs) are also first to recuperate. So if game under-performs despite what otherwise would be considered decent sales, every last cent goes to whoever invested in the game, not to the studio or its employees.

Bizdev in the last two years was especially cut-throat. Small and medium size publishers scaled down investment in new titles. Their pipelines are typically 2 years deep so they can afford this conservative stance. The only games publishers were interested in were promising games near completion. So essentially the deal was "we'll help with your final 20% and marketing for ROI 150% or more". Very few studios can afford carrying game to alpha and then look for a publisher. But this is how market looks right now.

And elsewhere:

Money people are, very often, fucking clueless and benefit from the system that makes it incredibly hard for rich people to fail. Games and movies are investments in content to them. They won't wake up because they aren't dreaming. Gamers are, thinking that there are some secret cabals making games "worse". It's not a secret, it's unchecked capitalism.

And elsewhere still:

This ties into platform considerations: bleeding edge graphics limit your target audience. People advocating for mind blowing graphics are at odds with what sells. The only tiiiiny problem is that unless you can fund your development yourself (i.e. you are independently wealthy) there's pretty much no chance of getting funded right now. A lot of small and mid-size studios are betting on this dry spell ending in 2025 but it's a bet.

It is as bad as Bill claims.

 

[Johnny Awesome]

This is just "life".

I'm not sure there's anything fundamentally wrong. It was never really sustainable that there are 10000 new Steam games every year or something along those lines.

Game devs just aren't used to life in the big city. When gaming was growing at double digits for years on end, they were insulated from reality. Now reality has come.

Every artistic endeavor suffers from the same problem. 1000 actors out of 1 million make 50% of the money. It's the standard Pareto problem.

It's the same for music artists or YouTube content creators.

Game devs were under the illusion that talent = success, but life doesn't work that way.

 

[Dominik D]

I'm not sure there's anything fundamentally wrong. It was never really sustainable that there are 10000 new Steam games every year or something along those lines.

But the underlying observation has nothing to do with this. Majority of games released on Steam every day have no formal funding. This is not what Bill is talking about. Above certain game size you need some sort of funding. Historically the risk assessment and cost/benefit calculation made both developer and publisher bear fairly even burden. This is no longer the case. If you think there's nothing fundamentally wrong with financing structure where developer's risk massively outweighs that of publisher then we exist in different worlds. The only way forward is for most development studios to close.

Nobody's asking for free lunch. The way publishing deals used to work required completing multiple milestones for the publisher to approve. It was already pretty easy to abuse this structure with some publishers getting what they requested but pretending it's not that (so developers had to finance additional weeks of work from their coffers). But at least it was a staged system where you got paid along the way for something developer and publisher agreed to build. And even in this system publishers were the first to recuperate costs, no matter how the release went. Today you're asked to have game pretty much half-complete (ideally in alpha) before publisher is willing to do something meaningful for you (in terms of finances or marketing). And even if you do have that, chances of getting a publishing deal are slim.

This is new and this isn't limited to game publishing either. Music labels used to do a lot of heavy-lifting promoting artists. These days artists won't be signed unless they already have fan base willing to buy their music. In both cases the middleman who used to provide some service became a middleman who extracts disproportionate amount of money from the system because they have the leverage (or perceived leverage). We're reinventing feudalism in real time and you're like "meh, nothing fundamentally wrong here".

 

[Johnny Awesome]

You're concentrating on one small part of what I said, while ignoring the fact that AAA anything has always faced funding challenges. Nothing wrong with people being cautious with hundreds of millions of dollars.

The reason publishers/studios/labels have become tighter is the risks have become greater and the supply of talent gives them options.

It ebbs and flows. Sometimes devs have the upper hand like when studios were desperate to get games out during COVID lock downs. No one wrote any "poor publisher" articles during that time. Lol

 

[Dominik D]

Nothing wrong with people being cautious with hundreds of millions of dollars.

This assumes that they weren't up until now. And this is what changed. It isn't.

 

[Johnny Awesome]

Not at all. Ebbs and flows. They are more cautious now than during Covid lockdowns for instance.

A lot has changed since the dawn of the Internet. It used to be expensive in a low bandwidth world to get the word out about a product. Now it's hard to get noticed in a sea of information in our high bandwidth world.

It's not that surprising that 100 game franchises dominate out of 10000 and that 10 dominate out of those 100.

I'm not sure why everyone is surprised by this. It's a standard Pareto distribution.

30 years ago it was Mario, Sonic, Final Fantasy and Madden that were the black holes. Now it's a slightly different cast of games.

One difference is that publishers used to risk 100s of thousands and now it's 100s of millions. You won't get an argument from me if you say we need more $50 million budget games and less $250 million budget games, but that will likely mean more layoffs, not less.

Real stream of consciousness from me today. Lol

Isn't it ironic that AAA is supposedly dead and yet GTA VI is coming out this year with a rumored billion $ budget?

Seems like the tale of AAA's death has been greatly exaggerated...

The problem with AAA budget games like Suicide Squad isn't their AAA budgets. It's the fact that they were crap.

 

[digitalwanderer]

Isn't it ironic that AAA is supposedly dead and yet GTA VI is coming out this year with a rumored billion $ budget?

Quick correction; GTA VI is one of the few AAAA titles.