We Still Spend Lots of $$ on Video Games, But Is It Enough To Save The Industry?

on July 11, 2011 4:00 PM

The other day, Chad wrote an article detailing some of misconceptions about the video game consumer. Given his findings, particularly that the average video game consumer is 41 years of age, it’s no surprise to hear that, according to an article on Gamasutra, video game spending has actually increased by 1.5% for a total of $5.9 billion in video game related purchases for Q1 of the 2011 fiscal year.

Now this may not seem like a huge deal, but if you consider that $1.85 billion of that (roughly 32%, if my high school math skills are what they once were) is spent on “used games, rentals, subscriptions, digital download, social networking, DLC and mobile games.” Additionally, only $2.As a result, publishers are really only seeing a portion of that astronomical figure, and its clear that digital gaming is catching up.

Now what does that mean for our traditional publishers out there?

It means, that, of course, they are going to update their business models, as the social gaming phenomenon and increased used games sales are causing them to make slightly less money than they once were. The following is purely my opinion on changes the industry will experience in the near future, and feel free to disagree with any of them.

First off, I believe there will eventually be three separate purchasing models, all of which are based in the Cloud. What better way for publishers to completely halt used game sales, then for all games to be downloadble? Publishers will also be able to constantly monitor your play habits, and more importantly, monitor the fact that your game is not-pirated. This won’t be as intrusive as something like DRM or disrupting save files, but it will allow publishers to mostly guarantee they are profiting off every game you play.

Now for the three ‘new’ business models. These aren’t exactly new, given that all these concepts exist, they will just be applied to different areas of gaming.

The first of these is the subscription based shooter. Right now, Activison can only make $60 off the latest Call of Duty title (and whatever they make off DLC) for players, but imagine giving away the game as a free client download from the Cloud, with a $15 monthly subscription? That would entice hordes of dude-bro’s, the primary audience of the franchise, to download the game, play occasionally, and quickly forget that $15 a month is being siphoned from their account.

Next up would be the ‘interactive storytelling experiences’ type of games. These games, such as Alan Wake offer much more than the scope of a ‘game’ has to offer, and will no longer be marketed as such. However, this type of media will be sold at retail, like it is now, but of course will be downloaded from the Cloud.

Finally, you’ll have your social games, which will have an entirely separate market and will be made for a more ‘casual’ audience. They will pretty much work like they do now, and will be entirely based in micro-transactions.

It’s likely that games that don’t fall into one of these three distinct business models will be viable, but just not on such a large scale as they once were. Ultimately, it is the job of the publisher to attempt to siphon as much money from the consumer as physically possible, and to me, these seem like the most effective methods of accomplishing this. Now that it’s more clear than ever that the purchasing power lies in the hands of the 41 year old, it seems that publishers need to do a more effective job in marketing in a way that that demographic can understand.

 /  Contributing Writer
Daniel Horowitz is currently a Writing/Film student at Sarah Lawrence College, where he previously worked as a film technician and teacher assistant despite having little technical knowledge. He is currently abroad studying play-writing at Oxford University in the UK. Daniel likes to think of himself as a weird combination of Captain America and Hunter S Thompson minus the extensive drug use. As a result, he can often be found lifting things, fighting for justice, and being a crazy outlaw journalist on the edge who doesn't play by the rules. When he’s not writing about, reviewing, or playing games, music, and occasionally writing well-paying profiles of businessman, Daniel thinks about what exactly he'll end u doing with his life post-graduation. Daniel plans on either going to graduate school for an MFA, or more realistically, getting a day job, which he hopes is somehow involved in the gaming, comic book, or film industries. You can contact Daniel at dhorowitz107@gmail.com or follow him on Twitter @DHorowitz107
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