The Post AAA Landscape

Posted: December 1, 2012

AAA is dying… I said it, there, you happy, cause I sure ain’t. Well I’m a bit nervous and a larger bit ambivalent. A month or so ago Polygon released a series of articles about the state of the games industry. In it the numbers paint a grim picture of publishers struggling to make decent margin off multi-million unit sellers. They also tell of rising indie, PC and mobile sectors. I figured I’d weigh in because I like the sound of my own typing, so here’s where I think we’re headed as an industry.

AAA Implosion

Looking at the numbers things are a bit scary in AAA town right now, however it’s a good thing long term. The large publishers we have came to be so through a barrage of studio and IP acquisitions. This was a long term mistake. By doing so they gained the ability to amass huge sums of money from developers that succeeded and shut down studios that did not. They pumped money into successful studios to make bigger productions with better graphics. This raised costs, reduced margins and altered public perception of what a game has to look like to be high quality.

When these huge juggernauts begin to splinter under their own weight to only publishing and not development, it will be better for them. The perception will have to shift back down, meaning costs will shift back down, meaning margins can go back up. It’s just too expensive to make something considered AAA these days, and either the graphical fidelity has to level off, or another miracle cost saving measure has to come along. CD’s filled that role at one point, digital distribution could now, I just don’t feel it will given another reason AAA is waning.

Independent Expansion

Every year, everyone’s list for game of the year includes more “indie” games, to the point where the term is essentially meaningless. We call Bastion indie because it was made by a small team, that doesn’t say anything about the quality of a game anymore. This trend is going to continue as the tools get easier to use and the distribution improves. As an aside, buy Bastion right now, I’ll wait.

All you need to make a decent game now is killer design, a programmer, and an artist, sometimes all the same person. We’re returning to a time when a bunch of guys in a garage can make great games again. To me, the entire industry feels like it’s hitting reset because of the next big change.

Digital Adoption

This is the engine of change for the last few years and coming few. I’ve heard opinion that this next generation of consoles may be the last because everyone is downloading involved games on steam or time wasting games on their phone/tablet. The internet and wireless are almost everywhere, making digital only sales a viable option. Many developers are alluding to enormous profits on digital that they wouldn’t see from a retail product. In the case of indies a lack of publisher means an even larger profit potential.

Everyone is looking and watching carefully as this transition happens. I think free to play isn’t the model to make billions, yet will stay in some small form. DLC practices are going to get better, though still seem shady for the most part. The monthly subscription is done for now and may come back later when everyone forgets World of Warcraft, though impossible that may seem at the moment. What it will mean definitely is more great games, from a more diverse pool of developers.

Mid-tier Return-sion

OK so the “sion” didn’t work but I didn’t want to wreck the flow.

As publishers return to their appropriate role as “publishers” and not development conglomo-megacorps and digital distribution means costs can be recouped on average size projects, we’ll see a healthy return of mid-tier games. Some of this is happening already on Steam with companies like Telltale. On console I would argue Atlus puts out many games like this. As another aside, go get The Walking Dead and Dark Souls.

Mid-tier games are engaging and just don’t have the team size, graphics, or marketing push of a AAA production. They can afford to take occasional risks because the studio won’t typically have all it’s eggs in one basket, thus they can be more nimble. In my opinion a healthy middle tier of developers is as important as a healthy middle class in society. This is the most vital change I see coming and the happy note I leave you on.