Making it Special

What games define Activision? Call of Duty, of course, and since the Vivendi merger, World of Warcraft (which isn't in the chart but still made enough money to wallpaper the moon in hundred-dollar bills with enough left over for the bus home). Electronic Arts? Brave attempts at new IP and pushes into exciting new digital markets will probably pay off in the end, but right now it's Madden and FIFA. Ubisoft? Assassin's Creed and Splinter Cell, pretty much. Nintendo? Mario, of course, and Wii Sports and Wii Fit - the Axis of Casual.

It's not an accident, of course, that the defining games of each publisher are the ones which sell the most. It's perfectly blatant logic that commercial success and widespread recognition go hand in hand. Each publisher has a strength that it's playing to, and they are increasingly learning that playing outside those comfort zones is hard work, prone to failure and ultimately a fairly weak investment compared to simply playing the game at which you're already good.

Outside the world's giant publishers, specialisation proceeds at an extraordinary pace. When we first got excited about browser-based, Flash and mobile-phone games, there was always a vague assumption that these would be integrated into the operations of "real" game publishers some day. Even those companies that set themselves up as the leading publishers of such new content (often by means of hiring better PR people than their rivals, rather than any real achievements) were often essentially designed to be acquired by a game publisher at some point down the line rather than with the intention of ever really being a force in the wider market.

Yet today companies are learning that such specialisation isn't just viable, it's often healthy. Specialisation - be it on a genre, or a target audience, or a medium - provides a wealth of benefits, both in terms of specific expertise and in terms of the ability to structure your entire company around the requirements of your market sector. It's hard for a company used to building monolithic boxed software to embrace the mindset required to iterate quickly and release lots of smaller products, or to run a full-scale service for several years. It's not just the developers who have to change their working habits - middle and upper management, too, require re-education, and bare basics like how money flows into and through the company need to be reconsidered.

Moreover, if you're a company used to selling $60 software to your customers and making a $10 margin, it's natural to have a serious conceptual problem when setting up a service which deals in Average Revenue Per User (ARPU) figures instead, especially if those ARPUs are being measured in cents rather than dollars. Isn't this cannibalising your lovely, straightforward high-margin business, to some degree? Maybe it is, maybe it isn't - but for the specialist firm, which deals in nothing but high-traffic, low ARPU business, that's not even a consideration, making them more nimble and less constrained in how they choose to do business.

In other words, it's only to be expected that many of the industry's top publishers, after their flirtation with emerging markets, will fall back on what they know best - making core games for a core market. This won't excuse them from having to think about new business models - even core games are going to see their revenue models overhauled vastly in the coming years - but it'll certainly mean that the list of what we consider to be the world's "top games companies" will need a serious rethink in the coming years.

Those who will be left behind by this change - those most at risk in both this transition and the move to new business models in general - are those who simply don't have a specialisation. Studios which can produce major, exciting, AAA games have nothing to fear - no number of highly addictive iPhone and Facebook games will ever remove that market. Equally, those who can create genuinely entertaining family and casual products will find comfortable niches, as will those with valuable expertise in running games as services, rapidly developing high-quality titles for small-game plaftorms, and so on.

There exists, however, a crop of development studios - many of them quite venerable - whose existence has been entirely predicated on a market for games which fall somewhere in the middle. They're not bad games, but they're not fantastic games either - competent movie licences for movies that don't quite set the world on fire, decently made clones of games that were popular a year ago, enduring classics like racing games where the cars have guns on them, or nondescript shooting games where you fight aliens, demons, or alien demons. They're the games that scrape back their investment, because the investment is low, and because they're delivered on time and on budget the publishers come back for more.

This work, I fear, is going to dry up - for the simple reason that the investment required for a PC or console title has risen to a level where a "competent but unexciting" game can't really justify it. Meanwhile, whole new markets have sprung up underfoot, less risky ones where small investments can turn into significant rewards. We're already seeing a polarisation in the industry between games that were hugely expensive to develop and games that were incredibly cheap to develop, with companies deserting the middle ground and flocking to the extremes. That's going to leave studios which presently eke out a living on that middle ground in a seriously bad place. It's time for them, too, to pick a lane and stick with it - to find a specialisation and master it, before the undifferentiated ground they're standing upon is swallowed up entirely.