American McGee doesn’t much like console game development now; why we should pay attention

4 mins read

He might be only the most recent in a long stream of industry veterans to speak out against traditional development models and for freemium gameplay, but American McGee is a voice worth listening to – this guy deserves a whole lot of respect.

The man behind the rather brilliant American McGee’s Alice, and the disappointing-but-entertaining Alice Madness Returns has spoken out against traditional games development. Now helming a mobile and freemium studio in China, he claims the two freemium games his new company have produced has raised more revenue than Madness Returns ever did.

I have a lot of respect for American. I was fortunate enough to meet him and interview him briefly at a media event a few years back, and the guy struck me as a deeply intelligent and creative but business savvy individual. When he says something like “Earning out on a console title is like digging out from under an avalanche,” it’s not just a great soundbyte for a news story, it’s a genuine call out in frustration.

American is a guy who clearly likes to make big-budget, traditional games. Madness Returns was flawed, but it was a game made with real passion. “It [the market] was unsustainable from inception. Looked at from the perspective of external markets where consoles aren’t the foundation of the gaming ecosystem, the idea of physical media (discs) and fixed location gaming (consoles) now seems anachronistic,” McGee said.

I’ve already run through some of the many reasons that the traditional development business model is especially challenging right now, but to bullet point them:

– Escalating development budgets, and more high-profile games to compete with has not been offset by increasing game costs. Indeed, the perception amongst consumers is that games are still overpriced. This is a tension that is directly impacting on developer and publisher profitability.
– Rampart second hand sales as a result of a retailer love/hate parasitic relationship with the games industry means that developers and publishers are essentially competing with their own products. This in turn means early and aggressive discounting, directly impacting on developer and publisher profitability.
– An unwillingness for consumers to adopt DLC or protections against second hand sales. It’s never a good idea to put consumers off-side, but there are few other avenues for developers and publishers to maintain profitability.

Combined and with other incidental factors it seems inevitable that those traditional games business models are going to fade into oblivion, and claim a few more high profile scalps along the way. Often when developers or publishers criticise the state of the market people dismiss what they’re saying on the basis of “bad business,” or “bad games,” but with American, neither is the case.

And that’s why his criticisms should be carefully considered. We all love those big blockbuster games – whether it’s Final Fantasy, or Call of Duty, or Assassin’s Creed, or even Mario and Zelda. The business model that made all of those games will either change dramatically or disappear entirely. Will those beloved franchises change to match?

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  • Never heard of him. Went to his website and all I see are shovelware cassual titles……

    f2p isnt about the gamer or quality. Its about money, which makes this guy sickening

    The regular game model wont go anywhere if anything its getting bigger

  • "
    he claims the two freemium games his new company have produced has raised more revenue than Madness Returns ever did."

    But both were casual shovelware nonsense.

    They werent better games

  • Yeah, free-to-play games are about making money, but most other video games are about making money as well. People don't make games solely to entertain the players and create the best games they can make. Game development is just like any other profession; at the end of the day, it's about making money.

  • But the other forms do it better and actually work with all genres

    F2P works with online shooters and games with 0 story………

  • Some questions:

    1. Other forms of games do WHAT better?

    2. WHAT works better with all genres?

    3. Actually, I've seen many free-to-play games that have stories. Granted, they aren't complicated stories by any means, but they are still stories.

  • Hi Steve,

    I'm not sure how you can judge a game you haven't played yet (if I were to do that as a critic, I would get slaughtered), but regardless of that…

    This is not a discussion about game quality. Game development is a job. Yes, the people that do it love their work, and yes most professionals out there want to do a good job, but at the end of the day these people have bills to pay and families to feed.

    So, when it makes you more money to make "casual shovelware nonsense" (your words, not mine) than a full budget game, then it makes more sense to make those games. That's precisely why so many industry veterans are setting up studios around mobile and freemium game models.

  • I doubt things will change until the consumers realize what they are getting is the same product wrapped and promoted in just a different way, Perfect example like always is call of duty franchise, it doesnt change much but it sells big and I am one of the guilty parties, even though it doesnt change I still pay the money and buy it because its still fun, eventually it will fade and things will in turn change but i still think it will be a while.. Great article though very important and vaild points.

  • The market *is* in this state because of bad business and bad games. I'm seeing the image of the 1983 crash looming over the industry whenever I think about it.

    We constantly see layoffs left and rights, studios closing, "high-profile" games with terrible receptions, etc. I really don't think it has to do with the "traditional model" and more with Developers that need to try and innovate, and Publishers to stop blocking innovation and hasting release. The market is over-saturated with those "AAA" titles and popular IPs that just don't deliver.

    Many "AAA" games these days are released with so much hype, and people buy that into it, but the games quickly die down once players realize they didn't get what they expected. On the other hand, you have indie titles growing in popularity by delivering something "new", while still using the traditional model. Minecraft is the most obvious example, EVE Online is a great success story. Could probably mention DayZ launching Arma2 sales off the charts as well, although doesn't quite apply to traditional model.

    We're seeing the rise in popularity of indie titles because they're delivering something different, and very few high budget have managed to follow that trend. Bethesda ( Skyrim ) and Valve (although they deliver great games like Portal 1-2, it's the Steam platform that's followed the trend best) are great examples of companies that haven't lost the "flame".

  • The problem is not to do with creativity or desire to be innovative, but rather the developers and publishers can't afford to break out too far.

    The real, fundamental problem with the mainstream games industry is that it operates on very thin margins. Game profits are simply not big enough to support extended development cycles and risk-taking.

    Indie development runs on a slightly different model, but that's a different business model. Those 'AAA' games – they're the ones that going be the casualties of the next gaming crash (and I agree with you regarding that – I've written about how I think it's an inevitability as well).

    Whether that crash is a good thing for gaming or not depends on whether you enjoy games like Final Fantasy, Assassin's Creed, Call of Duty and like having the likes of Ubisoft, Nintendo, Sony and EA around.

    Thanks for the input!

  • I have to disagree when you say that the developers and publishers can't afford to break out too far. I'd say it's not that they can't, it's that they don't want to. This is becoming increasingly more visible with popular IPs that, rather than building up on previous games, creates an exact copy of it and changes a few weapon and setting.

    If I remember correctly, and that's based on what I recall from the early Infinity Ward/Activision debacle, some of these companies signing contracts with Activision requires them to make a new game every year (and then there's that royalty issue). CoD being the most obvious one with a new release every year since 2005(there was one in 2003, but none in 2004). Guitar Hero is another example.

    Considering the revenues CoD makes and the rather tight schedule, it doesn't give them much room to innovate. Of course CoD is probably the most insane case in the industry. But I think that even if Publishers don't give other companies such a tight schedule, they still don't give them the room to try something different…other than voice overs (looking at you SWTOR!).

    To use the example from my previous comment. Bethesda Game Studios and Valve are perfect example of companies that continues to push their games to the next level. But why are they successful? Because their developers are given more room, and this is especially true for Valve (Valve's "Rambling in Valve time" has some very fascinating articles about their internal organization). Todd Howard's DICE Keynote is also an interesting insight into the ideology behind Bethesda Game Studios.

    I'd like to cover the last paragraph of your comment as well, but it's getting seriously late, and I've written enough to start my blog. :þ
    However I will say this, I believe the real companies who are at risk of causing the crash are Microsoft(console), Sony(PS4), Activision (Vivendi…) and EA. Nintendo survived the 1983 crash, it will manage to sneak into every household again somehow. Nintendo isn't very dependent on 3rd party titles.

  • haha, I really appreciate you taking so much time to come up with such a good debate – I'm thoroughly enjoying this. 🙂

    I don't believe it's a lack of desire. I've spoken to a lot of game developers, from the indies right up to the likes of American and Goichi Suda, and one thing is constant – they love making games.

    But, unfortunately it is very difficult to take risks in this industry. The ideal profit/ cost ratio is actually around 100/30. That's a healthy margin. Most game developers and publishers make nowhere near that. The closer it gets to 100/100, the less risks you can afford to take, because it becomes more and more likely that a single flop will sink a company.

    Now, the thin margins are a consequence of a very commoditised market. There's a strong downward pressure on prices, and there's little to no room for the usually upselling that compensates for low margin markets. DLC is an attempt at that, but it's not being successful enough for most yet.

    As for the yearly release cycles that the major publishers demand for franchises – that's another consequence of low margins. When margins are low, then releases need to be regular to keep the revenue rolling in.

    Now, there are some that are in a position to go about things a different way – Nintendo, Rockstar, Bethesda, Valve. But there's always a reason for that, and it's a luxury. Nintendo and Valve are platform holders with other revenue opportunities. Rockstar and Bethesda are both very small, boutique publishers, with far less shareholder pressure as the likes of EA or Activision.

    So, while I agree with almost everything you've said, I think people are far too quick to blame good business people for making good business decisions when facing a difficult market. You're right that it's not sustainable, and you're right that there are going to be some big casualties (though I don't necessarily agree with who is going to be those casualties).

  • First off, how is a free-to-play game not a real game? Yes, Tribes Ascend is free-to-play, but that does not mean that it isn't less of a game than something like Super Mario Galaxy. And even if I were to follow the logic you propose, then I would have a pretty hard time saying that TF2 is not a game anymore because it started asking money for hats.

    Secondly, how is the free-to-play model broken? I can see the justification for some traditional game mechanics being incompatible with free-to-play games and thus being broken, but to say the whole model is broken is just arrogant.

  • Steve, I think this is the point where you need to understand there is a difference between your personal opinion on what you like to play, and an objective analysis on the quality of F2P games.

    And in turn, there's a difference between what you want to play, and business strategies that are good for game developers.

    I wish I could resolve it for you, but unfortunately I can't. In the mean time, I would appreciate it if you could at least try to understand that not everyone has a blanket dislike for F2P, casual, social, or any other kind of game out there. We're all gamers here. 🙂

  • Ok, that's enough now, thanks. We're very happy to have you here, and appreciate you taking the time to have a discussion with us, but as per our community rules, we do ask that everyone remain respectful of one another.

    Thank you for understanding.

  • No, I didn't. You claimed that the entirety of the free-to-play model was broken while I said that some game mechanics would not work with a free-to-play model. There is a difference between saying 'All of it is broken!' (your point) and saying 'Some things might be broken because of the nature of the model.' (my point)

    Also, my first point still stands strong and I see no contradictions in my statement.

  • 2 minutes won't even get you past the tutorial. And if you did actually play the game instead of heading to the tutorial, then you would have not understood any of the main mechanics that make the game what it is. That's like me playing Modern Warfare for half of a match and then claiming that it is terrible.

  • If the big players crash, the indies crash too………
    But its really the japanese doing the best work and adding employees and not going under

  • I think that's pretty awesome. I only need to play a game for one minute before I can review it.

    I can get 20 reviews done a day now, and still have time to get back to games I'm actually interested in playing, like Farmville :3

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