Are shared services the future of the gaming industry?

Given some developments in the video game industry, there seems to be a broad consensus around the idea that the industry is transitioning to a business-based model. It is based on shared services, and this process will be led by well-known shared services such as Gimps, the new PlayStation Plus, and any other options being developed by companies such as Amazon and Valve.

BingMag.com Are shared services the future of the gaming industry?

Given some developments in the video game industry, there seems to be a broad consensus around the idea that the industry is transitioning to a business-based model. It is based on shared services, and this process will be led by well-known shared services such as Gimps, the new PlayStation Plus, and any other options being developed by companies such as Amazon and Valve.

However, it can not be considered the most harmonious consensus. Almost no two companies have the same attitude and goals towards these shared services at the moment, and there are serious disagreements about their future role and how these services will work in the future. Naturally, the attitudes of large third-party companies are very different from those of Sony and Microsoft, and even now the approach of Microsoft and Sony is not the same at all.

While almost everyone has come to the conclusion that services Shares are likely to play a big role in the future of the video game industry, but there is also a lot of debate about how this is going to happen and how it will affect games, developers and publishers large and small. p>

In a recent interview with Lorne Lanning, creator of Oddworld, she seems to be very concerned about shared services. Of course, Lenning did not take a hostile or accusatory approach in his speeches, and in his opinion he only regretted the devastating effect of the release of the PlayStation 5 version of the latest game in the series on the PlayStation Plus at the time of release.

Of course here There is no evidence that Sony has made an inappropriate offer to Oddworld game developers. Even the developers of Oddworld reportedly referred to the initial deal as a good deal that provided good financial stability, and at the same time exceeded what they expected from the expected sales of 50,000 to 100,000 copies of the PlayStation 5 console at the time. have been. While acknowledging that the deal seems fair, they can not ignore the fact that the game has been downloaded about 4 million times via PlayStation Plus, which is much higher than they expected at the time of signing the contract.>

BingMag.com Are shared services the future of the gaming industry?

No one is wrong or to blame here, but certainly sympathy for Lenning and his feelings about the effect that might be a miscalculation It's easy for them to have Oddworld on PlayStation Plus. They had made a deal in which they expected to make a few hundred thousand downloads for the game, but when the number of downloads exceeded 40 times their expectations, it is natural that they lost their potential and were dissatisfied with the loss.

Reading Lenning's comments, even superficially, reveals an important issue that may be a miscalculation about how the PlayStation 5 version of the game will affect PlayStation Plus at launch. The game's creators seem to have overestimated the impact of the console's lack of inventory. Although the demand for consoles has been very high, despite their appearance, their inventory has not been awful by industry standards, and the community of people who have bought the PlayStation 5 has grown faster than all of Sony's previous-generation consoles. In fact, this is why PlayStation 5 is running out of stock in official stores.

Similarly, Sony may have misjudged how consumers interact with free monthly games on PlayStation Plus. Subscribers who had not yet received the PlayStation 5 could easily add the free PlayStation 5 version of Soulstorm Oddworld to their game list at that time to experience it on the PlayStation 5 in the future when they purchased the new console. This is a big obstacle for PlayStation Plus owners to buy the PlayStation 4 version of the game. Having a different version of your playlist for free, even if you still can't play it, can be a difficult psychological barrier for anyone looking to buy a work at the time of release. Although Sony has officially announced that it will not make its in-house studio games available on PlayStation Plus on the day of its release, this problem could be felt even for in-house PlayStation Studio games in the company's new shared service. Some audiences have a good understanding of when a game might be included in these shared services after its release. Of course, you have to wait a lot longer than usual to experience that effect.

BingMag.com Are shared services the future of the gaming industry?

some In a way, the problems that Oddworld is facing here are a very specific set of problems, but in others, they are a preview. Some of the broader problems expose us to subscription services, which are hotly debated at the moment but are set to become a major priority in the industry in the future, and which could spark a major war.>

First, the question arises as to how different developers reimburse the cost of offering their games on shared services. Co-payments, such as what Lenning says about the release of Oddworld: Soulstorm on PlayStation Plus, are not uncommon at the moment, and for developers who have reached financial constraints at the end of a long and costly game development process, offer a reasonable lump sum risk. Eliminate the equation, it can be very pleasant. In this particular case, it would be interesting to know if there was a higher risk/reward trade on the table. However, it is difficult to blame a standalone developer for choosing a low-risk option, especially given that they believe otherwise in terms of sales and possible game download statistics.

Nevertheless, it is likely The one-time payment method for this type of contract will not be the default method in the future; At least for companies that want platform owners to encourage them to somehow have a limited monopoly on their games. Instead, some developers may claim a share of the revenue to compensate for their costs based on the audience interaction with the games on the shared services. This method is much more risky for developers (which, of course, can be reduced with an initial down payment) but can mean that developers who have had great success and follow-up to their games on these services will earn more. And the cost they receive should not be limited to the initial cost for which the contract is made at the time of the agreement.

BingMag.com Are shared services the future of the gaming industry?

In contrast, the interaction - the hours, minutes and seconds that players spend each month in a particular game - is a fairly fair estimate of how much that game influences the consumer's decision to renew their subscription. Provides the end of a course. Even if this criterion gives a lot of value to some types of games (especially service-oriented online titles) and at the same time reduces the value of short but outstanding and high quality titles.

This leads to another wide range of issues. It may have been mentioned in Lenning's speeches. This means that we will probably see a wide-ranging debate in the industry about the true value of a download or an hour of gaming interaction. The developers of Oddworld regret that their game is on PlayStation Plus, because their game has been downloaded about 4 million times, while they had agreed in their contract to pay the equivalent of about 100,000 copies to compensate for the loss. The main question is how many of these 4 million downloads went to the game just because it was free and otherwise they would not have gone to the game? It is clear that there is no definitive answer to this question.

This is a debate that has been going on in many different media for decades. When digital theft emerged in the 1990s, various media companies claimed that any game, movie, or music album downloaded in this way was equivalent to a complete loss of retail sales revenue at the original price in retail stores. . While in reality only a small part (maybe a very small part) of the people who downloaded the product through search, in the absence of search, would buy the product at full price and the rest would not go to it at all. Of course, this can vary from industry to industry.

BingMag.com Are shared services the future of the gaming industry?

Has been researched. Excessive estimates of industry losses due to surveillance were annoying to anyone with even the most rudimentary understanding of statistics, yet everyone still generally agrees that surveillance is problematic and harmful in its own right. Exaggerated too It did not hurt anyone except some naive executives who may have paid a high price for anti-hacking conditions.

It is absolutely vital that we can consider it a substitute for selling at a full price. The developers of Oddworld certainly know that four million downloads on PlayStation Plus does not mean that the company has lost four million full-price sales - but it seems that they feel strongly (perhaps with a little justification) that the free download ratio Selling at full price is a little less than 40 to 1.

This may or may not be true. This is an untrue conditional statement that we can never actually test in a reasonable way, but understanding what constitutes a fair estimate based on this ratio (or the more complex ratio that can relate to the number of hours a game experiences on shared services) , it's too important. If companies feel strongly that these ratios are not being calculated fairly and have suffered losses and lost a lot of money because they have placed their game on shared services, even for ambitious services like Xbox Games, this is still possible. It will eventually become home to a handful of in-house studio games, some older third-party games, and other small things.

BingMag.com Are shared services the future of the gaming industry?

different publishers are adding newer games to their shared services to avoid hurting their revenue at a later time, or whether they want to put more pressure on service providers to get a higher and more generous share of Giving them income is a more complicated matter. Many music companies loudly denounce the revenue they receive from Spotify and Apple, but any attempt to remove popular music from those services hurts both the artist and the publisher. This power imbalance is something that video game publishers want to avoid, but it may eventually become inevitable as these shared services become more powerful, hurting game publishers and developers.

Conflict Existing shared service providers and different publishers over pricing and revenue sharing are likely to lead larger publishers to decide to create new shared services themselves and place their games on those services. We've almost certainly seen that happen in the movie industry. It is unclear. Even now that we are in the early stages of the formation and growth of these shared services, all the companies that have published their first-rate and costly works on these services are not satisfied with the end result, and some of them have had unsuccessful experiences. The consensus on the importance of shared services for video games is merely a set of highly controversial disagreements about how different companies work and play a role in this new ecosystem.

It takes years and eventually neither side will ever be completely satisfied. We have to prepare ourselves for a dirty public dispute over the percentages and calculations of the companies' participation in these contracts, because the discussions about how to distribute this new cake in front of us have just begun.

Source: This post by Rob Fahey at Gameindustry.biz has been written.

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