Videogame Sales are Through the Roof -- and Game Designers Are Getting Canned Left and Right

Categories: Business
Bang! Gotcha! Yer fired!

As more and more Americans find themselves sitting at home in their tattered bathrobes at 3 p.m. on working days, videogame sales have gone through the roof. Last year, Americans spent $22 billion on games -- a 23 percent jump from the prior year.

Now, here's the funny part: Many of the unemployed folks listlessly gaming through the day are themselves game designers. While the industry has recorded record sales, the men and women who design those games, quite a few of whom were headquartered in the San Francisco area, are being turned out like hookers in Grand Theft Auto.

How can this be? On its face, it's less rational than all of America being captivated by an Italian plumber who leaps on mushrooms and shoots fireballs. But if you analyze where the quarters are being spent these days, everything begins to make sense.

It turns out that judging the videogame industry as healthy based upon its gaudy sales figures is akin to gauging the well-being of a nation based upon its average income -- if you throw a couple of Bill Gateses and Michael Jordans in there. It turns out that a massive percentage of overall sales are due to a tiny handful of games like Call of Duty, Halo, and, of course, all things Wii. It turns out, in fact, that the four top-selling games of 2008 were all for the Nintendo Wii.

"Nintendo makes more money than God at this point. I would not be surprised if they have a warehouse that's just full of money," said Bay Area game developer Seppo Helava, who has put in time at EA Games in Redwood Shores, Backbone Entertainment in Emeryville, and Sega in San Francisco, and was recently laid off by Factor 5 in San Rafael.

Of course, Helava points out, those Wii sales aren't helping local designers like him -- those games are created in Japan.

When you move away from franchise-model games like Madden Football or Guitar Hero, the economic landscape starts to look a lot less rosy -- and that's why designers like Helava now have time to sample their own creations. Perhaps 90 percent of the industry's income is derived from 10 percent of its games. Obviously, the vast majority of designers are working on the "smaller, riskier" games among the 90 percent that often don't make much money -- or, in fact, fail to break even. Those folks found their jobs to be expendable, even as many of their companies were thriving.

As a result, Helava -- who notes that he's keeping busy developing games independently -- predicts many game companies will take a conservative approach to the current economy and stick with proven fare.

So, the days of $30 million games developed by hundred-person teams may be over -- or, at least, if scads of money and time are to be invested, it'll be on fairly risk-free, unoriginal endeavors. Still, Helava points out that Playstation Network and Xbox Live games are often developed by teams of 15 or fewer, and can be churned out for a couple hundred thousand dollars. And iPhone Appstore games are almost exclusively created by teams of two or three Americans working out of garages or rumpus rooms -- many of them locally. So there is still an outlet for innovation. You may just have to look a little harder.

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