Why most video games aren't profitable

Only 20 percent of all video games that make it to store shelves are profitable. Don Reisinger thinks he knows why.

Don Reisinger
Former CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
3 min read

Although video game revenue is at its highest level in history, most researchers believe the industry is "recession-proof," and there are more gamers across the globe than ever before, not everything is so blissful for the video game industry.

According to the Electronic Entertainment Design and Research institute, just 4 percent of games that go into production will turn a profit and only 20 percent of titles that make it to store shelves will achieve profitability.

That shouldn't surprise us. When I look at the video game industry and the countless number of titles that I fire up on my consoles, it's not hard to see why the industry is struggling to develop profitable games: too many titles are the same basic game in a different box with different characters.

How many first-person shooters and sports games need to flop before the industry realizes that although shooters are the highest-grossing titles and sports games perform well thanks to EA, it's time they stop wasting their time with more of the same and start moving towards better titles that offer something unique?

Too many developers get bogged down in the statistics. According to EEDAR in a study it conducted last year examining the industry, mature-rated titles comprise 10 percent of all U.S. retail games and have the highest average gross sales in the country. The action genre is most prevalent and shooter titles have the highest gross sales.

Armed with that knowledge, developers should tell their teams to stop developing games for the Wii and start developing mature-rated first-person shooters, right?

Think again.

During 2007, only two of the top 10 best-selling games of the year--Halo 3 and Call of Duty 4--were first-person shooters. Most of the titles left on the list--Wii Play, Super Mario Galaxy, Guitar Hero III: Legends of Rock, and Pokemon Diamond--span varying genres and offer a relatively unique experience. Combined, those titles sold over 10 million units, compared with just 7.86 million units for the two first-person shooters.

Judging by those figures, it's clear that developers are trying to increase profitability through shooters and action titles, but Nintendo's success with the Wii's unique style of gameplay, as well as the success of unique titles last year, suggests they're wrong in following that strategy. After all, even though the industry is dominated by mature titles, only a select few have performed well.

It's time developers stop looking at statistics and the perceived popularity of first-person shooters and start realizing that as consumers, we crave innovation and fun. We want a compelling storyline and a new battle system that takes aim at current conventions instead of copying them. And more than anything, we want games that provide an enjoyable experience instead of another FPS with another crappy story and the same design.

If developers really want to make games profitable, they can't maintain status quo. First-person shooters are fine if they're unique and created with value in mind, but if they're not, they'll be thrown back into the heap with the vast majority of video games that simply don't make the cut.

Say what you will about gaming, but I don't necessarily think we need more games; I think we need better games.

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