'Games industry business model does not work' - Ward

LucasArts president Jim Ward has slammed the games industry's traditional business model, arguing that publishers' overwhelming reliance on single retail products has stunted the growth of the sector in recent years, where rival entertainment media have prospered through diversity.

Speaking in an exclusive interview with our sister site Eurogamer TV (part one, part two), Ward claimed: "Right now this industry has a business model that does not work. This industry has been flat for the past six years; we've been selling games to the same people. Our revenue model is based on one shot at retail - we have no back-end revenue streams like a movie might in terms of DVD, TV, that type of thing."

Ward sees a huge opportunity in the nascent online model, though, particularly in the console space and believes the rest of the publishing community should throw its full weight behind initiatives like Microsoft's Xbox Live, insisting this is exactly "what the industry needs".

"We need to develop that back-end revenue stream - that can be done only online with transactions and subscriptions, all those kinds of business models," he explained.

"So the degree that Microsoft, and Sony, are pushing the online component of this is absolutely the right thing to do and what the industry needs to do because that's our back-end revenue stream - we desperately need that and we support in a hundred per cent."

Ward added: "Certainly what Microsoft are doing makes all the sense in the world. And we hope that what Sony ends up doing in terms of its online presence will also help us out."

Elsewhere, while Ward was not surprised by Sony's pricing strategy for PS3, he did express concerns that it was important for the industry as a whole not to exclude potential consumers through high pricing.

"Those are some high price points [with PS3] but you're getting something for that," he commented. "From an industry perspective we've got to get to the point where what we do is way more accessible to a lot more people and therefore we've got to get these platforms into as many hands as possible, not just the hardcore gamers. We've got to get it into the hands of adults and girls and kids. I hope that price point won't be prohibitive."

Parts one and two of the exclusive video interview are now showing on Eurogamer TV.