Games industry still in "Dark Ages" says Dyack

In a talk he presented today at The Games Institute at University at Waterloo, former Silicon Knights boss Denis Dyack outlined his views on the past, present and future of the games industry. He said there have been three major eras, and while right now the business is in the "Dark Ages," the "Renaissance" is ahead.

He began by noting that the early business of video games was largely based off the toy industry, and there was a very low cost of developing games at first. His first game cost well below $100,000. The next era was a "Golden Era" of sorts where consoles dominated, and there were very high profits with low-medium development costs.

As costs and team sizes grew, however, the business entered its next phase, or the current "Dark Ages" in which extreme development costs can reach hundreds of millions, and profits are quite low for most. Dyack used GTA V as an example - over 1000 people worked on GTA V for five years, he claimed. "It is so risky right now and the chance of failure is so high you have to wonder what's going to happen if something like a GTA fails," he said.

"I went from being crucified [about my one-console future idea] to 'Hey do you want to do an interview on this?' when Xbox One and PS4 were announced with nearly same specs"

So what's at the heart of all of this? Well, Dyack went back to his idea about commoditization - something he's been discussing for years and years at this point. The value of the different platforms diminishes over time as it becomes a commodity. It's all about faster, better, smaller, cheaper, and then performance oversupply sets in. Manufacturers are putting more into these technologies than consumers actually want, he said. Dyack is certain it's what's happening right now in the games industry. It happened in other electronics businesses, and with music, and now it's video games' turn.

"I went from being crucified [about my one-console future idea] to 'Hey do you want to do an interview on this?' when Xbox One and PS4 were announced with nearly same specs," Dyack commented.

Ultimately, commoditization creates a highly competitive and highly risky environment. The industry landscape looks a lot like Westeros and winter is coming, he said, making a reference to Game of Thrones. It's a dangerous time and there's not much guidance on what to do.

For developers, though, the good news is that it's becoming more and more about software. Pointing to research from Deloitte, Dyack said that the last decade was the decade of devices, but manufacturers are tapped out, things are getting commoditized and now it's becoming about the software. He reiterated that this current console generation will be the last. The cloud will be the platform of the future, he said.

"Console manufacturers are all under siege right now. There's not as much proprietary hardware anymore. Now if you look at Xbox One and PS4 they are almost identical except for interface," he said, noting that the interfaces were the "last gasp to separate their brand" and make it stand out from the rest. "But they can't fight commoditization. We'll move away from devices."

So if you're a games developer today, what do you do? How do you prepare for the future? It's all about psychology, Dyack said. Games aren't driven by gameplay, or narrative or high-fidelity visuals or music. It's a combination of everything to engage the player. Engagement is the most important thing for developers to consider. You can be immersed in an experience but not engaged, Dyack noted.

Ultimately, "We have to understand what games are, what makes them special, to know where we're going," he said. Dyack stressed that without cross-disciplinary approaches, the industry won't survive. He'd love to see more collaboration with the film industry and with people in humanities - it's not all about computer science. He talked about theories from samurai Miyamoto Musashi, and how important it is to know about all arts.

Another important change the industry will undergo, he said, is a reduction in team sizes. He compared it to the early days of film when thousands got involved on a project, but it wasn't sustainable. He then showed an old trailer for his Shadow of the Eternals project, holding it up as an example of what a small team (7-10 people) can achieve.

When questioned by the audience afterwards about the state of the project and Precursor Games, he was elusive. "The team's taking a break. There's no release date. The team itself needs a rest, so we're resting," he said.