Market expansion is no zero-sum game

The tremendous sales success of the PlayStation 4 - outpacing even the record growth of its celebrated ancestor, the PS2 - is well-known and much commented upon. Even the Xbox One has outperformed its successful predecessor, the Xbox 360, in many regards, and is only considered a "troubled" console launch because of the tough comparisons it faces to the ascendant PS4. The true scale of the success of this console generation, though, is only apparent when you take in a broader view that encompasses not only hardware sales but also software, DLC and services - so this week's figures from research group EEDAR provides a useful and insightful piece of the puzzle.

EEDAR's figures contrast not hardware but software sales across this generation and the last generation. They show that over the first three years on sale in western markets, the Sony and Microsoft consoles this generation have generated almost $2 billion more in software sales than their predecessors did - even excluding DLC sales, which likely adds as much as a billion dollars to that total.

"More level-headed thinking has been proved correct; this is not a zero-sum game. Mobile and social gaming can blossom (as it has done, beyond the wildest dreams of a decade ago) without this being to the detriment of core gaming"

Console software sales, in short, are in rude health - at least in the core genres, and on the consoles which appeal to a core audience. Nintendo's figures are excluded from the analysis because the "Wii Bubble" distorts the picture so badly; it seems likely that we'll come to see that bubble as the last hurrah of casual titles on consoles, before a plethora of other devices (phones, tablets, browsers and even TVs themselves) became more than capable of entertaining casual audiences. Incidentally, EEDAR also disregards handheld, which remains Nintendo's major strength, and doesn't cover Asian markets; the figures still provide a great insight, it's just worth understanding their limitations.

One could look at the breakdown of the figures and take away some negative conclusions. The share of software sales enjoyed by "fun for all the family" styles of game such as music/rhythm titles, or "general entertainment" titles, has collapsed; racing and sports remain broadly stable, while action and shooting games have soared up to utterly dominate the percentages. If you're a developer of the former group of casual style titles, of course, you're probably not lamenting this change. The intervening years have seen an explosion of opportunity for such games on platforms beyond console - it only stands to reason that players who want to engage with that kind of title aren't spending money on dedicated consoles on which to do so.

On the other hand, though, if you're someone who takes a broad view of console gaming you might be disturbed by this concentration of focus in the core genres. It's suggestive of altogether too many eggs in one basket, you could argue; it implies that console games are becoming myopic in their focus, that developers find themselves chasing around after an increasingly narrow group of high spending "core gamer" consumers rather than evolving and expanding their reach. Such specialisation is a short-term strategy at best.

I'm not convinced that that's what these figures show, though. For a start, those broad categories - "action" and "shooter" - cover such an extraordinary expanse of gaming experiences that it seems impossible to define them solely as being narrow and focused. "Shooter" covers everything from Gears of War to Splatoon to Dishonored and Uncharted; "action" is even broader, a bracket that could encompass almost anything, from Skylanders through to Diablo, from The Witcher to Portal. The dominance of these broad categories in EEDAR's figures is less a sign of narrowing focus and more a sign of the recent broadening of the experiences available within those categories.

If this expansion and experimentation within core genres is the reaction of core game developers to the expansion of the market elsewhere, it is a good one. The past few years have been defined in part by a fear - often expressed by consumers, if less often by creators - that casual, mobile and social games were sucking the lifeblood out of the core genres. We've heard over and over again about the death of the console and the end of the "traditional" market, drowning out more level-headed voices arguing that in fact, the expansion of the market elsewhere need not necessarily impact upon the growth and success of the core market at all. EEDAR's figures, read in conjunction with the noisy success of the PS4 and more muted success of the Xbox One, show that more level-headed thinking has been proved correct; this is not a zero-sum game. Mobile and social gaming can blossom (as it has done, beyond the wildest dreams of a decade ago) without this being to the detriment of core gaming.

Considered from another angle, this ought to be obvious. The kind of player who wants to engage with something like Destiny, like World of Warcraft, like Final Fantasy or Uncharted or Bioshock, is not going to be satisfied in the same way - ever - by the lighter, more bite-sized experience of mobile gaming. Even if the day finally comes when consoles no longer make sense due to the technological advancement of other devices and network services (and I maintain that that day is several hardware generations, not several years, hence), that will only be because the core experience they provide - immersive, involved, lengthy and weighty games that demand commitment and repay it in spades - will have been replicated entirely on another device. Of course there will always be overlap in player base, and a great many core gamers are also avid consumers of certain types of mobile game, but this still isn't zero-sum. Some people read books, some read magazines, many read both in different contexts; yet authors do not fear that magazines are making their books redundant, instead rejoicing that overall, people are reading more, and the rising tide lifts all boats.

Of course, at least part of the concern of core gamers hasn't been the idea that their games would just go away - with the exception of odd, angry fringes, everyone understands that the core game genres are terribly popular and aren't going anywhere. Rather, many consumers fear that techniques created to monetise casual games are filtering back into core gaming; that free-to-play and a host of other new business models are coming to "ruin" games.

This is a more reasonable concern. There are certain game genres which do not work with certain business models - or, even if they can be made to work with those models, they would alienate the existing fans of the genre in the process, effectively throwing out a ready-made audience of dedicated fans in the vague hope of finding some other, ill-defined audience elsewhere. Mistakes have been made and will be made as companies struggle to find the right business models to fit all of their IP and all of their audiences.

"The cost of creating and operating a game has grown faster than the number of people playing. This is a problem internal to core games, not an external problem imposed by the growth of mobile and social, and it demands a solution internal to core games"

At the same time, this is a very important process, because while the traditional model of paying a chunk of money for a game up front isn't going to disappear any time soon - it will probably remain the dominant model for certain game genres for many decades to come - it is showing cracks which have nothing to do with the rise of social gaming. The problem is that despite the growth seen in EEDAR's figures and elsewhere, the reality is that the core gaming audience isn't growing (either in population or in spend) as fast as it used to. The late 1990s and 2000s saw a truly extraordinary growth spurt in which tens of millions of devoted new consumers engaged with core gaming; now, while the audience is absolutely growing, its growth is far more measured. This is problematic because companies have become accustomed to game budgets growing enormously as technology leaps forward - in the past, budget growth was matched by audience growth so everything worked out nicely; today, budget growth often outstrips audience growth.

As a consequence, games have to find new ways to pay for themselves - hence the proliferation of DLC, of purchasable consumables, of special editions and season passes and peculiar hybrid subscription models and god knows what else. $50 doesn't pay for a game any more, not because publishers are getting greedier (they've always been greedy, as is the nature of a capitalist enterprise) but because the cost of creating and operating a game has grown faster than the number of people playing. This is a problem internal to core games, not an external problem imposed by the growth of mobile and social, and it demands a solution internal to core games.

The issue has loomed for years and continues to loom; even as EEDAR shows us confirmation that the sector's sales are very healthy indeed, the question of how to make a return on investment in core gaming is tougher with each passing year. Will gamers learn to accept games whose technology is on a plateau demanded by budgetary constraints? Will they learn instead to spend more money on each game, with the consequent further tightening of the number of games which can actually turn a profit? The next few years will probably yield a little of both approaches - but one thing is absolutely certain. With core games continuing to generate more revenue year-on-year, this kind of experience is here to remain, as the high-end "pinnacle" of gaming entertainment.