In his new video, industry expert Jason Schreier highlights the strategies of major gaming companies like Xbox, EA, and Sony, and why small gaming gems play hardly any role there.
Who is Jason Schreier? The industry journalist from Bloomberg has made a name for himself in recent years through his various investigative reports. There is hardly another insider who is as well-connected in the gaming industry. When something goes wrong, those affected turn to Schreier to report.
On YouTube, Schreier started a channel a few weeks ago to provide in-depth insights into the gaming industry for all interested parties. In the current video, the journalist addresses the question of why the big players in the industry – like Xbox, Sony, Take-Two, or Electronic Arts – keep making these massive, $500 million blockbusters instead of investing the money in 500 games, each costing only $1 million?
The chance that one of those 500 games contains the next Stardew Valley or Balatro, which generates several times its cost, must be very high, right?
His thesis: The big players have no choice.
Xbox will milk Call of Duty in the coming years just like Activision did in the past:
The Compulsion for Size
Why are the big players obliged to size? Jason Schreier provides several arguments for this in his 20-minute video:
- The focus of the big players is on ROI, the Return on Investment. If you invest $500 million, you should end up with not just $600 million, but $1 billion. Small games cost less but also offer significantly less potential for maximizing ROI.
- In giant corporations, the game departments compete with other areas. Xbox does not only compete with PlayStation; it also competes with other segments of Microsoft’s business, like Azure and Windows. If the ROI is significantly higher there, it affects the strategies for and investments in Xbox.
- This internal struggle also occurs at pure game publishers. If a small and a large game are released simultaneously at EA, it should be clear to everyone which of the two projects will receive the majority of the available marketing budget or get better support with engine support. Resources are finite and must be prioritized.
- Making a small game and hoping it becomes the next Balatro is something almost anyone can do these days. However, there are only a few companies willing to invest hundreds of millions of dollars in a single game and create something like GTA 6. Companies like Take Two or EA must leverage this advantage to generate the desired hype and keep shareholders satisfied.
- For large game manufacturers these days, it’s not only important that players invest money in their products. They should also spend a lot of time in their games. This kind of “engagement” can best be generated through large franchises and services.
- A high level of community “engagement” creates enormous visibility, through which potential customers ideally come into contact with the respective game over and over again – and then eventually try it out. Games that manage to build a critical mass of “engagement” are typically also financially successful.
You can watch the entire video by Jason Schreier below or on YouTube:
What else does the expert reveal? The video actually starts with an anecdote about Blizzard. Before the launch of WoW, they aimed to have about a million players by the end of the year. At that time, their biggest competitor, EverQuest, had about 500,000 players.
WoW exploded, and within 12 months, they had already attracted an incredible 5 million players to Azeroth. After a few years, there were even 12 million paying subscribers. This success made Blizzard, a relatively small but notable milestone studio, into a huge live-service corporation in a comparatively short time.
This article fits well:
This enormous success of WoW did not only impact the size and direction of Blizzard. The game acted like a black hole, drawing so many resources to itself within the studio that other projects like Starcraft 2 and Diablo 3 had to suffer at times.
Since these were sequels to successful series, everyone knew that these games had to be completed eventually. It was a different story for a small card game that a small team wanted to build for the Warcraft universe.
Here, the developers had to continuously assist with more important projects, and there was likely pressure from above to completely discontinue the work so the devs could work full-time on WoW and other projects. Only after 4 years of development did the group receive the green light and thus the assurance they could indeed finish their Hearthstone. Good decision. Hearthstone also became a huge success for Blizzard.
Fun fact: According to Schreier, the small team would have loved to dive into the next small project after the big success of Hearthstone. Unfortunately, the developers then had to realize that they were now stuck continuing to supply this successful service with content.
There are several reasons for the focus on blockbusters. Would you still like to see more small games from the big players in the gaming industry? Feel free to share in the comments! In his first video, Jason Schreier also looked at Bungie and Destiny: The industry’s biggest expert has played Destiny for hundreds of hours, analyzing reasons for its end
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