Archive for category games
The Case for Government Help for the Games Business in the UK
Of all the assorted political and financial issues which face the
videogames business in the UK, few are quite so divisive as the
question of tax breaks for game development. Addressing this topic in a
public forum invites a torrent of passionate missives from both sides
of the argument – those who favour government support for the industry
through targeted tax cuts, and those who argue fervently that business
should stand on its own feet, as they see it, without turning to the
public purse for help.
The reason why this is such a divisive issue is simple – it’s because
it cuts to the very heart of one of the crucial divides in fundamental
political beliefs. In the wake of the massively unpopular bank
bail-outs, and with highly politically motivated messages about
crippling national debt floating around (few of which are supported by
any genuinely persuasive figures, but neither journalists nor
politicians are keen to allow facts to get in the way of a good story),
the climate has become even more chilly for industries seeking
Arguments against tax breaks, in this climate, can be extremely bitter
indeed. The phrase “begging bowl” is bandied about. Industries not
strong enough to survive should adapt or die, we’re told – and that’s
not entirely an unfair sentiment, of course. It’s an argument I’d
personally apply to media industries wrong-footed by the Internet and
presently running to hide behind the Government’s skirts, demanding
that Peter Mandelson protect their failing business models with
dangerously authoritarian legislation.
These are, however, utterly unfair arguments and metaphors to employ
in the discussion about development tax breaks. The hostility of the
response from some quarters belies the ignorance from which such
arguments often spring. They misrepresent not only the position and
requests of game developers, but the very nature of government and its
role in the nation’s commercial development.
Game development is not a failing business. In fact, it remains a
rapidly growing business, addressing an increasingly wide consumer
demographic with a diversifying range of product types. Revenues rise
sharply year on year – yes, even through the global recession. There is
no evidence of slow-down (a curious form of pessimistic confirmation
bias means that reporting focuses heavily on job losses rather than job
creation – the reality is that the latter healthily outbalances the
former) and no sign of the top of the curve being reached.
That’s the global picture. In the UK, however, we see the signs of an
uneven playing field all too clearly. Despite presently enjoying a
temporary uplift thanks to the weakness of the pound on the currency
markets, developers in this country are faced with an unappetising
long-term prospect – forced to compete for business with rivals in
territories such as Canada, France, Singapore, China and elsewhere, all
of which offer enticing tax benefits to the development business.
The question of a unified, easily understood and easily accessed tax
break for game development is not, therefore, a question of propping up
an industry in decline. It’s not about throwing good money down the
drain to keep failing businesses open. It is, quite simply, about
making sure that the UK remains a market leader in a rapidly growing
and increasingly important media and technology sector. The pie is
growing every year – the challenge to the UK government is to find a
way to make sure that our slice of it doesn’t shrink.
That, at a fundamental level, is absolutely the role of government. I
fully agree with those who mutter darkly about public funds being
diverted to the support of failing industries – while there can
occasionally be strong social arguments for doing so, it warps the
business environment and can end up creating even bigger problems and
sucking away even more public money down the line. However, the
government’s role where expanding markets are concerned is to ensure
that Britain is a competitive, attractive place to do business, and to
ensure that this country gains as much benefit as possible from these
Moreover, it’s increasingly clear that the “begging bowl” metaphor is
deeply disingenuous. Developer trade body TIGA is, of course, an
interested party, and its figures must be considered in that light -
but the maths behind its most recent report, which argued that a
clearly defined tax break would pay for itself twice over in the space
of five years, is convincing. On top of creating employment, keeping
highly skilled jobs and personnel within the UK and improving the
nation’s balance of trade, the Treasury would actually end up over GBP
200 million better off. It’s not a begging bowl – it’s an invitation to
invest in an industry with a proven track record of high returns.
It remains to be seen whether the present government will respond to
that request. So far, the Labour government’s response to the industry
has been confused at best. Despite being obsessed with courting the
film and music industries – even effectively offering major changes to
our copyright laws to please these lumbering dinosaurs – the much more
innovative and rapidly growing games business has enjoyed far less
attention. Conservative shadow minister Ed Vaizey makes encouraging
noises about what his party would do, assuming they win power at the
next election (by no means a certainty at this point), but words said
before elections are, of course, rather different to actions after
Pressure must be maintained both on the government and the opposition
to make these changes to the tax regime happen. The argument is clear
and persuasive – the UK government has a genuine responsibility to
support the games industry, not by throwing money at developers or
propping up failing businesses, but simply by providing a level playing
field. British developers have spent decades proving that, on a level
pegging with their overseas rivals, they can punch vastly above their
weight and deliver huge benefits to the nation and its economy. The
government owes them a chance to continue demonstrating that
Sony’s most recent update to the PlayStation 3 firmware, version 3.00,
has brought with it a little more controversy than anyone had expected.
Coming in the week when the console notched up the highest point in
its sales since launch, it’s unlikely that this unrest has caused too
many sleepless nights at the firm, but it’s interesting to consider the
source of the complaints.
A few minor issues regarding user interface aside, the primary source
of the backlash was, perhaps, somewhat predictable. Many users don’t
like the new “What’s New” panel which appears when you switch the
console on – accusing it of being a platform for advertising rather
than a useful addition to the system.
Sony refutes that viewpoint, arguing that the panel also gets you into
games more quickly by offering hotlinks to recently accessed games on
the hard drive. However, there’s no doubt that What’s New is, for the
most part, designed to serve as an advertising platform.
So, do consumers have a point when they complain that this update has
polluted their dashboard with adverts, eroding the sleek, minimalist
aesthetic and functionality of the XMB interface in favour of the
steady encroachment of adland? From a design standpoint, possibly. From
a functionality standpoint, however, the PS3’s dash is long overdue an
Regardless of your personal views of the console war, there’s no doubt
that one of the big winners in this generation has been downloadable
content – in the form of game add-ons and small games on services like
Xbox Live Arcade and PlayStation Store. Whether it’s providing more
content for blockbuster games, such as song packs for Rock Band or new
areas and missions for Fallout 3, or encouraging creativity and
risk-taking in development by providing a channel for the distribution
of low-cost games like Braid and Flower, these services have provided
new breadth and depth to the gaming market.
However, they suffer from a huge problem – visibility, or rather, the
lack of it. XBL and PSN titles are locked away behind an icon on the
dashboard, often buried several levels deep in a store interface which
few users will peruse on a regular basis. Consumers who regularly read
the gaming press will know which titles they’re hunting for in these
stores, but the average user will probably either ignore the store
entirely, or only skim through it on a very infrequent basis.
Rockstar went for the obvious solution to this problem when it
released expansion content for Grand Theft Auto IV – the publisher
invested in a major TV advertising campaign, the first of its kind for
a piece of Xbox Live content. This avenue, however, is only open to
major publishers with high profile content to push. Much of the point
of XBL and PSN is the benefit it affords to smaller firms, for whom TV
advertising is out of reach.
The obvious, logical solution to this is, of course, to create an
affordable, tightly targeted advertising solution on the platform
itself. Console dashboards need a way to put new releases and products
of interest front and centre, where users will see them, rather than
burying them in the store.
This is exactly what Sony has done with the new firmware update – and,
of course, it’s also exactly what Microsoft did with the release of the
NXE dashboard update for the Xbox 360 many months ago. Both firms
recognise the potential of on-dash advertising boxes – not only the
potential, in fact, but the simple necessity of their existence.
Naturally, as with any advertising venture, there are a number of
pitfalls which gape open as soon as you start down this path. It’s
possible, for example, to annoy users by poorly integrating your
advertising space with the design of your dashboard – Microsoft avoided
this by designing NXE from the ground up to be an advertising platform,
but Sony has walked headlong into it by slapping a big ugly ad space
over the top of its existing interface.
Even more annoying in the long term is the delivery of irrelevant
advertising content to your users. Repeatedly telling players of
Killzone 2 or Gears of War about the exciting launch of a new Hannah
Montana game will result in users switching off and ignoring the
irrelevant, annoying ad spaces. Modern consoles have individual user
profiles which know perfectly well which games each user plays – this
information can be used to create accurate targeting which changes
adverts from being distracting to being useful and relevant.
The biggest pitfall of all, however, is also the most enticing -
simple greed. Advertising space on console dashboards is justified if
it’s being used to promote features and content which are accessible
through that dashboard – in that context, it’s actually useful to
users. What’s vastly more questionable is the selling of that space to
promote other products, treating it effectively as a standard ad format
which is available to anyone with money to spend.
Microsoft, which has been keen to monetise everything to within an
inch of its life in this console generation, has already started down
this path with the advertising boxes on the Xbox 360. These spaces are
pitched to advertising firms, and Microsoft clearly sees them as a new
revenue stream – even though in many cases they’re appearing on the
dashboards of users paying for the Xbox Live Gold service, which seems
a bit cheeky.
This is the tipping point at which many customers may begin to feel a
little abused by on-dash advertising. Promoting new content on XBL or
PSN, or highlighting new additions to the assorted video rental
services, is something that actually makes the dashboard more useful
and informative. Suggesting that you might like an ice-cold Pepsi or a
trip to see Michael Bay’s latest movie in the cinema, however, is just
clutter, and platform holders will have to tread carefully here to work
out where consumers’ comfort zone ends.
For those complaining about the addition of advertising space to the
PS3, however, there are no words of comfort. I’m surprised it’s taken
this long to arrive, in fact – and now that it’s launched, you’d better
get used to it. Love it or loathe it, on-dash advertising is becoming a
core part of the console experience.
Games: Redundant Publishers?
The idea that publishers will become redundant in an age of digital
distribution is a popular – and perhaps more notably, populist – one.
Publishers are not, by their nature, attractive beasts. Where
developers are seen as hives of creativity, the engines of creation
which drive the gaming medium forward, publishers are easy to
categorise as soulless creatures, faceless entities packed with
accountants, marketers and executives. In a popularity contest between
the suits and their spreadsheets, or the creative developers and their
high concepts, there’s no question as to whose side the public – and
the media – will be on.
As such, when David Lau-Kee – himself a former Electronic Arts VP, a
cynic might note – blasts publishers as “blood-sucking leeches” and
talks about a digital future in which they will be rendered obsolete by
the march of progress, it’s a sentiment that developers feel pretty
It helps that there’s a strong sense of truth to his statements. Many
publishers are guilty of being utterly domineering in their
relationships with development studios, taking not only the lion’s
share of profits but also demanding that IP rights – the very lifeblood
of a creative industry – be signed over.
Big publishers have been the gatekeepers to retail for years, with
they alone holding the clout required to put a boxed game onto store
shelves, and rather like the border guards of any banana republic, they
have not behaved well with this power. Many developers, even very
successful developers, will talk in public about how supportive and
fantastic their present publisher is, only to reveal in private that
they feel that the entire structure of publisher-developer
relationships in the industry is fundamentally broken and heavily
There is no question, too, but that the role of publishers will be
diminished in the digital distribution era. Some of their major
functions are essentially becoming obsolete – new retail channels are
wide open, while warehousing and inventory have disappeared along with
the physical products themselves. Physical production, packaging,
distribution and sales are steadily disappearing from the publishing
Marketing, meanwhile, is not disappearing but is most certainly
changing. The extraordinary and exponential rise in interpersonal
communication which has been facilitated by parallel developments in
areas such as social networking and mobile phones has been a broadside
to traditional marketing – one which, frankly, very few marketers have
come to grips with. Positive word of mouth buzz, spreading through
mediums ranging from SMS messages to Facebook to Twitter, is driving
sales more effectively than any above the line campaign ever could.
Countless blogs and podcasts with a few hundred readers each are
collectively reaching audiences wider than any magazine or major
Sometimes, clever marketing people can set of a spark which ignites
that kind of coverage – but right now, it’s more an art than a science,
and the slightest hint of insincerity or PR guff can make a publisher’s
dip into “crowd marketing” backfire horribly. Yet, conversely,
developers thrive in this market. They’re the creative types, their
enthusiasm for their game considered “real” and sincere by the audience
who see publisher enthusiasm as fake, bottled and profit margin
focused. That doesn’t quite translate into indie games outselling FIFA
- but it does translate into indie games probably selling more copies
than they would if they had been picked up by a publisher at some point
in the process and released with an EA or Activision logo on them.
However, let’s temper this for a moment, and think about a few of the
things that publishers do which aren’t going to change in this brave
new world. For a start, while marketing is paradoxically getting harder
for the big guys and easier for the little guys, there’s still
incredible power in traditional campaigns, be they TV, radio, print,
online or outdoor. Developers, as a rule, don’t have the know-how to
create those campaigns – or the financial muscle to support them.
Which brings us neatly to the question of finance. Of course, the
model whereby the publisher pays for development up front is far from
being the only model which works for game creation. Indeed, digital
distribution opens up the exciting possibility of a long-tail model,
whereby games continue generating decent revenue long after their
release – so a studio with a few successful titles available can
conceivably fund development on new projects with continuing revenue
from back catalogue sales.
However, that won’t work for everyone – and finance isn’t just about
where your money comes from. It’s also about how you handle your money.
Over the years, many developers have summed up their relationship with
their publisher to me in the simplest of terms – “they’re our bank” -
but many others have understood that the publisher is, in effect,
taking care of all the annoying financial stuff and letting the
developers get on with what they do best, which is creating great
Other issues, too, would be new territory for developers to break
into. Few developers have much experience of negotiating for licenses
and IP to work on (there are many exceptions, of course, but it’s
certainly true that the majority of IP negotiations in the industry are
carried out by or on behalf of publishers, not developers). Sales, too,
would remain a factor to some extent – at the very least, someone needs
to be cultivating the relationships required to get your products
featured strongly on the portal pages of the various digital
In a world without publishers, then, developers would need to either
learn a whole raft of new skills in marketing, finance or elsewhere -
or hire people who already have those skills, effectively turning every
developer into a mini-publisher. Of course, rather than everyone hiring
their own skilled staff, it might make more sense to have a company
with all of those staff, who work on games created by many developers -
at which point you have, essentially, reinvented the wheel and created
a new publisher.
So, as appealing as David Lau-Kee’s sentiments are, I think his case
is a little overstated. Publishing is certainly going to change in the
coming years – there is a storm on the horizon which is likely to break
first in the music business, where the publishing giants really are
becoming increasingly obsolete, but which will eventually reach
videogames and will reshape the entire market. Some publishers will
disappear. Some will shrink, in their range of functions if not in
their actual size and turnover. Some developers will become publishers;
some publishers will become developers, and strange hybrids between the
two (such as Steam operators Valve) will appear.
But while digital distribution will change much, it will not remove
all of the functions which publishers now serve, nor will it make the
existence of publishers themselves entirely redundant. They may not win
any popularity contests, but this industry needs its suits, just as it
needs its creatives, and a role for publishing companies will remain
even after the unheaval to come.
New Software for Online Delivery of Games: caveat emptor?
It’s normally the keynote speeches which draw most of the attention at the Game Developer’s Conference – but this year, those speeches have been overshadowed by a new technology which has drawn more attention and more column inches than anything else at the show. The most exciting thing in San Francisco this week is seemingly not a new game, but rather a new way of delivering games – OnLive.
On the face of it, OnLive is a simple concept supported by some
eyebrow-raising technical claims. The service purports to completely
change how videogames are distributed, by keeping all of the software at a datacentre, running the game on a server, and then streaming HD video over the internet to a “thin client” at the user end (and, of course, streaming input like button presses back to the server).
It’s easy to see why a system like this would make publishers and even developers rather excited. Like standard digital distribution, it
promises to eliminate physical products and annoying concepts like
inventory from the equation, but OnLive would go further – it would
also completely eliminate piracy from the equation (you can’t make an illegal copy of something you don’t actually have, after all) and would allow every game to be sold as a subscription to a service, rather than a one-time payment.