The end of AAA “first-party” game development?

Posted: 2010/11/20 in Indie Games

I believe virtually all games are going to be multiplatform in the future. Microsoft seems to have seen the writing on the wall on this one, as they’ve been slowly selling off (or otherwise shutting down) almost all their internal game development for years. Bungie’s gone, Ensemble’s gone, and several internal studios without fancy names are also gone. Rare’s left, but they appear to have spent more time working on Xbox 360 Avatars than on actual games in recent years. Most of Microsoft’s first-party games, both retail and download-only, for the last several years have been done in partnership with third-party developers. The Gears of War games are made by Epic, Alan Wake was made by Remedy, Hydro Thunder: Hurricane was made by Vector Unit; all published by Microsoft, but none developed by a team owned by Microsoft.

As game consoles have become more powerful, average game budgets have increased in proportion. More horsepower and HD resolutions have meant more detailed geometry, physics, AI, and textures, with correspondingly bigger development teams. The reality is that game development is so expensive now that it’s unrealistic to expect the amount of work that goes into an Uncharted or a Gears of War without it becoming either:

A) funded by a console manufacturer, or

B) multiplatform.

The problem with “A” is that it’s becoming increasingly unprofitable for the console manufacturers to sink that many millions into a game that gets released on only one platform. The only reason they do it now is to have something unique that helps sell their platform, but even with that the economics are making less and less sense, especially as third-party hits such as Call of Duty routinely eclipse even the best-selling first-party console exclusive games. Both Sony and Microsoft have scaled back first-party development this generation. Nintendo’s still on a system where development teams can be smaller, but what will they do on their next system?

“B” has, and will continue to, become increasingly common simply because the economics are unavoidable. It’s been reported that Black Ops may have had the engines for the PS3 and 360 versions built from the ground up and tailored for each system, rather than developed on one and ported to the other, but it still benefited a great deal from shared graphical and audio assets.

I doubt Sony made a lot of money on Uncharted 2. While the 360 and PS3 are separated by a mere 10% or so in console sales, global 360 software sales beat the PS3 by a much wider margin than that. That’s why Microsoft has scaled back first-party development, and is increasingly farming it out to third-party development teams: the risks are just as huge for a AAA first-party game, but the rewards tend to be less since the target audience is smaller. There will be some first-party blockbusters, like anything with Halo or Gran Turismo in the title, but for everything else you might make a bit of money, or you might lose your shirt. Your exclusive AAA game might help sell systems (like Gears of War did for the 360) or it might become a butt of jokes (as Lair did on the PS3). The risks increasingly outclass the potential reward.

Next generation we’ll have even more powerful consoles that will doubtlessly require even bigger budgets, and first-party games will become even that much less attractive still. The writing may well be on the wall for the blockbuster AAA console-specific game. This is a future that Indie Games developers need not fear, as fewer AAA games on store shelves will mean more gaming time, not to mention more money in gamer’s pockets, for smaller downloadable games. The cream of the Indie Games crop may also find Microsoft increasingly interested in co-publishing games with them in the future, through Xbox Live Arcade. And while Microsoft may not let teams working on small downloadable games at their crown jewels like Halo, they just might let second-tier franchises like Project Gotham Racing, Midtown Madness, Kameo, etc., be explored by teams with innovative ideas.

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