2006 Year in Review: The Big Lie2006 was the year of the big lie.
Sometimes I write about something when I'm still mad, and it comes off as a rant. This isn't one of those times, though. This isn't about anger--it's just about math.
As politicians know all too well, sometimes it's easier and more effective to tell a big lie than a small one. Sometimes the most outrageous statements are the most believable, especially whoppers that are told to generate sympathy.
So this is what we were told in 2006: development costs are skyrocketing. Skyrocketing! A top-quality game for next-gen platforms like the 360 and the PS3 could cost 20 million dollars to develop. Even at $59.95, we desperately need you gamers to tolerate in-game advertising and buy downloadable content if you want us to survive.
Spearheading this frenzy was Electronic Arts, of course. They signed in-game advertising deals with IGA and Massive, and they have over a thousand purchasable downloads available via the Xbox Live Marketplace.
Think about that for a minute. Electronic Arts is a three billion dollar company, based on its trailing twelve month revenues. It's market cap is almost sixteen billion dollars. It has over two billion dollars in cash on its balance sheet.
So a three billion dollar company with two billion dollars in cash is portraying themselves as an underdog, as a victim, of the harsh economics of the gaming industry--the same economics, by the way, that made them a three billion dollar company in the first place.
You know what, Electronic Arts? I don't give a shit about your problems. If you spend twenty million dollars developing a game, it's not my fault. And guess what? For every 360 or PS3 game you spend twenty million dollars on, you'll make twenty (or fifty, or a hundred) games that cost much less. Guess what? You'll be charging us $59.95 for those, too. You'll be jamming in-game advertising down our throat. You'll be making us PAY for cheat codes.
This is a company pleading poverty when it's made over a hundred and eighty million dollars in profit in the last twelve months. Maybe I would be more sympathetic if players didn't dunk through the backboard in NBA Live '07. Or if the people who bought that gigantic turd could take it back for a refund. But they can't, can they? You guys released an alpha, people bought it, and they're screwed.
Maybe you could have taken a few million out of that hundred and eighty million dollars in profit and finished that game. Or maybe you could have finished a few others that came out, well, badly. But all too often in the gaming industry, big companies expect loyalty to be a one-way street--from us to them.
A company that respects its customers receives my full attention if they claim that the current environment is unforgiving. They will receive my continuing support. But a giant company that makes generally average games, displays generally zero concern for its customers, and claims it can't survive without ripping us off even more is just an embarrassment.
If you think you're sick of paying for downloadable content that should have been included with the game, or in-game advertising, just wait. Believe me, it will never be better than it is now, because we're going to see a high-velocity adoption of both. Take-Two, Activision, Microsoft--they're all in.
Oh, and just so we're clear here (trailing twelve-month revenues):
Take-Two: 1.01 billion. 141 million in cash.
Activision: 1.4 billion. 790 million in cash.
Microsoft: 45.35 billion. 28.25 billion in cash.
Huge companies with hundreds of millions of dollars in cash claiming that they just can't surive unless they charge us more, add advertising, and make us pay for content that should have been included with the game.
That, unfortunately, was the single most important trend of 2006.