This is a great article! While game publishers/distributors get a lot of flack for forcing games to come out early or buggy or both, players have to remember that their continued (monetary) support is the only way to make their favorite games better, no matter how bad they are "now" (e.g. Age of Conan, which has gotten much better now that all those pesky players have left).
In my opinion, much of the struggle that games developers have with their cash flow comes from the misguided community belief that "everything extra be free because I pay a monthly fee" or, much worse, "why should I buy items from the cash shop, this [free-to-play] game is buggy and has no end-game!" The bottom line is, the more money you pay to play a game, the more of that money will go into making the game better. Also, the more revenue that a game generates, the more likely it will be that the developer will be able to go back to their, or other, venture capitalists and get more money for development of future content.
Edited, Feb 23rd 2010 8:28pm by Maarg
What Will Less Money Mean For MMO Developers?
Venture Capitalists reduce in investments in games development.
It's no big secret that 2010 and 2011 are set to be big years for the MMORPG industry. Either through chance, fate or some diabolical plan to wipe out the gaming population through stimulation overload (we're going with the third option), almost all of the biggest gaming developers have set their sights on two years to pop out their greatest MMO creations. But is it all sunshine and happiness?
Just a few days ago, we reported that Stargate Worlds Developer, Cheyenne Mountain Entertainment, had filed for Chapter 11 Bankruptcy, noting that they needed to "restructure" their debts so that they could continue to move forward with their development plans. Unfortunately, while filing for Chapter 11 is considered to be the "lightest" of bankruptcy plans (some banks that almost went under during the economic crash also filed for Chapter 11 in order to restructure), CME may have another problem on their hands getting back on their feet.
According to an article from Gamasutra and the Boston Globe, the latest news for 2009 and 2010 is that venture capitalists, the investors that enable all but the biggest of game developing companies to continue to do what they do best (develop games!), have begun to slow their investments in the video game industry. For those of you who don't know, a venture capitalist is essentially a company or an individual who looks for other companies or projects to fund in order to claim a portion of their profits. For many young game development companies, venture capitalists and other investors are the main source of their start-up income.
While the articles don't focus specifically upon the MMO industry, some of the consequences noted spell out a grim future for gaming devotees. Specifically, Alex Finkelstein, a general partner at the Boston investment firm Spark Capital, noted that he thinks there is "a little too much capital" for budding game development companies, and that investors should move away from a "hits-driven" business. In other words, investing in aspiring MMO development teams, like Cheyenne Mountain Entertainment, is a difficult commitment to make, as most triple-A MMORPGs require millions in investment capital, and if the game flops, there is, literally, nothing that can be salvaged from the investment.
What many investors are doing, including Finkelstein's Spark Capital, is switching to low-cost casual games or gaming technology that can be licensed to multiple companies, thereby reducing the risk of an "all or nothing" investment. Unfortunately, while this means that Facebook application games and social networking programs are on the rise for 2010, it also means that "premium" MMORPG titles, like Final Fantasy XI and World of Warcraft, will soon be limited to the biggest and most experienced of companies, like Square-Enix, NCsoft and Blizzard Entertainment.
Tags: Editorial