How Big is Big Enough?

Ironically, the newly competitive landscape of the console market doesn't help. Developing for both the Xbox 360 and the PlayStation 3 turns out to be tougher than most insiders had originally predicted - and if you want a Wii version of your title (it's the best-selling home console on the market, after all), you'll need to develop a totally new game, in effect. The outcome is that developing a multi-platform hit is more expensive, more time-consuming, and crucially, makes more demands on staff than most firms had planned for.

There's a second problem, however, which afflicts many smaller-scale publishers - not necessarily those on the shortlist a few paragraphs ago, I hasten to add, although each of those has suffered from this problem at some point in the past few years.

This is, simply put, the problem of mismanagement. Smaller publishers are by no means cottage-industry-sized firms - they are large enterprises by anyone's standards - but for some reason, many of them have retained vestiges of the cottage-industry management which they started out with.

The result? Overspending, poor work practices, shoddy products, weak sales and utterly lacklustre treatment of valuable IP. There is a litany of failure spread across the past decade of the industry's history which can be laid right at the door of rubbish managers and executives who would defend their positions by saying that they've been "in the business for years", which gives no indication, of course, as to whether they've had their eyes open, their brains engaged or their creativity in gear during those years.

This isn't to say that "veteran" is a dirty word - just that it's not necessarily a meaningful or useful one. The industry's best "veteran" executives don't hold on to their jobs and salaries because they've been doing it for fifteen years - they do so because last year's results were brilliant, with the previous fourteen being merely a footnote. Altogether too many of the industry's decision-makers, however, can't claim that, falling back instead on past glories (and in some cases, largely stemming from an unfortunate period when videogames became a refuge for the music industry's least wanted, those past glories weren't even in this industry and may not actually have occurred at all).

This leaves the industry in an unusual position as the rest of the world girds itself for recession. Even though the number of publishers with billion-dollar revenues grows with each passing year, there are a handful of well-known names in the publishing market whose revenues are small, whose profits are negligible, whose management is quite possibly weak. Yet these firms frequently own absolute treasure troves of valuable IP, not to mention strong, well-respected brands and even talented studios.

What will happen? They'll be bought. Be it an internal industry merger or a toe in the water from a major media firm, each of these smaller firms will disappear in the coming years (or morph into a new type of business outside of traditional game publishing). They're just not big enough, and in many cases not clever enough, to compete in the market as it stands right now. New forms of media offer new opportunities for small firms, certainly - but in the full-price game market, it's hard to see how any firm that doesn't have its sights set on USD 1 billion revenues is going to survive the coming years.