Do most games really fail financially?

Chris Deering, formerly of Sony and currently involved with Codemasters, has spoken out about a number of important issues facing the games industry.

Delivering a speech at the Edinburgh Interactive Festival yesterday, Deering stated that only 30 per cent of games currently manage to break even and recover their development costs.

This is a relatively damning indictment of the way most companies and publishers market their games to the public.

Consider that Deering also said the audience for gaming would push 2.5 billion by 2011 and this becomes even more worrying.

Perhaps it is because only a very select few games are genuinely pushed, in the way that music labels tend to have 'keynote' artists that receive the vast bulk of the marketing budget.

The rest of the games are released more in hope than expectation and, therefore, will struggle to grab the attention of the general public.

Deering believes that the industry "must explore new models to survive". Things like Steam and "hybrid online/offline advertising revenue models" are pushing the boundaries of how companies can make money from games.

Think about how a relatively small development company, like Valve, can make so much cash from its pioneering Steam platform, providing smaller companies with the chance of getting their games 'out there'.

Other companies are starting to embrace this concept, with digital distribution coming more into the thinking of Sony, Microsoft et al.

Deering also thinks companies need to embrace the extraordinary growth in internet use and mobile social networks to bring in extra revenue.

In the end, the traditional "make game, ship game to retail, sell game" model can't exclusively be relied on for much longer.

David Brown