The Innovation Problem

Gamespot has a terrific two-part piece on the economics of video game innovation (part 1 is here, part 2 here). This is the needed next piece of the puzzle after stories like my article on game prices. I’ll post more on this soon, but a couple striking things:

Part two has this telling comment from an EA executive:

As general manager of Electronic Arts’ Los Angeles studio, Neil Young is no doubt more partial to the latter view. As he explains it, there are two types of innovation: franchise innovation (taking a new concept from scratch, as with Will Wright’s upcoming Spore) and feature innovation (tinkering with an existing franchise, like putting the quarterback vision feature into Madden NFL 06). Looking forward, the emphasis at EA is primarily on feature innovation.

“We want to make sure that all of the franchise businesses have the right level of innovation inside them and I think that we have been guilty of not doing that historically in certain areas of the business,” Young admits, referencing Medal of Honor as an EA series in need of a change. “So a focus for us right now is, how do we get new, innovative features that take the existing franchises and move them forward in interesting ways? And then I think what you’ll see is a couple of–you know a couple might be the wrong term–but some very focused bets at doing really innovative and different things.”

Not even “a couple” innovative franchise attempts! Basically he seems to be saying that EA will gladly take a chance on whatever genius game Will Wright can come up with, but otherwise they’ll just stick to churning out useless sports “sequels.”And Katamari Damacy has sold 300,000 copies — a terrific showing for a bizarre Japanese game with minimal graphics and one gameplay element. The game can’t have cost too much to make, and that’s the model the industry needs: modest-budget games that can sell a few hundred thousand copies. Psychonauts, which should have been a hit, has sold 86,000 copies total between Xbox, PS2 and PC. If you care at all about games, just take a chance and pick it up.
Never-ending franchises
There’s nothing inherently wrong with video game franchises, just as there’s nothing wrong with movie franchises. The Back to the Future, Indiana Jones and original Star Wars trilogies are some of the most fun movies of all time. The big difference between movie and game franchises is that, with a few exceptions, film franchises are usually finite. A sequel or two, maybe stretch it to four movies, and then the studios move on (perpetual movie franchises are either sporadic enough that they’re more brands than franchises, like the James Bond movies, or by #4 or #5 they’re just low-budget/cult/camp efforts that can easily make a few bucks, a la Jason X). Game franchises, on the other hand, not only can go on seemingly forever, but they come out usually every year and are nearly identical to what came before.

There have been 16 John Madden console football games in the last 15 years. There have been seven Tony Hawk skateboarding games since 1999, eight Resident Evil titles since 1997 (some of those were platform-exclusive). Again, nothing inherently wrong with this; Resident Evil 4 is one of the best games of this year. The problem is that you rarely get a Resident Evil 4 in a perpetual franchise. The gaming press rarely makes a big deal out of the latest game in a franchise being the same as what came before, which gives publishers no reason to try for something different. Indeed, Electronic Arts’ executive Neil Young told Gamespot that the company “cross-referenced Metacritic review scores for the top 30 games of the last three years to spot trends, and they found that the best-rated games all had ‘1-3 meaningful innovative features that strike at the heart of gameplay.’ ”

I just looked back at Gamespot’s Madden reviews, and here they are for the past 10 versions of the game: 8.5, 9.0, 9.2, 9.0, 9.2, 9.1, 9.3, 8.3, 8.8, 7.5 (the first Madden game for the original PlayStation). Each of these might be a great game on its own, but there has to be some consideration that each is also basically the exact same game as the year before. Likewise with Gamespot’s Tony Hawk ratings, which range from 8.3 to 10 until the recent Tony Hawk’s American Wasteland came in at 7.5. If everyone wrote reviews like this, harping on the fact that for sports games you’re paying $50 for what’s basically a roster update, maybe game companies wouldn’t cite those reviews to justify churning out rehashed franchise titles.

The other big problem with perpetual franchises is that by discouraging innovation throughout a company, they make it less likely for new finite franchises to develop. After all, Rockstar Games and EA had to take a chance on Grand Theft Auto III and The Sims before the games could become the decade’s two biggest franchises. (Granted, they weren’t fully original content: GTA had its top-view predecessors and The Sims stemmed from Will Wright’s SimCity games. But they were different enough to be considered new games and gambles for the publishers.) And successful finite franchises are the best of both worlds: they provide the big PR and financial benefits of a franchise, but by forcing a company to keep developing new franchises they’re a form of diversification. They insulate companies from the potentially big shocks when people get tired of shelling out 50 bucks for the same game they’ve already bought 10 times.

So the choice for game companies isn’t innovate and risk Psychonauts-like failure or focus solely on games that will come out every year and provide reliable numbers on your earnings sheet. Game companies can succeed by innovating just enough to make games like God of War, Shadow of the Colossus, Knights of the Old Republic, Jade Empire, the recent Prince of Persia trilogy — games that are so good or interesting enough that people will want to play them a couple more times and they can become successful finite franchises. (Of course this assumes God of War, Shadow and Jade Empire will get sequels, but at least for the first two I don’t think there’s any doubt.)

There’s another option, but it’s almost unique to Nintendo. Game companies can succeed by innovating enough and finding the right creative people to come up with the holy grail: the perpetual brand franchise. These are the Zeldas, Marios and Metroids: games, like James Bond movies, that come out sporadically but are guaranteed successes. The care and quality is assumed by gamers; changes aren’t punished and creativity is rewarded. These franchises are the key to Nintendo’s success: there have only been six Zelda and four Metroid games for consoles, but the numerous handheld spinoffs and cachet have been invaluable.

— December 26, 2006

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