Anita Elberse’s book Blockbuster: Hit-Making, Risk-Taking, and the Big Business of Entertainment takes a look at the business strategies found in the entertainment sector. When it comes to movies, music and video games, the tendency is for companies to gamble on a few high-profile “blockbuster” projects to make a profit.
While expensive to fund, blockbuster projects typically have very high production value. They are also often designed to appeal to the broadest audience possible in the hopes of attracting the largest number of consumers.
Media industries have found success by focusing their resources on creating blockbusters. Elberse’s thesis holds that this business model is a safer business strategy than diversifying with a number of smaller projects. Though blockbusters present a greater risk of loss to a company, she argues that they also pose the greatest chance for profit. With a decade’s worth of statistics and insider interviews, Elberse makes a very good case for the success of the blockbuster model in entertainment.
Back in March, GameInformer ran an article where they interviewed Elberse. The biggest question the article raised was whether or not the blockbuster model applies to the newer video game business in the same way it does for the other entertainment industries.
The blockbuster model has always worked for the video game industry in the past, but the sheer scale of AAA titles is reaching an unsustainable level. The most obvious example is Dead Space 3.
While the production costs on Dead Space 1 and 2 were fairly average, the third installment in the horror franchise received the blockbuster treatment. When the game was finished, EA announced that Dead Space 3 would have to sell five million copies to be considered a viable IP for future sequels.
Considering the sales for Dead Space 1 and 2 didn’t come close to cracking 5 million copies combined, this sales goal was incredibly unrealistic. In the end, Dead Space 3 sold less than a million copies, representing a huge loss for EA.
Dead Space 3 also introduced a number of new mechanics and a shift in tone to create greater mass appeal. This goes along with the blockbuster model, but it just doesn’t make much sense when you consider the roots of the franchise.
The previous games in the series were niche titles that appealed to a small but dedicated group of survival/psychological horror fans. They managed to turn a profit because they keep costs low and still produced quality titles that had a defined market. Instead of learning from the past, they made the disastrous shift to big budget blockbuster that tries and fails to appeal to everyone.
The successes have kept the industry going, but more and more AAA titles have been failing financially. The less-than-stellar sales of Call of Duty: Ghosts and Battlefield 4 show that gamers are losing interest in these blockbuster franchises. Game journalists have written about the instability of the blockbuster mentality and even some industry insiders have said that AAA games are rapidly becoming obsolete.
When looking at the success of blockbusters in movies and music as a guide, you also need to look at a key difference between those industries and the video game market. Between the $60 price tag on AAA titles and the consoles needed to play them, there is a much higher costs for consumers with gaming. Trying to appeal to everyone has less chance of paying off when you consider that most gamers only make a few purchases a year.
It’s clear that investing big and striving for the widest demographic works for more mainstream entertainment, but gaming is a more specialized medium, which is something companies should embrace.
With the rising cost of creating next-gen games, it seems to me like the safest path for the games industry would be to back away from the blockbusters. Devleopers and publishers should be spreading their money out with a number of small-scale, quality titles rather than placing all their faith in one or two blockbusters that need to sell millions to make a profit. It could protect against the possibility of big loss from the blockbusters and it would give the smaller projects better funding to create innovative titles that appeal to specific audiences.
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