Former PlayStation Boss: Exclusivity is an Achilles' Heel When Games Cost Over $200M - News
by William D'Angelo , posted on 02 April 2024 / 8,106 Views
The former PlayStation boss Shawn Layden in an interview with GamesBeat discussed the state of the gaming industry and the growing cost to developer AAA games.
"When your costs for a game exceed $200 million, exclusivity is your Achilles’ heel," said Layden. "It reduces your addressable market. Particularly when you’re in the world of live service gaming or free-to-play. Another platform is just another way of opening the funnel, getting more people in.
"In a free-to-play world, as we know, 95% percent of those people will never spend a nickel. The business is all about conversion. You have to improve your odds by cracking the funnel open. Helldivers 2 has shown that for PlayStation, coming out on PC at the same time. Again, you get that funnel wider. You get more people in.
"For single-player games it’s not the same exigency. But if you’re spending $250 million, you want to be able to sell it to as many people as possible, even if it’s just 10% more. The global installed base for consoles–if you go back to the PS1 and everything else stacked up there, wherever in time you look at it, the cumulative consoles out there never gets over 250 million. It just doesn’t.
"The dollars have gone up over time. But I look at that and see that we’re just taking more money from the same people. That happened during the pandemic, which made a lot of companies overinvest. Look at our numbers going up! We have to chase that rocket!
"We’re not doing enough to get heretofore non-console people into console gaming. We’re not going to attract them by doing more of the shit we’re doing now. If 95% of the world doesn’t want to play Call of Duty, Fortnite, and Grand Theft Auto, is the industry just going to make more Call of Duty, Fortnite and Grand Theft Auto? That’s not going to get you anybody else."
Layden stated the price to purchase to new games hasn't increased much since the late 90s, while the cost to develop games has grown multiple times over.
"Crash Bandicoot, back in 1998, cost $49.99. But it probably cost less than $7 million to make," he said. "It sells 10-15 million units? Well hey. In today’s world, God of War costs more than $100 million to make, and yet you can only charge $59.99. What happens to your break-even point? That’s why, back in the late ‘90s, there were a lot more Ferraris in the parking lot at game developers. The profit sharing explodes. Price elasticity has been a huge problem in gaming."
"Profit sharing ain’t what it used to be," he added.
He said there was more variety in gaming during the PlayStation era than you see today.
"Granted, I’m an old man," said Layden. "We have our own nostalgia. But I look back at the PS2 era, and there was so much variety. You had God of War and Assassin’s Creed. But you also had Loco Roco and SingStar and Dance Dance Revolution.
"You had this entire spectrum of entertainment opportunities. At $7-12 million a throw, why not make a bet and see what happens? Katamari Damacy, for Christ’s sake, you couldn’t get that built today because you can’t even explain what it is. But now, when every bet is triple-digit millions, risk tolerance is super low. You end up with copycats and sequels and not much more."
Layden wants games that are 15 to 20 hours in length to complete, which will help lower costs. This compares to the biggest games taking upwards of 100 hours to complete, if not longer.
"We have to scale back the ambition. Not the creative ambition, not the entertainment ambition. Again, I want 15-20 hour games. As the average age of the gamer has increased over time, from early 20s to early 30s, we’ve seen the swap between people who are time rich and money poor to people who are time poor and money rich. That person can’t fit an 80-hour game into their lifestyle. I still have Red Dead Redemption 2 in shrink wrap on my shelf. It’s way too much."
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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I wish Shawn never left. Jim was bad for PS.
He seems to have a much better grasp of the general landscape of the industry than a lot of the executives who are still in a major decision making position. The fact that he doesn’t have to worry about quarterly earnings anymore means he can take the long view of things
So true miss the old bosses
If everyone was driving Ferraris, maybe they were making too much money during the PS1 days.
Shawn Layden speaking truth. "I look back at the PS2 era, and there was so much variety. " ""You had this entire spectrum of entertainment opportunities. At $7-12 million a throw, why not make a bet and see what happens? Katamari Damacy, for Christ’s sake, you couldn’t get that built today because you can’t even explain what it is. "
" now, when every bet is triple-digit millions, risk tolerance is super low. You end up with copycats and sequels and not much more."
The PS2 had the most variety of any console. I had Xbox and Gamecube, but I genuinely think PS2 was by far the best console ever made because so many games went unnoticed or received moderate scores, but in reality were better than anything but the top 5-10 games on the other consoles. Also, PS2 was the weakest console, but a lot of multiplats played better on PS2 with better framerates because they were designed for it and ported to other consoles. Katamari Damacy is a weird example because it's not even in my collection of over 500 PS2 games. However, I'm pretty sure I played it on the Namco Transmission Demo Disc 3.2 which was included in the PS2 exclusive Soul Calibur 3.
Okay. But Baldurs Gate 3... Only a moderate sized budget, not a short game either.
It sold like hot cakes.
I do agree with shorter games. I don't know why more companies aren't doing it. The Resident Evil games aren't very long at all and they get great reviews.
Yea I noticed this as well. When I originally played them I felt like they were these long epic journeys. Then when I replayed ME1 and beat it in 20 hours doing everything (hardest difficulty) I realized oh it's not that long at all. I honestly think 20 hours is plenty for a game. Sure I'll play more don't get me wrong but I'm satisfied with 20 hours.
While I dislike bloat and grinding, a longer game of high quality is always objectively better than a shorter game of high quality. I cannot get into One Piece because I'm well over 1,000 episodes behind, but that's my problem not One Piece. I am far less nostalgic for shorter games (like the Metroid franchise) because they feel cheaper than a longer game like Pokemon Blue/Gold, ect.
RE4 is considered the best game in the RE franchise and is longer than any other game in the franchise. Not very long because it's still only 16 hours long, but the first 3 Resident Evil games were only about 7-8 hours each. However, it's about 60 hours to 100% which is 20 hours more than the next game in the franchise and about 40 hours longer than the first three games.
I would like my games to be shorter as well. There were quite a few games over the course of last year and the start of this year that I would love to have played, but.......just didn't have the time for them because I was busy playing another long game. Baldur's Gate 3, a modestly budgeted title at that, played a big part of that. But, not every major release needs to be that long.
This doesn't even include other timesinks of the industry like COD, Fortnite, Roblox, Apex Legends, etc. There's only so much time , only so much money a gamer can spend, and only so many gamers you can reach.
Also as of note, wasn't Layden head of SIE when most of the projects that ended up costing $200 million+ were greenlit? lol
"Also as of note, wasn't Layden head of SIE when most of the projects that ended up costing $200 million+ were greenlit? lol" Yup, but now he thinks he is Jesus or something LOL and everyone else doesn't want to see reality when he is still part of the current state of the industry.
There is a lot to take on here really.
The fact he said Crash cost $50 in 1998, inflation along says games now should cost $80-90. Obviously they don't but games are still treated as more expensive than ever (obviously many forgot the days of SNES cartridges). Not sure what to blame there, putting games costs up would allow for exclusives to remain relevant. Customers seem unwilling to make the sacrifice for poorer quality for less cash and want the best of the best for less cash but at some point we need to admit, we need to pay more for games.
Also, back when crash came out, it was made by all of what? 20 people? Even the smallest studios now have 60 to 100 people. Helldiver's 2 studio, have 100 or so but are obviously making it work. I'd also note, some games now sell more than games 20-30 years ago, many of them are these 200million budgt games. FF7 originally sold "over 10 million" units on PS1, Gran Turismo sold like 10 mil. Spiderman before going to PC sold 20 million. Spidermn 2 has already sold 10million. Even if they get $40 from each sale after expenses or taxes that's 800million made from a game with a budget of rumoured 300mil? That's 500mil profits. I do agree budgets need to come down but expectations need to as well.
Will also note, Spiderman 2 was apparently 15-20 hours game time and people complained that was too short. :P
Balancing the higher relative costs of games previously for consumers was a huge rental market. For every game I purchased in the 90's & 00's I would have rented several and it was the same for most of my friends. That ability to play a game for a day or a week for $2~$14, even if it was the latest AAA blockbuster just released is something missing from the current gaming scene (although Gamepass comes close to simulating the experience).
Microsoft was panned for the idea of digital game rentals during the Xbox One era but some of us would have appreciated it. I'm interested in a day or two playing the latest Tekken for instance, but not $70 interested. So instead of $5 to $10 coming from me for a couple of days rental, the take is $0.
Was price of games considered in the rental market back in the day? Publishers use to have a big issue with used games, wrongfully so in a sense but renting was similar. A Blockbuster would buy a few copies of a game and rent them out, so serveral hundred people could rent a game but only a few copies sold. Yet isn't what you mention essentially what demos used to be for, big publishers outside of Japan just don't seem to do them anymore when back in the day when games cost $50, magazines used to have them, so you could play a demo and be comfortable with your purchase. Now, do people take the same risks?
"That ability to play a game for a day or a week for $2~$14, even if it was the latest AAA blockbuster just released is something missing from the current gaming scene (although Gamepass comes close to simulating the experience)."
So in my opinion, GP is honestly the same as this renting, a sub model is renting forever as long as you keep subbing. It used to be that we purchase maybe 3 or 4 games a year, even in the 90s, that's $200 on games, bit more depending on things, yet now GP offers those and more for pretty much the same cost as 25 years ago. That isn't sustainable.
Presumably Microsoft think it may be able to be sustainable. It really depends on the split between people paying more than they otherwise would have, vs less. There will be some for whom a $200 yearly spend, sustained across 5 years, is more than they would have spent on individual purchases. So if there were a lot of those people, and I am probably one of them, and if they outnumber people whose yearly sub to gamepass, and supplementary purchases they make, are less than what they otherwise spent, you get toward the thought behind it I think.
Without Gamepass I probably buy 2 xbox games per year on average. With gamepass perhaps one, which means revenue from me would go up -> but the trouble is after having Gamepass for 3 years I let it lapse, as the releases haven't interested me, and the kids just play Roblox and FIFA, which are either free to play or we own it.
What will really kill them is people doing what I intend to do.. subbing for a month when there are 3 or 4 games I want to play, and then unsubbing for a year. But I would very likely have kept it going if they didn't raise the price.. so all of this goes into it. Raise the price -> more money, but less users, so lose some money.. does it work out? It depends..
I have a son who is turning 11 this month, and I'm a couple decades older than that.. all of his generation that I see predominantly play free to play games, and the idea of a solo hardcore game experience just doesn't seem to interest them. They prefer sandbox online experiences (which ultimately do suit free to play over the old boxed high cost model). You can understand why the industry is so up in the air.
"Katamari Damacy, for Christ’s sake, you couldn’t get that built today because you can’t even explain what it is. But now, when every bet is triple-digit millions, risk tolerance is super low. You end up with copycats and sequels and not much more."
I get this, and I hear this. I think that it is certainly true for big players in the gaming industry. But I find that this type of risk and innovation still exists, you just have to look towards indie games to get it. Games like Lethal Company or Battle Bit have been some of the most notable launches for me over the past few years, because they are games that take risks, but are made by few people on relatively small budgets. It's possible to make games that are innovative, fun, and make a lot of money these days. I don't know why every game that comes to market has to be a $200+ Million dollar behemoth.
It's funny that he wants to talk like if he is the "good guy" when he was part of the decision to close Japan Studios, but hey everyone wants to be "liked" these days I guess.
I'm all in for smaller games, I don't really care about paying 70 for a game but smaller games means MORE games and I have a PS to play PS games so of course the more the better. Now, he should know as former Sony suit guy that console sales have been the biggest Sony income since the ps4 era, the ps4 success saved Sony from the possibility or going bankrupt lol, in a world where pc is already big if you take exclusivity you take console sales. It doesn't matter how much software can sell if you lose the whole company because your main source of income is gone. That's why with a stable economy you will never see Nintendo games on pc .. legally.
Maybe I'm just not bright enough to see the forest through the trees but, why not just make smaller games, then? Some of the best, most original, most compelling experiences I've had over the last decade have come from indie games. Even Minecraft was indie. So why not just scale back? Focus on creativity and innovation again instead of whatever the inverse is. Seems logical to me.
The big games publishers absolutely do need to re-normalize "short" games, and "linear" needs to stop being such a dirty word. Not every game needs to be a giant open world filled with 60+ hours of activities (usu. repetitive busy work), or be filled with long cutscenes filled with advanced mo-cap with hyper-realistic graphics. There's a time and place for those kinds of games, but if your game is selling 10 million copies and you're still struggling just to break even, then clearly something isn't working.
We need more mid-budget games that fill the gap between low-budget indie games and big, grandiose AAA titles. There's plenty of examples of smaller-scale games that have done very well for themselves financially while still managing to look impressive visually. The games industry needs to start leaning harder into those smaller-scale games and treat the big-budget AAA fare as a once-in-a-while treat, because things are quickly becoming unsustainable. Nothing can grow forever, not even game budgets, and sooner or later something has to give.
He makes several good points, especially the one about variety. I feel like Playstation are the ones that cut their variety of games the most in the recent years. It's like Indie are the only ones bringing something to their consoles that they don't offer. While they used to push many genres. They kind of only focus on cinematic single player rn and even if one if beating Gods and one is more cartoony like R&C, the difference is really not that far compared to what it used to be.
He might be on to something.
There's no need for games to cost that much. With the price of one God of War or a Spiderman, they could make four new IP single player games that could then spawn into popular series of their own, while also helping filling the release calendar.
Then don't spend over $200M, you silly person.
Exclusivity is often a negative, and in this regard he's right.
While it's not the same kind of exclusivity (it's part of a subscription and you can watch on different devices), some media companies are having issues with exclusive film and tv. It's really risky to spend money on a project that will be at least time exclusive to a streaming service.
I'm all for just about all of Sony's title to go on PC. Some might even go on other systems one day.
Nintendo will be the big holdout. The only games they've released on PC were edutainment titles back in the 90s. I do think it would be great if they put Xenoblade Chronicles on PC.
So.. Nintendo and Sony have been doing this business wrong the whole time?
He is specifically not saying that and if you read between the lines of what he is saying he believes wholeheartedly the Nintendo business model (inexpensive hardware, tightly controlled development budgets, focus on mechanical design and art direction over graphical presentation and power) is the more sustainable and desirable business model.
PlayStation is currently on track to have first party games that cost $500 million to make (if you include marketing costs they have probably already passed this) and the PS6 is probably going to cost $500-$600 to manufacture. If you are going to incur operating costs that large, and still expect to have the profit margins Nintendo enjoys, then sacrifices have to be made, and he correctly points out that console exclusivity doesn’t make sense with those types of operating budgets
I think the most expensive marketing cost for a PS studios game was Niche-Man 2 with its $45m marketing budget.
I don’t think they have a $500m budget game tho.
No, they haven't. But with Xbox going belly up everyone and your granny will tell you that you need to make your exclusives available for everyone when they don't realize the money isn't there, it's in the 30% they make in 3rd party software. Larian wants to sell as many copies of BG3 as possible and they will make the game available in every platform. Sony wants you to buy BG3 on Playstation because they will reap that juicy 30%. Do you know how you get customers to do that? Having exclusives that make them want to buy in your platform.
It's like the IQ of the industry and fandom has dropped to single digits overnight.
The days of first party exclusives are numbered. It can't sustain itself especially with rise in dev cost
Timed exclusivity for one year makes the most sense to me. That way you get the best of both worlds - a platform boost AND expanded sales market.
Do that for most titles and just keep a few that are very brand associated as genuine console exclusives (Halo, Gears, Forza, Fable vs Uncharted, Horizon, God of War etc).
That would be nice but it won't happen. Itd heading to a future where its based on hardware and online experience as to how people choose what to buy
He's got bad time management if he still hasn't finished rdr2 lol
Not gonna pay $60 to a 15 hours game experience. I always wait for discounts. Release day price just for games I know will bring me at least 50/60 hours of gameplay and with replay value. I work too hard to pay for shallow games because of corportations' bad decisions. Execs should have thought about costs before getting into that technology obsession. It's never a good idea to punish consumers for your bad decisions.
A games length doesn't determine if a game is shallow or not. You can have a 60 hour game with filler to pad out the experience while a 15 hour game is engaging from the beginning to the end without all the fluff. Some of the best video games out there can be beaten in less than 20 hours.
Also you can have games that engage you for 100 hrs and pretentious "games" that last 2 hrs but never try to reach the player. Just to finish the idea.
There are amazing games that you can sink a lot of time in. Unfortunately most modern games don't respect an individuals time and use things like fomo, unnecessarily large empty spaces, and other fluff to get player engagement. The older I get the more I appreciate the shorter games.
Length is no measurement of how deep or shallow a game is. A Short Hike is a very deep game, and it takes you like an hour or two. I would never want to miss that experience, while I forget about the copy&paste crap in AssCreed or so.
