Thursday, February 19, 2009

What's Killing the Video-Game Business?

I found this interesting article on Slate By N. Evan Van Zelfden.

Like pretty much every industry these days, video-game publishing is in some financial trouble. Electronic Arts, the world's largest game publisher, best known for Madden and the Sims, lost $641 million in 2008's fourth quarter. Activision-Blizzard, owners of the cash cows World of Warcraft and Call of Duty, reported losses of $72 million in the fourth quarter of 2008. (They lost $194 million the quarter before that.) THQ, the third-largest publisher in the United States, and known for lucrative licenses ranging from the Ultimate Fighting Championship to Pixar, had $192 million in losses over the holidays and is laying off 24 percent of its work force.

In my opinion, they need to revise their business model. Their biggest problem is that their costs exceeds their revenue. They should employ smaller teams on products that sell and cut-out the middleman. There's no need for draconian DRM schemes that hurt sales.


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