In the beginning developers are inspired to create a intriguing game, however; somewhere down the line they lose focus of their aspirations. The loss of their passion may be due to various reasons such as, lack of funding, bad management, hiccups in the development process, or even an economic downturn. In other words, they may not have planned for the unexpected.
But for most businesses the unexpected is to be expected, especially for small businesses. But with the way our economy is structured and regulated, small businesses (including small gaming studios) have a hard time remaining in the black or should I say, generating profits. When things begin to faulter, companies look for an outside source of funding. Normally their funding will not come from banks, but from a larger gaming company or a publisher such as Electronic Arts (EA).
In a normal situation where banks are not being funded by the government, a small business is actually more likely to receive a loan from a bank. But when a small business has to compete with tens of thousands of potential college students who are applying for college loans, why would a bank lend money to a small business that’s much more likely to fail when they can lend it to student who will be force at gun point (figuratively speaking) to make payments even if he or she is unable to?
But back to my previous point; let’s talk about those big companies such as EA. Electronic Arts is a publishing slash video game company. But more importantly it’s a public company that is traded publicly on the stock market. Now what did I say in the beginning about investors? I said that today’s investors are looking for quick-cheap-easy money.
They’re not interested in the company’s products nor are they interested in the company’s long-term. They’re only interested in rising stock prices and perhaps paid dividends. Yes, the video game industry is no exception to this. Hell, most investors are probably not even gamers (don’t quote me on that). So when a developer think of those great ideas but fails to deliver them, it’s probably because investors were tired of dumping money into the project and wanted to see results.
The flow of cheap money has not only conditioned investors to expect big returns in little time, but it also has cause various assets (stocks, bonds, homes, and etc) prices to rise rapidly. And because these assets are rapidly rising in price (even when there’s bad economic news) investors expect their money to grow all the same, including video game companies, otherwise; if the price of stocks in the video game industry remain flat or negative you can be sure that investors will cut their funding and move onto another industry.
Today, the focus is no longer on the development of good quality games that will enhance the long-term growth of the company but rather quick and easy money that will mot likely come at the expense of the company. Unfortunately my friends, this is why the gaming industry has gone downhill at least for the big companies. As for the smaller companies there remains an uphill battle for them, however; the good news is, thanks to crowd funding such as the kickstarter program, small gaming studios are able to make some positive progress. Lucky for us!