The AAA Video Game Industry is Unsustainable As Is

In 2020 the world was struck with an era defining event, the Covid-19 pandemic was a disaster for many lives and many industries. Irrevocably changing the daily habits of everyday life and multiple industries at the same time. There was much turmoil and adjusting needed, some industries are still coming to terms with the changes to this day. It was awful, except for one notable industry.

With traditional sports shut down, TV and Film productions closed or costing up to 10% more what they usually cost to continue shooting and many more. There was a massive vacuum in the entertainment industry and this is where the video game industry capitalised.

With so many people stuck in their homes quarantining and with not much brand new entertainment to consume, video games and the entire ecosystem surrounding video games boomed. The Industry either through clairvoyance, forward thinking or blind luck had prepared itself for a remote digital distribution system that suited the purchase and consumption of their products. You didn’t have to leave the house to buy games, you could just purchase them through your console, while on your couch in the various store fronts made available. The advancements in broadband internet (in some areas) meant that downloading games was quick, easy and convenient. Twitch, a streaming service dedicated mostly to various gamers streaming themselves playing video games had become an accessible impromptu marketing tool for various games and studios both big and small.

With all of these ingredients a whole subset of brand new gamers were one or two clicks away from engaging in this hobby in one form or another. Digital video game sales in the United States alone hit a record high 27% increase in profits according to Matt Piscatella in the NPD reports. This bump was not only felt in digital sales but in Twitch viewership as well with CEO of StreamElements, Doron Nir quoted as saying “Twitch, YouTube, and Facebook all experienced major jumps in viewership traffic, which includes Twitch hitting 3 back-to-back milestones from October to December to end with a record high of 1.7B hours watched in that final month.”

 Surprise Indie Games became household names, games such as Among Us and Fall Guys all saw their games have hundreds of thousands of views with one stream involving New York politician Rep. Alexandria Ocasio-Cortez in particular garnering immense mainstream appeal such as appearing on the BBC.

 In October it was announced that Microsoft was acquiring Zenimax for a mouth watering $7.5 Billion. Zenimax , parent company of Bethesda Softworks known for publishing and developing games such as Skyrim, DisHonored and Fallout 3 was now under the umbrella of Microsoft Studios and this accelerated the consolidation of the AAA video game industry that had started to become a trend at this point.

It was clear that the line was going up and to the right and in a very steep fashion at that. Business and capitalism being what it is requires that growth should always be maintained for shareholders to be happy and the only way to sustain this growth was to either keep people in their homes and keep consuming games at this pace or make bigger and more expansive games. Bigger games cost more money, more time and more human resources to make. The gap between big tentpole AAA releases has eponentially inreased within the last generations with pivotal industry defining IP like Grand Theft Auto basically skipping two generations of consoles due to development time. Costs are up too, analyst Mathew Ball explains “The original Spider-Man game for the PlayStation, released in 2018, cost $100 million to build. A 2020 sequel cost $156 million. The newest version of the game, released last year, cost $315 million, and the next one coming down the line has a reported budget of $385 million.” These costs are the thrust upon the consumers to recoup which leads to multiple well reviewed and well received games attaining the “unsuccessful” label by their publishers due to failing to meet market targets.

Gameindsutry.biz reported that 95% of Publishers have resorted to attempting to develop their own brand of Live Service game in order to have a daily attached rate of players whom they can milk revenue from via season passes, skins or loot boxes. The conundrum here being that there is a finite amount of time and consumers for these kinds of games. Not every Live Service game can have the success of Fortnite or Dota 2. Some heavyweight games such as Blizzard’s Overwatch 2 have waned in popularity. Previous eSport mainstays such as Heroes of the Storm have even seen their development get sunsetted. If big games, backed by mega publishers that have a myriad of recognisable IP are seeing their live service games fail then there isn’t much hope for every brand new live service game scheduled to be released soon, which cost years and hundreds of millions to develop.

Microsoft recently shut down award winning studios, Arkane Austin and Tango Gameworks. The former of which released Xbox Studios only Game of the Year nominated games of the past console generation, Hi-Fi Rush. A decision which has baffled everyone in the industry and the fanbase. Matt Booty’s justification being “prioritizing high-impact titles and further investing in Bethesda’s portfolio of blockbuster games and beloved worlds.”

A confusing statement to say the least, one which implies the damning reality that award winning double A (AA) titles are not good enough or successful to exist. The statement also implies that any titles currently under the Xbox umbrella that are not ‘High impact blockbuster titles’ which is fancier way of saying AAAA are not meant to be produced and published. This is deeply concerning for the future of games and the kinds of games that will be made or greenlit. We are looking at a potential future in which only AAAA games and small independently funded games are the only options gamers have. An ironic turn of events when the past few of years has seen AA games such as Fall Guys, Helldivers 2, It Takes Two, Palworld, Disco Elysium, Life is Strange and many others have massive success both monetarily and critically.

 What does the future hold for the industry when game studios and game developers who should be seeing the fruits of their labour be rewarded are then slapped in the face with unemployment and layoffs just so that corporations can appease investors and shareholders.

The AAA video game industry is unsustainable if we allow it to operate as it currently is.