This isn't rocket science, of course. Given exponentially increasing development cost and a fixed retail price, a game mathematically must reach more consumers to be profitable. The math is simple but the implications are not.
What does it mean to say that in 1999 a videogame only needed to reach 80,000 customers to break even? It means that videogames once had economics similar to book publishing or music publishing. A low cost of production relative to retail price point creates a low breakeven point that incentivizes publishers to invest in top-quality genres that cater to specific niches. They can capture every consumer's taste, no matter how obscure, with something great. This is why Barnes & Noble has a separate section for "World War II History books" as distinct from "American Civil War history books" and it's why record stores carry bands that are pretty underground.
And it's why a publisher like Talonsoft used to be able to profitably publish premium games with cutting-edge graphics aimed at a niche audience. When Age of Sail was published in 1996, it was a premium title on retail storefronts within the mainstream genre of strategy simulations. It was competing against two other games at retail, Wooden Ships and Iron Men and Admiral Sea Battles, within the 19th century naval simulation genre alone!
Of course, this is not to say that the best-selling titles of the past were developed for niche segments. The best-selling games of the 1990s were all broadly accessible games such as Pokémon, Super Mario World, and Sonic the Hedgehog. Best-selling product is always accessible to large audiences: That's what makes it best-selling. That doesn't change for any medium or genre, whether that's fantasy books like Lord of the Rings, historical movies like Gone with the Wind, or whatever it is that Mario Kart 64 is.
Best-sellers notwithstanding, videogames once had economics similar to book publishing or music publishing, and now they don't. Now they have economics similar to movie publishing, where you have "blockbusters" aimed at mass audiences, and "made for TV" and "B" movies aimed at niches. The result is that the number of genres that can be supported with high-end product collapses. If you want to make specific niches, you can't develop high-end games. If you want to make high-end games, you have to develop for the widest possible audience.
This is harmful to our industry, of course, because the ability to target niches goes hand in hand with the ability to take creative risks, while the demand for wide audiences leads to stultification and decay. But the industry has found ways to still innovate: The burgeoning indie games movement, for instance, provides continuous new innovation. But niche consumers who used to enjoy premium content still lose out. Indie games, no matter how innovative, can no more satisfy my tastes than YouTube videos about cowboys can satisfy those who want Hollywood to do blockbuster Westerns again.
Consider two examples that demonstrate this evolution in a genre I care about: Talonsoft's successor is Matrix Games. Matrix Games continues to release amazing wargames, but the graphics are no longer state of the art, the price points are lower, and the games are exclusively available via digital distribution because strategy simulation titles don't move enough units compared to other genres to command retail shelf space. The games that Matrix Games releases today are, of course, as good as or better than those released by Talonsoft - but they are not premium games for their platform.
Creative Assembly, on the other hand, took the other path. CA, which won my heart with Shogun: Total War, has sustained the highest levels of production value in their Total War games, but each generation has had a faster pace and less authentic historical feel. Rome Total War was the turning point when troops were sped up to hyper-kinetic rates and the Egyptians were equipped with ahistorical arms and armor to sustain pop sensibilities. The most recent games feel more like Civilization meets Warcraft than anything a company like Talonsoft would produce.
I still buy games from both companies, all the while wishing that CA's games were more historical, and Matrix's more beautiful. I don't blame Creative Assembly or Matrix for adapting to the new ecological realities. They needed to in order to survive. I'm the one who hasn't evolved.
So at E3 this year, I'll be prowling around like some sort of saber-toothed tiger of videogaming. My food supply has grown scarce; my days as an apex consumer are limited. I'm rated E for Endangered.
Alexander Macris is co-founder and publisher of The Escapist, as well as president and CEO of its parent company, Themis Media. He has also written two tabletop wargames, conceived and edited the book "MMORPGs for Dummies," and designed the award-winning web game "Heroes Mini." After hours, he serves as president of Triangle Game Initiative, the Raleigh-Durham area's game industry association, and runs a weekly tabletop roleplaying game campaign of concentrated awesomeness.