We are now well entrenched into the third year of this console generation; the generation that was supposed to crush smaller third-party developers under the boot heel of extreme development costs; the generation which was to be the doom of clever and unique games as big publishing houses played only the safest of bets. And yet, even as an inexplicably lingering sense of pessimism oozes from prominent developers constantly espousing the Death of This and the End of That finds itself compounded by constant fears of a sluggish economy, the videogame industry is coming off one of its strongest years, apparently immune to the downturn that plagued holiday retail for everyone else and the widely forecast doom.
We see neither widespread closures for small developers, nor the abandonment of creative experimentation from large publishers. We don't see consumers avoiding current-gen (formerly next-gen) consoles and games for their high prices, as had been widely predicted. What we see is an industry chalking another record breaking on its bedpost, bolstered by new IPs like Rock Band, Portal, Bioshock and Crysis as well as the revitalization of existing franchises like Call of Duty, Mario, Half-Life and even Halo. As traditional entertainment media like film and music struggle just to maintain the slipping status quo while failing to adapt to an ever changing digital marketplace, videogaming is succeeding and even flourishing.
And the really good news is that the industry seems to have crossed an important threshold in this generation, a threshold beyond which development costs shrink while sales increase. As systems like the Xbox 360 and even the PlayStation 3, now improved by the coming demise of HD-DVD, become the standard with millions of homes having made the leap into this generation, the return on developing for these consoles justifies the expense of development. We have entered that realm of a generational cycle where smaller companies can take advantage of the trail blazed by early adopters, where not every game requires AAA sales numbers to keep the lights on.
With tools and methods in place for developing for technology that was, only a few years ago, the domain of those with near limitless resources, creating the games that make for the foundation of the industry is now a reasonable prospect. This seems evident as GameStop, the leading retailer of video games, has increased its earnings estimates for the coming year following a strong holiday season. In a retail environment where the question isn't if you lost money, but how much, GameStop's sunny disposition is telling, because this is not a company that profits from the sales of consoles but from software. Any uptick of earnings predictions means that the company reasonably expects that this year is the one in which developers play catch up, releasing a far greater volume of games to a much larger base of consumers.
It would seem that much of the pessimism about the industry's future is not panning out. So, why didn't all the nightmares come true?