Another week and another business is adding a safety net to protect themselves from the potential firing line. It seems there might be more following suit this year. Atari, one of the founding gaming businesses have filed for bankruptcy protection after failing to find a new investor. Atari is an iconic business that has deep connection with the PC industry. It gave pioneers like Steve Jobs their first taste of work and in all honesty I think most console game players have had an Atari game or console in their hands at some point in time.
Atari’s struggles highlight the struggle that game development businesses have. The model that was once very profitable is now not working. The model was: create the game by investing in staff and marketing, which would lead to the success of sales from eager console game players. This concept made businesses like Atari, Blizzard, EA Games very profitable and successful. Millions of Dollars, Euros and Pounds were spent by customers all across the globe.
Fast forward a few years and the above mentioned model and the impact of social gaming has crippled the entire gaming industry. Most if not all of the businesses have had to make staff layoffs and have seen their profit go up in smoke. One other thing that needs to be mentioned is the ever increasing numbers of platforms on which game developers need to develop.
The list of platforms:
PlayStation 2 (this has been retired recently)
Android ( all of its various flavours)
So it leads to companies having to ensure that they either cater for all of the above or only the profitable platforms. Remember that in every platforms developers and staff need to be hired, paid salaries etc. The point is that it costs large amounts of money to make the games. The other factor is the ever increasing popularity of playing Online. The Internet has also become a distribution mechanism for the gaming industry. That also needs to be kept in mind.
The fact that it’s almost “Game Over” for Atari leads me to think 2013 is going to be a tough year for the gaming industry.