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Lost Garden Challenges Conventional Wisdom of Game Industry
posted by: Shawn Rider
publisher: Lost Garden
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date posted: 09:36 AM Fri Nov 11th, 2005
last revision: 09:36 AM Fri Nov 11th, 2005

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Click to read.Danc from Lost Garden ruffled a lot of feathers with his article about Nintendo\'s Revolution controller a couple months ago (as did all the greatest gaming websites). Now he\'s come out again with another sharp bit of criticism and advice for the industry: Broaden your horizons, or remain a niche form of entertainment. It\'s easy to forget about how few gamers there really are when we put ourselves into communities where everyone shares our interests. Why is there such a crisis about getting women involved in gaming? Because ultimately, the games industry cannot survive if it does not diversify, both in the people who make games and in the people who play games. Danc\'s article is an absolute must-read for anyone who truly loves games.

Here\'s a snippet from the article, which you can read here:

My problem is that I think a lot about money, profitability and competition. Yes, I am a greedy bastard. Let\'s run a few numbers. The current \'active\' population of US households that own one or more consoles is around 35 million. This is different than number of consoles sold and represents the current addressable market in the US.

Now 35 million is much less than the 300 million potential customers. For a consumer electronics device, it is also far less than the 500 million PC\'s in service [sic]. It is even less than the over 200 million have cable TV in the US alone. It is less than the 200 million cell phones used world wide.

It is okay to be small since we are growing rapidly, right? Unfortunately, no. We are currently growing at around 7.3% a year with much of this arguably driven by population growth not market expansion. It\'s a far cry from the 15-20% you hope to see in a thriving high growth industry. For example, that little cell phone market that is 4X larger than the game market? It is growing at a reasonable 19.1% a year.

Also, when you have hundreds of companies targeting the same 35 million person audience, the result is considerable competition. We do not even end up with is eight or nine media categories like you might find in music or movies [sic]. With genre king dynamics, we end up with eight or nine software categories. People buy games closer to the way that they purchase copies of word processor or tax software. They don\'t need 20 FPS any more than they need 20 copies of Word. Being a first mover on a new genre that serves a new need is like being the first company to master the sale of photo editing software. Big opportunity, low competition.

So, our great population of gamers is really a tiny insignificant fly speck if you look outside our insular little community. We fool ourselves into thinking the industry has \'made it\' because the few gamers we\'ve hooked spend a large amount of money. We even have splashy events on MTV. Sorry.

Get the full article on Lost Garden here.

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