Abundance and joy

How is this wave of over-investment in games going to end?

Access to cheap capital, the explosion of interest in interactive entertainment, the entry of several non-endemic billion dollar firms, and a rash of public listings at enormous valuations has created a lot of froth.

This week alone, Sony sank another $200 million into Epic Games, which raised a whole new $1 billion and saw its valuation shoot up to $28.7 billion. AppLovin went public at a $28.6 billion valuation. Amazon continues to slosh money into gaming even in the absence of any demonstrable proof points as team Bezos opened a new shop in Montreal. And Apple just beefed up its Arcade subscription.

All that activity is wonderful news, of course, because it provides funding to a broader array of content creators. Games that would otherwise struggle to obtain the necessary money to realize their creative vision now can and do. Financial logic, however, dictates that risk-mitigation is the most important part. As one contact phrased it:

“If you’ve held a somewhat senior position at Riot or Activision Blizzard, you can raise money with just a powerpoint.”

My contact is correct, of course. But if the business model behind your game is to be acquired, rather than to entertain audiences, perhaps we find ourselves in a market that is starting to look too frothy. That’s okay, but also requires a different strategy.

In the streaming video business budgets have consistently increased over the past years. As platforms look to build their catalogues, their content acquisition managers fly to LA to meet movie producers and celebrities. I can imagine it is a thrill to spend time with cool people while you pay for everything with that tech money. Nevertheless, it is obvious from the titles that currently feature on my Netflix recommendations that several famous movie stars did a few days of shooting, took their check, and went on their merry way. Art be damned.

The march toward brand dilution is well underway. The natural outcome of the different console makers offering multiple subscription plans that consumers now face a wall of options. Differentiation is necessary to help people navigate, so WIRED wrote an overview. But man, what if, hear me out, it was easier?

So one answer to the question how this will end is: with a return to quality.

We’ve seen what happens when game companies forget about what’s best for audiences. Too much money can be a huge distraction and tends to fund projects that carry little promise. It happened to Atari in the 1980s, in the 1990s it resulted in the disappearance of most console manufacturers, in the 2000s we saw the purge of the needlessly abundant MMO category, in the 2010s social gaming collapsed, and, I believe, something similar awaits the next wave of brilliant content that forgets to cater to audiences in the 2020s.