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Why do companies breaking into the video game industry fail?

levyjl1988

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Jan 31, 2010
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So many companies have tried breaking into the video game industry and just failed completely.

We know the top 3 gaming hardware companies as: Nintendo, Sony, and Microsoft.

On PC the preferred platform of choice is Steam and GOG, but mostly Steam.

Companies like Google and Apple are known for their app store and mobile market but they will never break into AAA gaming ever.

Amazon doesn’t know what the fuck they want, yet they own Twitch and Prime Gaming.

What is it that you think makes these companies fail?

When I observed Stadia, it was a groundbreaking concept. Streaming AAA games and using any device. The obvious problem is input lag, internet connection speeds, and pricing. When Stadia came out, it had so much potential but totally failed. They were charging like full price for games that were easily accessible on competitor system for cheaper and without constant online only and input lag, so the choice was clear. Initially I thought they would go the route of Netflix subscription, boy was I wrong. Their business model crippled and was forgotten completely. What boneheaded decision, now no one wants Stadia.

Apple and Android have app stores for their mobile. Mobile games are known for their microtransactions, loot boxes, exploitative psychological strategies in getting people to make small payments that all adds up. A lot of gamers disregard mobile as true games. They are not masterpiece titles like Shadow of the Colossus, Legend of Zelda Breath of the Wild, God of War, The Last of Us, Spider-man, etc. If movies were games, AAA games are like hard hitting movies that forever change the industry like Jurassic Park, Aliens, Avatar, Terminator, and mobile games are those indie movies that barely make a blip in the radar, they merely exist to profit and not make that cultural shift to change and challenge expectations. People who get into mobile gaming often do it for the wrong reasons and butcher the perception.

Amazon is known to me as an online store. But it has made me look at Amazon Prime streaming due to huge shows like The Boys and Invincible that satisfies that dark mature itch similar to Watchman that is not found elsewhere and I can watch it as I already have Prime. That is a smart business strategy as I can enjoy it already without being convinced.
Now if Sony integrated CrunchyRoll with PS Plus already it would be smart than an additional option. If anything I can Sony raise PS prices a bit and include CrunchyRoll rather than make it a secondary option than to have it added at an extra cost.

Anyway what are your thoughts on why and how these companies failed to break into the industry. What is your perception?
 

jigglet

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May 18, 2020
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Cause they treat it like a side project.

They need to understand to really make it, you need to go all in. You need to be ready to spend billions and make plans that span decades, not years. And they need to be ready to weather 5+ years worth of shit, and not give up the moment things are looking grim.

That's why MS is the only new entrant that has been successful so far. They were in this shit for the long haul.
 
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reksveks

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Jun 4, 2020
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Google - Doesn't know how to do paid consumer products imo; only one successful one which is Youtube Premium, Workspaces has been a bit iffy.
Apple - hasn't really tried honestly i don't think maybe Microsoft taking Halo put them off.
Amazon - seems like games and luna is just a way to sell more AWS, i don't also 100% understand prime video, i think it's to prevent churn mainly and then maybe some increased reveneue on the prime video via channels (I have an active bfi sub on it via prime video and haven't used it in a while)
 

AV

We ain't outta here in ten minutes, we won't need no rocket to fly through space
May 31, 2018
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Some companies think you can throw money at a problem and it'll fix itself. We'll see how well that works for New World.
 

Punished Miku

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Jan 13, 2018
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I think that they're just trying to squeeze blood from a dry stone. Every boardroom has data saying that 1/2 the people on the planet are gamers, that the market is near infinite and is barely tapped to capacity, that gamers no longer exist and that everyone plays games, that this is growing faster than TV, movies, music, etc.

However, I think there's still the same core market as always, and they're already at max spending capacity. I don't think that a lot of these new companies offer anything substantially new that would justify spending on them instead of one of the multiple options that already exist. They're not really offering a superior product, and core gamers don't have 25% more income to spend on another gaming ecosystem.

The last barrier is trust. Core gamers are among the most informed consumers out there. A company would have to basically commit to a loss leading position for an entire generation and then launch the next gen just to prove to people that they're in it for the long haul, that people can trust them to stick around, and that investing in this ecosystem isn't a complete waste of time and money. None of them prove that.

Most of the new entries into the market have aimed for the blue ocean approach and tried to appeal to non-gamers. That's probably the right approach, but they don't really have a strong enough product. They don't have any solid marketing. They don't have any killer apps. They don't have any world class studios. They don't have much of anything at all. It's honestly a mystery why anyone would think it's going to succeed (most knew immediately it wouldn't).
 

borborygmus

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Aug 10, 2014
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They fail because the only reason they're in this space is to expand indiscriminately like the out-of-control viruses they are. For some of these companies even their prior success is questionable and a strong case can be made that they only "made it" by cheating in various ways. Gaming is to them an item on the increasingly of short list of answers to the question "what don't we own yet?" Their strategy is usually the same cookie-cutter shit that out-of-touch suits come up with which they used in other industries where they succeeded for reasons other than merit.
 
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Drew1440

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Nov 12, 2020
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Any new entrant gets slated to death with people writing it off without having tried or owned the product, see Ouya, Stadia or the Amico
 
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NahaNago

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Aug 29, 2014
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Because they don't combine all the things necessary to break into it. You need decent hardware, interesting and hype making first party games, and third party support. All of this requires at least hundreds of millions to possibly billions of dollars of investment just to launch the device from creating or buying your studios, to bribing third parties to port their games onto your platform, to the creation of the hardware. Even then you probably won't be an overnight success and you might not even make back the money on your investment into consoles for your first console platform so companies skimp out on one of these things and usually it is first party since you have to maintain it instead of a one down payment for a third party exclusive. Crap! I forgot one of the biggest things and that is tons of marketing.
 

elliot5

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Because games are creative products/artforms and like a lot of creative/artistic products they fail to catch on
 

Jeeves

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Dec 7, 2008
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Cause they treat it like a side project.

They need to understand to really make it, you need to go all in. You need to be ready to spend billions and make plans that span decades, not years. And they need to be ready to weather 5+ years worth of shit, and not give up the moment things are looking grim.

That's why MS is the only new entrant that has been successful so far. They were in this shit for the long haul.
Couldn't have said it better myself.

It also doesn't help that newcomers tend to come along with dumbass "disruptive" gimmick approaches that no one wants. We just want good games.
 
Mar 28, 2021
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because the consumers are whiny little toxic cunts.

even if a company comes in and throws a shit load of money at it then it doesn't matter if the gamers don't accept it. you'll get people shitting on stuff just because it's not Sony. heck look at Nintendo + MS. big players but the kids still have a fanboy war. it's pathetic and childish. they wouldn't know a good game/product if it hit them in the face. too busy defending their precious multi billion $ company.
 
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Bonfires Down

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Your examples are pretty bad as none of them have tried very hard yet. They still might.

Amazon has been very successful with New World and Luna is still in beta. Their only failure is Crucible.

Apple is way more financially successful than any of the traditional companies by just doing mobile games. They haven't tried breaking into AAA gaming since the Pippin, probably because it's not worth the effort for them.

Google I guess you could say have tried a little and somewhat failed. But it's very early days for cloud gaming so I don't think anything is set in stone yet.
 
Aug 28, 2019
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You realize Microsoft broke into the industry and stuck around tho, right? It wasn't always Nintendo/Sony/MS it used to be Nintendo/Sony/SEGA and before that Nintendo/SEGA/NEC, Nintendo/SEGA/Atari etc.

So it's not fair to frame the question that way when we've had multiple companies break in successfully, then some of them folding. But in the modern context since the Nintendo/Sony/Microsoft dynamic was established? It's an easy answer.

Simply put, the new companies entering don't understand how gaming really works. Google and Amazon have tried streaming subscription models but the reason Microsoft's is working is because it's not the SOLE option for playing Xbox content, and they still have physical consoles users can buy and play all those games locally if they don't like streaming them over the cloud. Google Stadia provided none of those options and Amazon Luna (although I'm interested in the way it sets up its subscription as "channels" per publisher, something I think Microsoft will probably adopt in the future for GamePass) doesn't either.

That's without getting into the games part of things. Google actually thought they could trade off 3P alone, then only did very light investments into 1P, then chickened out (supposedly) when Microsoft purchased Zenimax/Bethesda. Google thought gaming would be a very light cash investment even though it's the biggest entertainment industry in the world, and despite being one of the biggest companies on the planet, seemingly can't justify financial investments at the level of Microsoft, Sony, or even Nintendo. Complete fail.

So those are the biggest reasons IMO. If a new player wants to be successful, they need to have a business proposition and platform unique enough to stand out from what Sony, Microsoft and Nintendo are already doing, and actually have a physical box to distribute even if they also want to push cloud. Oh, and have some meaningful investments into 1P content from the get-go.

I think starting as a 3P publisher and then moving into things as a platform holder might be the best approach. That's how Sony did it (starting as a silicon provider/designer for Nintendo and developing/publishing games for the SEGA CD, Genesis, and SNES under the ImageSoft label), that's kind of how Microsoft did it (working with SEGA on the Dreamcast, developing games for PC before taking a stab at consoles), even SEGA and Hudson/NEC, SNK etc. The only exceptions to this are companies like Atari and Nintendo, but they are outliers.

That's why, even though I don't trust them whatsoever given their connections with the CCP, companies like Tencent would be ones to watch for trying to become a platform holder. I'd say the same of something like Embracer Group or THQ (unless THQ are owned by Embracer Group?), given the wealth of acquisitions and investments they have. This way they get some understanding of the market as a content provider before jumping into being a hardware provider with a platform dedicated to hosting its own content.

I can definitely see Embracer Group partnering with a company or two to handle hardware design and online infrastructure/server systems while Embracer Group just provides a service for the content they own compatible with those devices, for example.
 

SlimeGooGoo

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Jun 29, 2020
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Because new companies don't really have a strong vision about games, they're all in for the quick money.

If the gaming industry suddenly stopped being profitable, most companies today would just jump ship.
Companies like Nintendo would still keep at it, finding ways to make fun and profitable games somehow, because their sole reason for existence is making games.
 

Azelover

Titanic was called the Ship of Dreams, and it was. It really was.
Dec 3, 2004
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Most people in business don't understand videogames.

With Stadia for example, they did it backwards. They should have had the games ready first, not just exclusive games, but games that are developed around their platform and its peculiarities. These companies want to have the platform first, and treat the games like an afterthought. That has been the problem imo.
 
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MaestroMike

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Sep 25, 2011
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If these other tech companies want to have their own platform someday best thing they can do imo is just start building up some home-grown studios and create a couple of games and see how they fair. A company can't have a successful platform without legit studios that can produce. imo just start making games here and there; build up some nice home grown studios and build up a nice backlog; maybe buy a couple small-time studios here & there & in twenty/thirty years time maybe they'll have a good enough group of people/studios & one or two reputable, popular properties that they can start their own platform & not do terrible. they need to just start building their name, get ready to fail and take their licks and don't give up
 

CitizenZ

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unimpressed morgan freeman GIF
 

schaft0620

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It's incredibly time consuming and costly to build a player base. Nintendo has been doing it for 135 years. PlayStation, Valve and Xbox over 20 years.

All three started out with very modest beginnings. Xbox was nearly stopped three times.

Google, Amazon and Apple can't just appear one day and demand a seat at the table. Xbox has made probably a $10-$12 billion investment into their platform this year alone.

Any new player into the industry would need to spend $15-$20 billion and wait 5 to 8 years before they could even really begin. Google gave up before their first parties could even start.

I think the biggest mistake Google made was saying to themselves, "it only takes three years to make a game." When in reality, they needed to build teams, structure, processes, tools etc etc etc before they could start THEN it would be 3 years. Plus Goolge really needed to have close to 10 first party teams.
 

Kumomeme

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culture that already rooted for years in videogame company/studio is not something that outsider can buy with money.
 
Oct 26, 2018
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Gaming takes a lot of money to get started and most people have loyalty to certain platforms. For many gamers, they are happy with one or two platforms and isnt interested in committing to another gaming platform where most of the games are multiplat already.

It's not like muffins or boutique pop where some local bakery or bottler can do enough sales with limited distribution, but it's still enough to stay alive or make profit.
 

Outlier

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Cause they treat it like a side project.

They need to understand to really make it, you need to go all in. You need to be ready to spend billions and make plans that span decades, not years. And they need to be ready to weather 5+ years worth of shit, and not give up the moment things are looking grim.

That's why MS is the only new entrant that has been successful so far. They were in this shit for the long haul.
Yup...

Just look at games like BeamNG and Automation.

Both started development BEFORE 2012 (I think), are very popular and successful, and are STILL in early access\development.

Why? Both are very unique, offer massive replayability, and receive REGULAR UPDATES!

Both their studios are proof that if you want to make it in an industry you need to stand out AND be dedicated to your work.
 

Sean Mirrsen

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Generally speaking, if a company is "breaking into" videogames, it probably doesn't understand videogames. Most of these companies are what you'd call "data driven", they look at people they are supposed to provide a product or service for, as numbers on a spreadsheet, and base their decisions entirely on the marketing engine. Hard data is extremely useful in marketing, of course, but if that's all you're basing your business on, you're bound to completely whiff on correctly reading your possible playerbase and do something monumentally stupid that drives people away.

Companies that succeed, they're usually more what you'd call "data informed". The hard data they use is supplemented with individual feedback from customers and players, and the extra level of human interaction in the decision-making tends to make for better results and fewer embarrassments overall.