High costs spur a shift in video game creation

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High costs spur a shift in video game creation
Rock Star Games, via Reuters
A scene from a video game in the popular ‘‘Grand Theft Auto’’ series.
By Jennifer Martinez Reuters

Rising development costs may lead the console makers Microsoft and Sony to publish more video games themselves, as independent studios avoid exclusive deals for blockbusters.
The fortunes of the hardwaremakers have turned onwhether they can attract exclusive hit video games, driving fans to buy their consoles. But increasingly, the companies behind PlayStation 3 and Xbox 360 will have to finance their own games if they want publishing rights to a product their rivals cannot get.
Konami’s June release of ‘‘Metal Gear Solid 4,’’ a game franchise exclusive to Sony’s PS3, helped narrow the gap between Nintendo’s Wii console and the PS3. The units of PS3 consoles sold posted a record for a nonholiday month, according to NPD research group.
ButMichael Pachter, aWedbushMorgan video game analyst, forecasts that independent studio exclusives like the ‘‘MetalGear Solid’’ serieswill disappear from store shelves as soon as next year.
‘‘The cost of making a game is so high that you need to recover it by selling a lot more units,’’ said Pachter.
‘‘You can’t give up half the market by selling exclusives.’’ A softwaremaker has to foot a bill of about $20 million to $50 million to make a game.
Sony has traditionally beaten Microsoft at securing popular game franchises for the PlayStation console. Take Two Interactive Software’s ‘‘Grand Theft Auto’’ series and Eidos Interactive’s ‘‘Lara Croft: Tomb Raider’’ games were both originally tied to PlayStation.
But ‘‘Grand Theft Auto IV’’ was launched simultaneously on the PS3 and Xbox in April. Microsoft dealt another blow when the company announced during July’s E3 video game industry conference that the upcoming ‘‘Final Fantasy XII’’ game by Square Enixwould be released for the first time on the Xbox.
The ‘‘Final Fantasy’’ franchise had been a PlayStation exclusive since 1997.
Exclusive games are not only pricier for independent studios to make than in the past, but analysts say it is hard for them to commit to one console since the Xbox 360 now rivals the PS3 for sales, unlike in previous generations.
The Xbox 360, with a year’s head start in sales, has sold more than 19 million units globally compared with 14 million PS3 units, according to data from the two companies. U.S. sales of the Xbox 360 and PS3 are 10.7 million and 5 million units, respectively.
‘‘The lack of a dominant console means it’s too difficult to give up on a console,’’ said Ed Williams, an analyst at BMO Capital Markets. ‘‘With the PS3 or Xbox 360, you don’t have a clearwinner like the PlayStation 2 or PlayStation were.’’ With exclusive games fading, console makers will have to depend on games developed within their own studios instead.
‘‘The reality of exclusives is that they will become far more infrequent,’’ said Williams. ‘‘The way hardware companies have to offset that is through enhancing the quality of games coming through their own studios that will drive customers to buy their own hardware system.’’

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