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The 2 Major Reasons MMO's Today Suck (and most AAA games)
Izkimar
Member UncommonPosts: 568
Why AAA Gaming Industry Sucks (2 Root Issues)
This is something I have pondered a lot, and it is also relevant because I am working towards a mini-doc on the Future of the MMORPG. This has led me to examine the state of the industry, and how we have gotten to where we are. The concept of this video was also inspired when I watched a Sam Ovens video on 2nd Order Consequences, which I will elaborate on further.I know this isn't MMO specific. However upon trying to understand the core issues of the MMO market, it led me to see that the major issues are rooted in philosophy that is plaguing the entire industry. Everything else trickles down from here, and most of the major issues we bitch about are just symptoms of the underlying disease.
I made a video on the topic, so I encourage you to check it out: 
It is a bit long I know, but this is sort of experimental content for me. I wanted to present my ideas as well as read some supporting examples. I recommend listening to it on 1.25x or 1.5x speed as it will save you a lot of time. I also have subject timestamps in the description.
If you prefer to read: I am going to try and encapsulate this video in this post as best as I can.
Why the AAA Gaming Industry Sucks: It is my thought that there are 2 major issues plaguing the industry. Both of these issues are transcendent, and are running rampant in modern corporate structure. The first issue is that companies value Speculative Market value and Shareholder value maximization over delivering real market value. The second is "Incrementalism vs. Innovation." Companies throughout time often fall into the trap of trying to perpetuate today, and they fail to invest in the R&D or innovation that will carry their tomorrow.
Opening Quote: "We must shift the focus of companies back to the customer and away from shareholder value. The shift necessitates a fundamental change in our prevailing theory of the firm... The current theory holds that the singular goal of the corporation should be shareholder value maximization. Instead, companies should place customers at the center of the firm and focus on delighting them, while earning an acceptable return for shareholders. If you take care of customers, shareholders will be drawn along for a very nice ride. The opposite is simply not true: if you try to take care of shareholders, customers don't benefit and, ironically, shareholders don't get very far either." - Roger L. Martin "Former Dean of the Rotman School of Management at the University of Toronto"
Shareholder Value Maximization vs Real Market Value:
According to Martin this new philosophy was conceived in 1976 at the Simon School of Business "University of Rochester."
Principle-Agent Problem: Shareholders are the principals of the firm, "they own it, and benefit from its prosperity", while the executives are the agents who are hired by the principals to work on their behalf.
The problem occurs because agents have an inherent incentive to value resources for themselves over their principals, and that the singular goal of a company should be to maximize the return to shareholders.
Apparently this idea spread like fire, and has become conventional wisdom today.
Jack Welch became a rock star status CEO under this philosophy and led GE to beat or meet analyst forecasts in 46 of 48 Quarters. In his tenure from 1981 to 2001 he took GE from a $14 billion dollar value to $484 billion at the time of retirement. He was named Manager of the Century by Fortune Magazine.
Jack Welch later in 2009 went on to say, "On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy. Your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal. … Short-term profits should be allied with an increase in the long-term value of a company.”
Money is in the speculations market:
It pays off more for executives to properly meet or beat analyst forecasts in the speculations market "Stock Options", than it does to receive their bonuses for consistently and slowly delivering real market value.
Since the adoption of this new philosophy in corporate structure, CEO compensations have skyrocketed and real market performance has dropped.
Martin used an analogy equating this to NFL Coaches and QB's consulting with bettors, and being judged not on winning actual games but if they successfully met the predicted point spreads.
The Role of the Business: The role of the business, organization, or corporation is to create real market value. Profits, wealth, etc., are not the main goals. They are a result. Modern business structure has now devolved into agencies that see their customers as value extraction units. They deliver as little as possible while trying to extract the most they can, all in an effort to demonstrate value to shareholders and push their valuations up in the speculations market.
This short term thinking certainly paid off in the, well short term... Look at the stock prices of Activision. Since the 90's it has climbed, climbed, and climbed. 20-30 years might seem more like the "long term", but in the lifespans of corporations and monopolies this isn't very long. Finally, this has led to a point to where consumer confidence has dropped drastically. People aren't as excited to buy Call of Duty 26 as they once were with number 4, or 5.
Quote from Peter F. Drucker, who is often looked at as the father of management. This comes from a 1999 NY Times article talking about how Corporate America fell out of love with him. I wonder why...
"For his part, The Man Who Invented Corporate Society (a biographer's apt label) disdains a corporate order that is in thrall to stock prices and that rewards its chief executives as though they were power forwards. "Earnings per share" does not exist in Peter Drucker's vocabulary. The religion of shareholder supremacy has him shaking his head." "That's right, I am not very happy with the unbalanced emphasis on stock price and market cap and short-term earnings," Drucker said in an interview last week.
"The most critical management job is to balance short term and long term. In the long term, today's one-sided emphasis is deleterious and dangerous."
"To his thinking, two personages, the customer and the highly skilled employee, are at least as precious as the investor. Increasingly, as pension beneficiaries, owners of stock options or mutual fund investors, they are one and the same person. Learning to balance these divergent but ultimately shared interests is "the challenge of the next 10 years," he said."
"Some 45 years ago Drucker declared a celebrated premise. "There is only one valid definition of business purpose: to create a customer." Does that premise still pertain? "What else?" he asked. "Who else pays the bills?" From that conviction has come his creed: Value and service first, profit later. Maximizing profit, perhaps never."
and 5 others.
Comments
Old Blizzard: Whether you enjoyed their games or not. Old Blizzard products delivered value to their customers. Go watch their documentary and read their story. They were basically a bunch of dudes just trying to make badass games. Their aim was to deliver value. The new business philosophies hadn't quite set in as the de facto way yet, and it hadn't quite trickled into this subsect of the gaming industry. Look at the relationship of them and their customers. The good will they created back then built a bulwark that has lasted until today. Even though people saw direction shifts with the company way back, their fans have defended them vigilantly for a very long time. This was all based on the value that they used to demonstrate. Now, I feel the good will has finally run out, but that is the power of delivering real value.
Innovation vs. Incrementalism:
This was first inspired by Sam Oven's video on 2nd Order Consequences. The major points I want to hit on here is defensive thinking, and the vain attempts to perpetuate today over developing tomorrow.
In Sam's video he tells the story of Valeant Pharmaceuticals. Basically, their CEO saw how expensive R&D was. Research and development is really expensive, it is basically scientists experimenting to create the future drugs. Experimentation is synonymous with failure, but it is done in the hopes of making big breakthroughs. So he had the bright idea to start purchasing drug companies, cutting their R&D, and rolling them into his investment vehicle. In the short term this resulted in huge spikes in net profits, made shareholders very happy, and it worked well for 3-4 years. However, eventually since they no longer had R&D, this quickly exploded as they no longer remained relevant and ultimately lost his investors a shit ton of money.
Contrasting example: In Peter Drucker's book the Effective Executive he talks about Theodore Vale as one of the least known major business figures. Theodore Vale was the CEO of the Bell Systems in 1910's the 1920's. "Later became the big telecoms monopoly of ATT that still stands today."
Bell knew that in order for a tech monopoly to stand the tests of time, it needed competition and innovation. Since there were no other companies that would push them, they would have to push themselves.
So he developed Bell Labs. The sole purpose of Bell Labs was to develop the future and render today obsolete "no matter how profitable or efficient that today was." Because of his foresight, the Bell Labs led to innovations and creations Vale never even imagined. This is offensive thinking.
Kodak: Kodak had the inventor of the digital camera working for them in the 70's, he presented the camera to them in 1975. Because it was a mishmash of parts, digital cassette recorder, movie camera, analog-digital converter, and other components they were unimpressed. They also said they can't see people ever wanting to view their photos on a television set.
He later presented a new model to them in 1989. This model was supposedly on par with today's DSLR cameras. "Used memory cards, compressed the images, etc."
They resisted it, and told him that they could sell the camera, but then they would cannibalize their own film sales.
They owned every step of the photo making process at the time. So why would they compete with themselves and hurt their own profits?
Well, they never caught on to digital, tried too late. They made billions off of the patent, but it ran out in 2007. And they later filed for bankruptcy in 2012.
Think Activision-Blizzard, and how they scrapped Titan and have not tried to release a new major MMO. I have often seen the sentiment of, "why would they create something to compete with themselves when WoW is still number one in the market?"
What major innovations has the AAA gaming industry developed in recent times? Outside of some outliers, there hasn't been much. This is a partial result of defensive development, the de-valuing of true R&D, and the vain attempts of perpetuating today.
Both issues together: While trying to maximize shareholder value, companies are constricted and fear to take big risks. They need to meet market speculations and justify investor dollars, they must deliver a sizeable return after all. This in effect trickles down to development. One, this leads to defensive development. It leads to incremental development. Companies can't afford risk, they must try and perpetuate today. So they spin the same games over and over, they develop in overly formulaic and rigid structures that are seemingly safe, they follow trends and waves rather than try to make their own.
The trickle down effect: These two issues create a value stream that flows downwards from the shareholder, to the executives, and eventually to the consumer. Because of this, we are seen as "users". We exist to be exploited.
In the philosophy of shareholder value maximization we play the role of 2nd fiddle.
Development is no longer done within the scope of creating wonderful experiences and delivering fulfillment.
Instead since we exist to be harvested, we see Marketing meets Psychology driven systems that are aimed to exploit behaviors. "Blizzard's patent on a matchmaking system that pushes microtransation behavior comes to mind."
Developers don't look at value delivery, they look at log ins, retention rates, and ways to funnel purchases or microtransactions.
That is why it is becoming more and more apparent that we are getting handed systems with the fucking wires showing rather than actual games to be immersed in. "I'm looking at you BFA and Lost Ark."
We can't really blame a lot of the developers and their design philosophies. Those of the old guard transitioned into the new business wave. "Blizzard melding into Activision." And the new wave of developers were molded in this environment. This is just seen as , "how business is run, and this is just how good systems are designed."
In conclusion: The gaming industry is rotten at it's core. It has the value exchange relationship backwards. It looks first to shareholders and the speculative market, and then to the actual value delivered to the customer last. Trickling down from this is the mindset of Incrementalism over Innovation. The industry is wrapped up in defensive thinking and spends it's dollars trying to perpetuate today over developing the risky tomorrow. In order to see real values driven game development restored, we must first see a foundational shift in business structure. I plan to propose solutions in my video The Future of the MMORPG.
Vault-Tec analysts have concluded that the odds of worldwide nuclear armaggeddon this decade are 17,143,762... to 1.
Someone is throwing money at them.
Someone taught them that F2P with a cashshop is making more profit than a subscription.
Someone taught them you can make a lot of money by simply selling a game in pre-alpha including an "exclusive" ingame item.
The only real difference now is that we can't rent them and demos are no longer commonplace, although all major platforms refund you within a couple hours/weeks of purchase, so that's still not really a strike against the consumer.
For my mind, there has never been a better time to be a gamer. There are so many options that you can easily find whatever experience you're looking for, and with the amount of media coverage the industry gets, if you blindly buy a game and get burned, I can't help feeling that's on you. Not to mention the countless free-to-play games on every platform that you can sink dozens of hours into without ever spending a dime.
Taste is subjective...there will always be people who like one thing and not another, and other people who like the inverse. But I don't agree that value is the issue when it comes to games like Red Dead Redemption 2, Assassin's Creed, God of War, Civilization 6, or even Battle for Azeroth. At least not when compared to the value of gaming in the past. This is an industry that was built on forcing more and more quarters out of you, so I certainly don't see how now is any different.
Consumers are stupid with their money and people running the show well understand how to take advantage of them.
Did I get it right?
Remember, you can't fix stupid.
"True friends stab you in the front." | Oscar Wilde
"I need to finish" - Christian Wolff: The Accountant
Just trying to live long enough to play a new, released MMORPG, playing New Worlds atm
Fools find no pleasure in understanding but delight in airing their own opinions. Pvbs 18:2, NIV
Don't just play games, inhabit virtual worlds™
"This is the most intelligent, well qualified and articulate response to a post I have ever seen on these forums. It's a shame most people here won't have the attention span to read past the second line." - Anon
Sure video game consumers are easily fooled short term, but on a larger scale the lack of value will simply move those costumers to areas where they do get value. Why this is not happening at a faster pace, is that modern video games are designed around addiction inducing game designs (instant gratification, retention rewards, etc); so essentially the consumer think they get more value than they really are. However, I don't believe this can continue on such a scale in the long run, even if consumers are somewhat stupid and addicted.
"I am my connectome" https://m.youtube.com/watch?v=HA7GwKXfJB0
I feel like my response will be similar to both of your comments.
1.) Consumer confidence is quite low. We have seen a noticeable drop in AAA stock values. If we aren't at the end of the road yet, we are heading there soon. These companies will have to adapt and transform their structure, or they will be left behind.
2.) to your point @Keller It doesn't matter what we show them in the grand scheme of things. The issue at the root is value is placed in shareholder maximization first. As long as that is the first principle, the value distributed to the customer will play 2nd fiddle.
Within that framework, yes consumers do drive their behavior but only in the way of value extraction. So yes if consumers didn't support this behavior they would be slightly better. But since their focal point is still the shareholder, the root issue would still remain.
3.) Consumer behavior in today's market is pretty complex. It can't just be blamed on the market being full of idiots. The current market hasn't evolved, it has been conditioned.
Battle for Azeroth is objectively bad. It is a shell of a game, and offers a very shallow gameplay experience. It is a terribly designed skinner box. The new Arathi, Warfronts, Island expeditions. Etc. etc.
But stock prices are fundamentally a bet on future profits, not past profits. If you knew that company A made $1 billion this quarter, but that it will be their last profitable quarter ever, their stock isn't going to be worth much. If you knew that company B lost $1 billion this quarter, but will make at least $1 billion in profit every quarter for the next 10 years, their stock should be worth a lot.
Stock prices are imperfect because people make decisions with imperfect information. But they're the best metric that we have for this. If you can figure out which companies are undervalued and which are overvalued ahead of time, rather than only in retrospect, then you could make a ton of money as a stock trader.
As for AAA games that are bad, it's typically not because companies are trying to make bad games. It's simply hard to consistently crank out games that are much better than the competition. But you could become very rich if you can consistently do so.
The health of the game industry doesn't just rely on one particular company. If one company falters and another makes a great game, then that gives players something good to play.
My point is that the shareholder executive relationship has evolved in the past 50 years, and not necessarily for the better. That is what I tried to illustrate with the philosophy built out of the Principal-Agent problem.
An organization is a system that creates value for a demographic. They are built out of solving problems or scratching itches. It is through this value exchange that they can afford to pay their bills, and then take home a meaningful amount of wealth. Shareholders can benefit on a well run system by investing capital that helps improve the system, all in the hopes of seeing a good return over time.
Investment is one of the many inputs into the system, and Shareholder return's are a result. But this result comes after demonstrating proper value to a market. The sentiment is that this is an issue of a result becoming the main goal, and that it is throwing off the whole dynamic.
I hope Pantheon ends up being decent!
After large companies seen Blizzards profit from World of Warcraft, like every other surprising profit product they decided to hop on board. Problem was, they couldn't hold the share holders hostage by making them wait for a full scale game. So little tricks were invented to cut production time.
-Easy and fast leveling, this reduces the size of the game to 30 days worth of content.
-Theme Park, sure telling a story cost money but on a positive side (for them) liner content.
-Cash Shops, self explanatory.
-Marketing and sales, tell the people this is what "everyone wants", how can anyone dispute it.
-Balance classes and targets. No need if the game is easy.
People will buy anything, business proved that long time ago as long as its advertised. On a positive note (for them), video games have little consumer protection, buyer beware.
mmorpg's have run their coarse. People are FINALLY catching on to this shady business practice, and developers know it, now we have Koran games, because the West will no longer touch this market.
mmorpg's are not mmorpg's anymore, their games-online. This site is still popular simply because the mmorpg players moved on and been replaced with the On-line player. Some of us like both, some of us like to stick it out and argue, but for the most part the mmorpg player moved on.
Their, I covered it all in 15 minuets.
Hell, even in the MMO genre you have several games like ESO or Guild Wars 2 with a $20 box price, an optional subscription fee, and how much content? Shout from the rooftops that the type of content in many popular games has no value to you and nobody could argue, but as a pure ratio of price to content, the amount of gameplay to be had from a standard $60USD price point has never been higher.
Most Triple A games I've played in the past few years, I feel I got my $60 value. In some I can wait for the deprecation price ... But most are worth the full retail box price.
Even the Games-on-line's are worth $60 if thats your entertainment style, but I like mmorpg's and it's been years since we had one. There above their budget and refuse to make them. Instead
of admitting this refusal, they use marketing to say this is what everyone likes. Now real mmorpg players are out in the cold.
Cash shops are like gambling for cheesy companies trying to extort money, hoping they can catch the unsuspecting or addictive player. They study and do their homework knowing they are many...... I rely on principle, their cheesy so I turn my back on them.
If you're a company that specializes in tooth care, then your product and your customer are easy to understand. They want to keep their teeth, clean, shiny and healthy and they want the product they buy to guarantee that it will. Not only that, but they will continue to buy your product month after month. Both brushes and paste will fly off the shelves day after day.
Gaming is completely different beast. Both the product and consumer are difficult to manage. Building a game that players want to play is both time consuming and expensive. The ROI isn't always guaranteed. Your players may have loved the first two games in your series, but for a myriad of reasons, they hate the third game and maybe you dumped more resources into the third one than the first two combined and it's a dud.
This is why you see the big studios almost completely unwilling to take risks. They shit out another Assassin's Creed and Call of Duty like clockwork without fail. Almost zero innovation, just the same game in a different location with a different skin.
But then putting out a yearly installment just isn't good enough anymore for the investors. Sure, you're making money year after year, but you're not making more money. Profits have to rise every single quarter of every single year for investors to make money, so that yearly AC release isn't good enough. Get out there and find another way to make more money.
So what do they do? They hold back parts of the game and sell it to you piecemeal. The come up with ridiculous bullshit digital items and hold them back in "collectors" or "platinum" editions. They put loot boxes in your game with randomized garbage so that you'll spend and spend until you have the things you want.
With investors behind gaming, the hobby is only going to get worse and worse and worse. Ways to monetize gaming are going crop up that you never though of before and you'll be begging to have DLC back because the new crap will be so ridiculous. A few years ago, I joked that one day in Call of Duty, you'll run out of ammo and a window will pop up asking you if you want to buy more ammo for your character for that life. In one night of good play, you could ring up another $20 worth of transactions in the heat of the moment. I'm not so sure it's a joke anymore.
The best gaming studios don't go public. They don't anchor themselves to investors. They create a set of principles and anchor themselves to the principles instead.
Even the much vaunted and highly praised CD Projekt Red will one day be cursed to hell in these very forums when their investors come back and say "What the fuck do you mean in your tweet when you said you wouldn't monetize a single player RPG? You had better monetize it or I'll put my money in another company!"
Investors are, hands down, the worst thing to happen to gaming... and I'm a capitalist at heart. It's just that the people expecting a return don't understand why the business works in the first place and they see us as living breathing atm machines that they can punch a pin number into every day and make another withdrawal.
At least the toothpaste company doesn't sell the cap separate from the toothpaste at the counter and make you buy it back so it doesn't squirt all over your car on the way home.
I don't think it can run on forever though. Consumers will eventually become resistant to it. It may seem like it can go on forever, but the evolution of modern game monetization is a blip on the radar of time for the lifespans of corporations and monopolies.
"A few years ago, I joked that one day in Call of Duty, you'll run out of ammo and a window will pop up asking you if you want to buy more ammo"
They put a reticle in the COD cash shop recently hahaha.
Anyways, consumers will eventually have had enough, and just have much less interest in purchasing. Looking at the steep drop in the market it might seem like we are starting to hit that point. If not now, the day will come.
We must get back to the original role of the corporation/organization. When real market value was the most important metric, and shareholder returns were a result. Returns are important, but they are not the main focus. Whenever they become the main focus it hurts the whole system.