Recently I spoke about the concerns in the gaming industry of escalating development costs and what I thought could be done to help alleviate this. The article got a ton of awesome feedback and I thought I’d address some of the topics you guys brought up and keep the conversation going.

And just to clear things up, the GameCube in the picture is a NPDP-Console/NPDP-Reader. It allows developers to place games on the cart as opposed to having to burn a new disc every time they want to test their software.

Both Robert and 60Hz brought up an interesting point about the cost of games compared to the increasing sales of games. If the gaming industry is growing, doesn’t that mean that more copies of a title are being sold? Wouldn’t that allow developers to continue to sell their game at $50 and now that they are selling 1 million copies instead of just 500 thousand they would still be profitable, even if development costs have risen?

Well, not necessarily. The problem lies in the fact that the overall gaming market is expanding, but that doesn’t mean the user base is expanding. A lot of people believe that the increased growth is primarily due to people who already play games just buying more of them. Sure, there are new adopters every day, but drawing in whole new demographics isn’t happening.

But that’s where Nintendo comes in. They see this issue and saw it years ago. You cannot keep feeding off of the same customer base and expect the market to actually grow. Instead you would just spend your time trying to weasel a few more bucks out of the same pockets. By increasing the entire audience of gaming, then you can continue to spend more money on dev costs because people are buying both more of games in general and more of a particular game.

kamon expressed concern over the online distribution method for distributing games and the opportunity for developers to abuse the system. kamon mentions that there is a potential for developers to gouge prices or never reduce game prices because there is no inventory or stock levels to worry about.

Clearly, this could happen, but it never will. There are still laws of demand and the rest of the market to consider. If one publisher starts charging $60 for their game and never drops the price, while another developer charges $50 and eventually drops the price… well, we can see who will win out if both games are of equal quality.

Now, [MaSQuE] & nexes both brought up a situation that is always a question when it comes to downloadable content. Namely, is it worth not having the physical content in your hands? And what happens if you lose your data somehow? Would you lose all of those games you paid for?

This is certainly a problem. In the comic book market we have seen publishers attempt to make comics available online, but most comic book fans still want to hold the actual paper in their hands. Owning that piece of property is an assurance that it is yours and that it will not be lost in time.

I don’t know if there is a solution to this. Many many people seem to be content to download all of their music through iTunes, not even purchasing CDs anymore. Of course, you can burn backup CDs and DVDs to archive your music. With console games there is no such option yet. No console has the ability to burn DVDs or allow you to transfer games to your computer to create a backup.

It is highly unlikely that Nintendo would allow you to backup your games even though they will be saved on SD cards. Connecting to your computer, transferring the files over and burning a backup disk would be awesome. However, I think the more likely solution is for Nintendo to keep a purchase history for each user and allow them to re-download their games at any time.

Finally, a couple last points were brought up. Eddie discussed the effects that online distribution would have on the second hand games market. With the ability to download virtually any game at any time, the used games market in the retail sector would dry up.

I see this as a fantastic thing. For one, no more searching through bargain bins or paying inflated prices for old games. Secondly, developers would actually continue to make money off of their classic games, as opposed to retailers. The only downside is that a publisher might keep the game at $20 while you could have found it in the bargain bin (possibly in terrible condition) for $3.

Lastly, kojo87 brought up the hot topic of in game advertising. This is a huge topic that requires its own discussion, but I will say this; in game advertising is inevitable. And, if done correctly it could be a benefit to both the developer and the consumer. Nintendo is a bit of a different story here, but even they have used in game advertising to help increase the atmosphere of the game (ie Ken Griffey Jr series, Wave Race and Pikmin).

Thanks everyone for your awesome comments and making this a compelling discussion to follow. I look forward to hearing your new comments.