Gaming sequels can be a big risk, says analyst

IBIS Capital director Tim Merel has said that firms concentrating on AAA franchises may being doing so for the financial bottom line, but lack of innovation with sequels can actually damage the business.

Speaking with GI.biz, Merel said that it's more important for the creative teams to make the decisions than Davis over in accounting.

"The major franchises are attracting increasing amounts of investment and generating increasing returns, but this doesn't come without risk," said Merel. "The gaming equivalent of Eddie Murphy's Pluto Nash ($100m cost, $4.4m revenue) is what scares the money men, so the risks of launching new franchises or making a mess of existing franchises becomes enormous.

"The concern is that this end of the industry goes the same way as Hollywood, with accountants and lawyers running the show and the creatives and techs being managed like execution monkeys.

"Hopefully the majors are smart enough not to let this happen.

"To state the obvious, the majors are doing exactly the right thing by investing in and acquiring big franchises. In the short-to-medium term that makes perfect sense, but in the long term I think they're going down a very risky path.

"If the gaming business is all about innovation and new unimagined gaming experiences driving growth, churning out the 25th incarnation of most franchises won't cut it. If the majors effectively become utilities, then they run the risk of becoming like traditional media companies. Cash generative, but declining and cost driven."

As an example, Ubisoft plans to issue updates to its largest franchises every 12-18 months, and Electronic Arts is doing the same with Mass Effect 2 and Dante's Inferno.

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