It’s really unfortunate that I’ve had to rewrite this post three times before actually publishing it. Originally, I was going to talk about this Joystiq news story from last week:
“Square Enix announced a massive restructuring today, which included the dismissal of president Yoichi Wada, but we really hope the company takes a long look in the mirror about its sales projections. Buried within the briefing of the consolidated results forecast, the company had a slide expressing the ‘weak sales’ of three of its games.
These allegedly anemic sales involve three games that will have sold millions of units by the end of the company’s fiscal year on March 31. It seriously raises the question: how broken is Square Enix’s business if Tomb Raider‘s expected 3.4 million units sold (not including digital distribution) is considered ‘weak?’” – Alexander Sliwinski
Then, just a few days later, Square Enix laid off a number of staff at its LA office, as reported by Polygon:
“Square Enix’s Los Angeles, Calif. office has been hit with a new round of layoffs in the wake of a company-wide restructuring, according to the company.
‘We can confirm that Square Enix’s Los Angeles office has eliminated a number of positions as part of the corporate restructuring announced last week,’ Square Enix senior director of public relations Reilly Brennan wrote in a statement to Polygon.” - Mike McWhertor
Then, before I had a chance to write a response to THAT news, Disney shuttered the legendary development studio LucasArts. From Giant Bomb:
“Word surrounding LucasArts, the once dominant, but more recently dormant video game publishing and development arm of the house that Star Wars built, had not been good of late. After a strong showing at last year’s E3 with an intriguing new Star Wars project, 1313, radio silence kicked in immediately following the sale of all things Lucasfilm to Disney late last year, and rumors began to swirl that the project was dead. That news has been all but confirmed, alongside news of the publisher’s effective closing today, as announced by Disney in a brief statement.” – Alex Navarro
Listen. I’m no MBA, but I’m pretty confident in my understanding of how businesses make money. I also like to think that I have a decent handle on how the video game industry works. It doesn’t seem like this business model is working.
AAA development is difficult, make no mistake, but there are sustainable ways of doing things even if you don’t sell Call of Duty numbers (read: 22+ million copies). Publishers need to sell a lot of copies of a game to recoup the cost of lengthy development cycles, yes, but if those cycles were a bit shorter or if studios worked with a smaller, leaner staff, maybe they wouldn’t need to sell 22+ million copies to be considered a success. No one knows what Square Enix expected Tomb Raider to sell, but the fact that they think 3.4 million sold in roughly four weeks is “weak” means those expectations were grossly mismanaged.
LucasArts, on the other hand, was a slow motion train wreck filled with sadness and wasted potential. There were warning signs all over the place; the telling phone call to Disney investors about moving away from console development, the frequent management overturn, and Star Wars Kinect. Who knows what could have been if the higher-ups had been able to focus their efforts and actually ship a quality product. Maybe Star Wars 1313 would have turned out OK! Between imploding projects and undermarketed gems, Disney and LucasArts just couldn’t get the “making video games” thing to work out for them.
While not necessarily the only reason for these layoffs, these mismanaged expectations and mismanaged studios cost talented, hard-working people their jobs. I truly feel for those who feel spurned by the industry and I hope they stick with it, land on their feet, and come back to make great games. With word that Doom 4 is in a similar boat on the sea of mismanagement, this probably won’t be the last we hear of these woes in 2013.