Publishers wary of the digital goldrush

Games firms are concerned that the digital marketplace isn’t big enough to sustain the number of competitors eyeing the space.

DLC, digital downloads, iPhone games, social network titles and more have become the key growth area for the games industry. Publishers including EA, Codemasters, LucasArts, Take-Two, Capcom, Codemasters and Sega have vowed to become ‘leaders’ in the digital space.

Now senior execs are worried that the sheer number of competitors will overcrowd the sector.

I am really concerned about that,” said THQ’s VP of core games Danny Bilson. Our strategy is based on the fact that Taco Bell has games on Facebook. It seems every commercial venture has a game on Facebook now.

We are not where Zynga was two years ago.

So we are being very selective about brands we break out in digital and making super high quality games. When we put a high quality game out then we stay out of the exploitation business and the over-exposure business.”

EA Sports’ senior VP of worldwide development Andrew Wilson added: I think it is always a risk when moving into a new space of getting there before your consumer does. The corporate graveyard is filled with companies that moved into a new field before the consumer got there, and then someone comes up five years later with exactly the same thing and makes a gazillion dollars.

The preference now is not to buy lots and lots of games, but to spend more money on fewer games. In fiscally challenging times, maybe a gamer won’t buy three games anymore, maybe they’ll buy two and spend the other 30 on extendable content, on experiences they know they love rather than taking the risk on another product.”

One of the biggest challenges for companies joining what’s been dubbed ‘the digital goldrush’ is trying to make their digital ventures profitable.

Sega West president Mike Hayes said: We need to be very careful and fleet of foot to compete with a lot of creativity in the digital market.

The challenge for us is not if the market is big enough, but how we adapt. We need to be cautious. It is exciting and there is a huge opportunity, but we have to be very smart in how we approach it.”