Friday, May 05, 2006

The Growth Gamble

Hey, have you heard the news? Apparently development costs keep on rising, and there's more rises down the line with next-gen technology virtually guaranteeing teams of over 100 as necessary now. You haven't heard the news?

Well apparently neither had Michael Pachter from Wedbush Morgan Securities until just recently when EA announced that their development budget forecasts for 2007 are expected to hit $900 million dollars, compared with $758 million for 2006 and $411 million in 2003. (source: Pachter apparently describes the $900m as speechless, and complains about the sustainability of it. EA's answer? They expect large growth. Pachter forecasts $3.46 billion in 2008.

This seems to be the answer for a few of the big companies now. Don't worry, it'll all turn out well in the end because, in case you haven't heard, the games industry is growing by 500% every quarter and will soon become the biggest baddest medium in the world and so on. As many others have pointed out, the 'eternal growth' model of the industry is predicated on one of many myths, the chief one being that the industry is in fact a big mainstream medium now.

Rant over.

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