This generation of video game consoles will be remembered for over-the-top, knock-you-out-of-your-seat extravaganza games like Halo, Call of Duty — and Gears of War, a juggernaut of a game. The first three Gears of War sold 19 million units, making it a $1 billion franchise. And the latest, Gears of War: Judgment, has just hit stores at a crucial time in the video game industry — sales are down, new Xbox and PlayStation consoles are due out, and mobile gaming is growing. In a lot of ways, what's happening with Gears of War is emblematic of what the industry as a whole is going through.
" Gears of War specifically, to me, is a game that defined the HD generation of gaming," says Phil Spencer, corporate vice president of Microsoft Studios, which publishes and develops games for the Xbox.
According to industry analyst Billy Pidgeon, Gears of War may be the swan song for this particular type of gaming experience.
"It is one of a kind," he says. "And it is over the top. And it's a great console game, no doubt about it. So in a way, it could be the last one of this generation."
Ahead Of The Curve
Big changes are coming to the game industry. While the console market is still hugely profitable, recent declines have people buzzing about what the future may be. In 2008, retail sales of video games in the U.S. were $21 billion. Last year, that number dropped to $13 billion.
According to Pidgeon, the console market has peaked. "There's a lot of places that a hard-core gamer can go to get, you know, hard-core games," he says.
That's a pretty radical thing to say. A smartphone or tablet is fine for Angry Birds, but surely an over-the-top game like Gears of War can't be replicated on something you carry in your pocket.
That said, Gears' maker, Epic Games, is already placing its bets on mobile.
"I like to think that at each time we've released something big and new, it's kind of guided the industry to where things could be going," says Mark Rein, Epic Games' vice president and co-founder.
Rein may not be modest, but he does have a point. Ten years ago, back when hard-core gamers were still on PCs, Epic made PC games. But when the Xbox 360 came out, Epic took a chance and used its PC game engine to make Gears of War for the Xbox. The company bet that the hard core would migrate to consoles, and that bet paid off to the tune of a billion dollars.
There's Always Time For Video Games
Now, Epic is helping lure the hard core to smartphones and tablets. It created Infinity Blade for the iPhone and iPad with the same engine that made Gears of War. So far, it's earned about $56 million, which is a lot of money for a mobile game.
Analyst Pidgeon points to another avenue companies like Epic and Xbox are using to make money.
"So I get Gears of War," he says, "and I'm playing it ... and then a new map comes out." But that map isn't free; it's downloadable content, or DLC, as industry insiders call it. Pidgeon says hard-core players will easily spend an additional $60 on DLC on top of the $60 they've already put down for the game.
Phil Spencer of Microsoft Studios says these changes have completely altered the way people like him think about the video game business.
"Fifteen, 20 years ago, we used to think about the launch [as] the end of a bunch of production and creative work," he says. "Now your relationship really starts with the consumers when you launch the game."
Spencer, for one, isn't too worried about the future, no matter how different it may be.
"People have always found time for entertainment," he says, "time and money."
So really, it's just a matter of figuring out how exactly and where exactly to best collect.
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