“Call it the “Psychonauts” phenomenon. Surely, you’ve deduced by now that the most probable reason that the 2005 title - a critical favorite and veritable masterwork of game design - tanked wasn’t its content.”

“Veritable masterwork” or not, let’s pay attention to the meaning of this sentence. To restate: “the content of Psychonauts was not the reason why it failed.”

“Rather, the likeliest culprit was the fact everyday consumers just didn’t connect with it... After all, how many parents shopping for birthday presents do you know likely to walk into Target or Wal-Mart and pick a Tim Burton-esque, tongue-in-cheek tale about goofy psychic children trouncing brain-nabbing villains over, say, Tony Hawk’s Project 8 or Madden NFL 07? Let alone one that... offers a smartly sarcastic sense of humor?”

From this description, does it not appear that the content of Psychonauts is what is being singled out as the problem with the game, in direct contradiction to the initial statement?

I propose another reason why Psychonauts was not a success, one that seems to escape the author’s attention: it cost more to create than it made back. It sounds obvious, but our game business consulting guru has not even mentioned this fact. Instead, he seems to be implying that a “Tim Burton-esque, tongue-in-cheek tale” simply couldn’t do well in sales by the very nature of what it was, compared to sports titles (even though Tim Burton’s own work generally does well commercially).

“The point here is simply that stepping back and taking an objective look at any given business scenario is the smartest way to succeed in gaming, or any other commercial venture.”

“Stepping back and taking an objective look“ at the “given business scenario” might have helped Psychonauts become a bigger success, but how? From his tone, it sounds like his decision would have been to cancel the project, but it is impossible to tell for sure. Without making an actual recommendation, and sticking to worn platitudes such as calling for rationality in business decisions, he doesn't make a case why the business acumen he is pitching would have improved the situation.

“I recently conducted an informal survey of over a dozen major software publishers and video game development studios, which simply confirmed what we all know”

The author seems to be telling us that when we (the people of the game industry) were asked about what we know, we gave answers that confirm what we know. While it’s nice to see the reflexive property in action, it might also have been nice to hear something we didn’t know, or at least found counterintuitive.

“Nobody’s got a clue in Hades what the precise formula for success is”

Our author seemed so convinced in the beginning part of the article about why Psychonauts was a failure. Additionally, throughout the rest of the article, a formula for success seems to be spelled out with great confidence. Yet here he disavows the notion that such a formula can exist.

“Speaking frankly, as a businessman, if it were my money on line, I’d presently be more inclined to publish a value-minded title aimed at the widest possible audience for PlayStation 2.”

This is where the article veers from empty swagger into actual poor business advice. Value titles sell for value prices, have value-sized marketing budgets, and compete on a field of hundreds of other value titles. The value market is not some kind of easy path to riches and it is disingenuous of this author to make it sound like one. It’s true that some value titles make great amounts of money, but what’s ignored here is that most of them don’t, and languish in obscurity.

“You tell me which sounds more financially tempting: A quickly-built, cost-effective game aimed a large target market, or prohibitively expensive one with a lengthy development cycle and smaller potential sell-through numbers?”

A match-three clone made for a casual game portal that makes sales measured in the dozens through its entire lifetime fits the description of “a quickly-built, cost-effective game aimed a large target market.” It’s also a complete failure. Gears of War meets the description of a “prohibitively expensive one with a lengthy development cycle and smaller potential sell-through numbers,” and that game has made so much money that it is single-handedly responsible for lifting Microsoft’s entire Xbox division up close to the break-even point.

One example doesn’t prove this author wrong in all cases, of course. But the idea that cheap games necessarily do better is wrong. Instead, it is the games that are best suited for their situation that do the best in the marketplace.

“That said, take the following with a grain of salt: I’m no accountant, jet-setting billionaire or mutual fund management guru.”

Given the kind of business analysis we have seen and are about to see, I find myself glad that the author is not one of these things.

“Keep fixed staffing costs low; these days, it’s possible to operate virtually, or use outsourced talent, nearly as effectively as simply maintaining a stable of in-house teams.”

Here are a couple of interesting myths. The first is that “these days”, “operating virtually” is “nearly as effective” as actually having employees in a building. I am dubious there exists any data to back up this claim, and any anecdotal evidence I have supports the notion that operating virtually is tricky, and works only with very small teams. The second is outsourcing, a term that is easy to bandy about when one are making grandiose statements about the future of the industry. The reality of outsourcing is that it is effective sometimes, and a disaster others: in other words, it is simply another tool in one’s toolbox, with appropriate uses if one knows the correct way to employ it. Additionally, outsourcing can never be a complete replacement for an in-house team if one cares at all about the quality of the product.

“Amortize associates’ time and value across multiple projects, or hire/fire based on cyclical demand. The last thing you want to see is warm bodies sitting at desks aimlessly surfing for porn or playing Tetris because there’s a general lack of work.”

This is the wrong attitude. If I may take this moment to coin a law: A game studio’s employees are its biggest expense precisely because they are its most valuable asset.

“Lead with SKUs on platforms that enjoy the most sell-through and mainstream appeal to quickly show proof-of-concept and more readily source funding for ports and future efforts. I favor the Nintendo DS, PS2, Wii and PC.”

You have to wonder about someone’s real experience in the industry when they recommend the Nintendo DS as a possible lead SKU for a multi-platform title (or the Wii for that matter).

“Scale back ambitions, unless you’re prepared to self-fund projects. Sad truth: Publishers are likelier to sign smaller, more concise titles than $30 million epics with lengthy production cycles.”

This depends on the publisher. Some actively shun smaller deals in favor of bigger ones. In other words, their philosophy could be described as: why spend $5M to make $10M when you could spend $30M to make $60M? If a publisher is confident it can have a big hit, it will make the corresponding bet.

“Would you hand someone, no matter how seemingly talented, a South American nation’s annual GNP to whip up a proposed masterpiece from scratch, knowing that anything could go off-track (e.g. team members departing, play mechanics not coming together) during its 3-year incubation period?”

The idea that any small problem could completely derail a big-budget game is very strange. In fact, things “going off track” (people leaving, etc.) is a common occurrence in any large project with even a modicum of complexity. If the “play mechanics” of an important title aren’t coming together, one can be fairly sure that the skill of problem solving– which many human beings possess– could be employed to rectify the situation as the project progresses.

“Subsidize costs by incorporating in-game ads, co-promotional opportunities and alternate revenue sources (e.g. the sale of online goods via microtransaction) into your products. Feel like you’re selling out? Never forget: Pride goeth before bankruptcy.”

I doubt the money made from in-game ads and the sale of online goods via micro-transactions will ever be the difference between solvency and bankruptcy unless they are part of the fundamental business plan for the game. In other words, one cannot simply “incorporate“ these things and suddenly become rich. They must be planned and executed like any other plan.

On another note: pride may also go before artistic integrity and self-respect. But I suppose this is a business-only primer about which we are talking.

“Concentrate on buying finished product – it’s a lot less risky and costly to import from Europe or pay for a feature-complete, under-the-radar outing than funding a brand-new top-tier title from scratch.”

One gets what one pays for, right? It’s certainly always possible to find a great deal at some kind of international video game flea market, but it’s just as likely that the game is being sold there for a good reason. It pays to be skeptical. Not to mention that a “feature-complete, under-the-radar outing“ that doesn’t sell still loses money.

“Nine times out of ten, choose branded/licensed product over original – consumers go with what they know, a rule that’s served game publishers well since Ocean’s mid-80’s heyday.”

In reality, licensing of IP entails great complications, and I really doubt that anybody who has done actual business in this arena would say something like “nine times out of ten“ is how often one should make transactions of this nature. Even casting aside the implications this advice carries for the creative health of games, it’s still poor advice because licensing IP correctly for business hinges upon properly evaluating the strength of the brand in question and executing a plan to capitalize on that strength. A supposed business consultant who recommends doing anything (let alone enter a complex legal agreement) “nine times out of ten“ is simply asking to be challenged.

“There’s no telling when your so-called flop in the U.S. could be the next big thing in China.”

There is telling: it won’t.