Even Wii games not immune to dilution of industry profits

Get this: Game publishers would be charging more for their console games if it wasn't for your consumer choice. Despite continued sales growth in the game industry, its biggest companies are still losing money. While ballooning production costs are certainly to blame ($25 million is a typical bill before marketing), the proliferation of low-cost games -- and means of distribution -- has been singled out as the underlying culprit of profit dilution, according to a NYTimes.com report. And these cheapo games are also keeping price tags low (at least, lower than big companies would like).

And let's be clear: Low-cost games aren't the ones sitting in the Wii rack at your local retailer. Even a Wii game needs to sell at least one million units to be profitable, by Reggie Fils-Aime's estimates. (And Only 16 out of 486 Wii games have crossed that threshold as of March 1, by NPD estimates.) So who's gobbling up all the pie? Well, just about anyone. Have you searched "free games" in the Apple App Store lately -- or just googled it? To counter the proliferation of consumer gaming options, companies are bringing down production and marketing costs (laying off, outsourcing, recycling IP, etc.) and tapping additional revenue streams (e.g., subscriptions, in-game ads, and DLC).

So what's our professional takeaway? Here, we'll give it to you for free: We see big-budget sequels (made in Egypt) and many, many casual games (made by Joe the Developer) in your future.

[Via Eurogamer; image credit: hyperscholar]

This article was originally published on Joystiq.