Separating the men from the game boys

Electronic Arts, owner of one of the largest — and definitely the loudest — E3 booth, is positioned to dominate no matter which console consumers eventually choose.

Electronic Arts publishes much of the gaming software that runs on consoles.  Games like the popular football series "Madden NFL," the war-gaming "Medal of Honor" series and "The Sims."  Three of the top 10 video games sold during the first quarter of 2005 belonged to Electronic Arts.

EA also has the benefit of funding studios around the world where technologies developed for one title — say, for example, new physics for controlling a hovercraft — could be built into another; negating the cost of building it from scratch.

Having studios worldwide also have the benefit of another potential barrier against prohibitively expensive next generation game development: inexpensive overseas game development.

"There's no reason why something developed in China couldn't be used here," Young said. 

Accessing qualified (and cheap) overseas development will likely be a determining factor for surviving development cost increases.

Jay Cohen, the vice president of publishing at game publisher Ubisoft described to MSNBC.com a development studio matrix spread across the world from California to Canada and beyond into China.

"We have people literally working around the clock in different time zones," he said.

All this talk of increased development costs leaves open the question of what will happen to the mid-size and small game developers and publishers.

Speaking to a group of reporters at E3, Doug Lowenstein expressed a necessary, if fuzzy, desire to find new ways to finance game development.

"Where's the money going to come from?" he asked.

Where indeed?  Are we going to see mid-size companies forced into the ditch by the costs associated with creating games for the next generation consoles? 

This questions have been rattling around in my head since the close of E3. 

Sega's Steinberg dipped into a little gaming history to try to ease my fears.  "Back when the PlayStation 2 came out I thought we’d see decrease in the number of PS2 game developers because PS One games were so much easier and cheaper to develop."

Yes, with a few notable exceptions many game publishers and developers managed to ride that wave.  And it's a given that the more ingenious companies will find methods to offset next generation development costs by becoming more efficient (or die trying).

But back in the PS One days I also remember games costing $25 brand new.  Those days are long gone.

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