Game Development Platform Planned

A unified development platform for Xbox and PC games could mitigate the rising costs of game development, a problem that is particularly acute on the Xbox platform because of its relatively low installed base. Dubbed XNA, the initiative could increase third-party interest in Xbox development by effectively adding hundreds of millions of Windows PCs to the Xbox installed base, and it will also help developers make the transition to the next generation of the console. However, the long-term deliverables for XNA are vague, and companies that currently specialize in game development tools may experience new competition from Microsoft.

High-Cost Business

Video games are big business by entertainment industry standards: consumers spent more than US$7 billion on PC and console games in 2003 (according to NPD Funworld), compared with about US$9.3 billion on movie tickets (according to movie industry analysts Exhibitor Relations). However, as is the case with movies and other entertainment businesses, video gaming is a “hit-driven” business in which most of the profits come from only a few games. According to Xbox Vice President J Allard, 40% of video game projects are cancelled before release because of financial concerns, and fewer than 20% earn enough to cover their cost of development. Much of this cost comes from developers writing low-level code to handle complex technical issues, such as creating realistic pixel shading and programming audio. About 80% of the game development process is spent on such tasks, according to Allard.