Jim Ward, president of LucasArts, said that the game industry is in big trouble because of its failure to diversify and expand into new areas of business. In an interview given to EGTV, Ward stated, "Right now this industry has a business model that does not work. This industry has been flat for the past six years; we’ve been selling games to the same people. Our revenue model is based on one shot at retail – we have no back-end revenue streams like a movie might in terms of DVD, TV, that type of thing."
Ward sees the solution in online sales. "We need to develop that back-end revenue stream – that can be done only online with transactions and subscriptions, all those kinds of business models. So the degree that Microsoft, and Sony, are pushing the online component of this is absolutely the right thing to do and what the industry needs to do because that’s our back-end revenue stream – we desperately need that and we support it a hundred per cent."
The president of Lucas Arts also said that game technology must be available to the widest possible audience in order to be successful-a not too veiled comment regarding the retail cost of the PS3. Ward noted, "Those are some high price points but you’re getting something for that. From an industry perspective we’ve got to get to the point where what we do is way more accessible to a lot more people and therefore we’ve got to get these platforms into as many hands as possible, not just the hardcore gamers. We’ve got to get it into the hands of adults and girls and kids. I hope that [the PS3] price point won’t be prohibitive."
Ward,s assertion that the lack of additional revenue streams is the cause of the game industry doldrums is really only part of the reason. Industry watchers site other factors that have contributed to the downturn of game sales, such as the large number of repetitive franchises in the market. In addition, with the advent of the new next-gen game machines looming around the corner from Sony and Nintendo, some are holding on to their wallets and pocketbooks to save up for the new machines.
