What's Killing the Videogame Business?

(UPDATE: Variety reports that Midway Games, makers of Mortal Kombat, filed for Chapter 11 bankruptcy protection on Feb. 12.)

Slate has an interesting article on the state of the videogame industry. While sales are rising, budgets are rising faster. That's leading to financial losses and layoffs.

The development cost of a game is now in the area of $40 million, which is the cost of a mid-range animated feature. The gaming industry is pursuing a Hollywood model, hoping that blockbusters make enough money to offset losses on other releases. I'm not sure how smart it is for anyone to raise the stakes in a time of economic uncertainty.

I'd love to know how many artists the gaming industry employs relative to TV and feature animation. It's possible that gaming employs more than the two of them put together. If that's true, I hope that the game producers know what they're doing.

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