Call of Duty’s sales numbers account for a disturbing trend. In 2012, Black Ops 2 sold nearly a billion dollars worth of copies in the U.S. alone and made franchise publisher Activision very, very happy. But that was nearly a billion in an industry that only made, in software and hardware, $14.8 billion. Still sounds pretty good, right?

Well, for comparison, let’s travel back in time by three years and shift to a different industry: film. 2009 was the year that Avatar was released upon an unsuspecting U.S. box office. By the end of its run, it had made $749 million and been crowned the highest grossing domestic film of all time. And yet, Avatar only represented fifteen percent of the top 521 highest-grossing films of the year (see this). Black Ops 2, however, part of a series that releases yearly and dominates its field just as regularly, represented closer to eighteen percent of total video games sales for its year. And remember, that’s based on hardware and physical software and digital downloads combined. Film may take in less overall but it’s based on a healthier, more sustainable model.

Even Avatar, a complete anomaly, made its money charging less than twenty dollars a ticket; whereas the video game industry requires sixty-dollar retail titles and expensive hardware to play them on just to keep up. And looking at Black Ops 2’s impressive retail numbers by units sold instead of total revenue tells a different story. Altogether in the U.S., the game sold roughly 13 million actual copies. If you were to imagine that Activision were selling a movie instead of a game to the same crowd then you’d multiply that 13 million by a ten-dollar ticket price and come up with a domestic box office of only 130 million. Continuing with the James Cameron connections, that would land you closer to Terminator: Salvation than Avatar.

Okay, so that’s where we’re at now. Where are we headed? More and more, it’s looking like the answer to that rests on the increasingly broad shoulders of Valve. Their Steam Box has the opportunity to revolutionize the way that we think about consoles. But revolutions are never fought alone and there always casualties. The two companies with the most to lose directly are clearly Sony and Microsoft. Assuming that Valve’s cheaper console alternatives are seen as copyable by other potential hardware manufacturers then it’s entirely possible that the next five to ten years will see a glut of “living room PC” solutions that connect to Steam as well as Origin and GOG. That could mean that a significant leg of the industry will be cut out from under it in terms of overall sales, especially if it is no longer possible to create first-party titles and bundle them exclusively to luxury items like locked consoles. But even if sales normalize to somewhere around the numbers that we’re seeing today, there would still be more companies vying for increasingly smaller pieces of the same pie. And likely fewer investors willing to take a risk on an industry that’s slowly destabilizing.

That could also mean that competing digital platforms will replace competing consoles but companies would likely have to offer consolidated entertainment packages with streaming movies and television if they want to charge similar prices as Microsoft and Sony are charging currently for the XBox One and PS4 respectively.

But lest you think that PC is an inherently better platform for diversifying the medium, look no further than the recent coverage given to Steam metrics (source: http://arstechnica.com/gaming/2014/04/introducing-steam-gauge-ars-reveals-steams-most-popular-games/1/) which expose a widely disproportionate market. There’s no evidence currently that mega-hits like DOTA have the ability to transfer into sales for other, smaller titles. In fact, no less than Infinity Ward executive producer Mark Rubin pointed out this contrast in an interview, claiming that his audience was made up of people who “aren’t hardcore gamers, or even gamers”.

No wonder then that Nintendo is locking its popular software to increasingly unique and gimmicky hardware. No wonder then that EA is attempting to mimic Steam before everyone else while also trying to invent a competing franchise for Call of Duty and simultaneously pushing into the mobile markets to diversify its own product. No wonder then that Valve itself is dragging its heels on supporting independent development while incentivizing those with the talent to instead spend their time on “user-generated content” that benefits Valve’s bottom line the most.

So, how do we fix all of this? Well, we sort of don’t. At least not without fixing the product first. One popular comparison point for the current state of the industry has been Hollywood in the 1960s, when the big studios were saved by a lot of young, independent filmmakers. But the issue there was an inability to capture the youth market, which video games obviously have no problem doing. The closer analogy is to the world of sports media, wherein it’s exceedingly difficult for a brand new sport to make a dent in the established hierarchy. And each new game really is like a whole new sport, with its own rules and its own community.

Maybe the best way to shift sales numbers then is to shift expectations. Neither art nor sport are the key here. Film is steady because it can play to a wide audience, it can tell any kind of story and it’s passive viewing. While video games will never really be the latter, they can at least capture the first two. In an interview with the Wall Street Journal, Dan Connors, producer on The Walking Dead at Telltale Games, revealed both the game’s impressive sales numbers and also the growing importance of the mobile market to their company. These simple but compelling story-based games can be ported successfully to any current hardware and while one series alone won’t be doing big numbers, only two or three selling at the same rate would equal an eighth of a Call of Duty. Now imagine multiple companies making this kind of product and selling it across all platforms. Lower costs plus a strong concentration on writing to court critical acclaim and the ability to go anywhere and connect with any consumer. Plus, the ability to re-package the same content for later generations (similar to a DVD box set) without it seeming as stale as a great deal of even current-gen games already do.

Simply put, if video games really want to be the future of entertainment then they need to get there the old-fashioned way: by telling stories.

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