Game Innovation Goes to the Nintendogs

The thinking behind such retreads is that even if the game is a dog, as it were, it will at least draw some sales from players who bought previous versions or from those caught up in the marketing for the movie or TV show on which it is based.

Indeed, the game industry increasingly resembles the Hollywood movie industry, analysts say. Studios have spent way too much time and money producing special-effects-heavy blockbusters without worrying enough about character development and telling stories.

Likewise, the game industry has become overly concerned about producing games with amazing visual effects that will wow investors and enthusiast magazines alike, and not enough on making games accessible to a broader audience -- or even fun.

"There's a lot of sizzle and explosions with what goes into games nowadays," says one former industry executive. "But the truth of the matter is, there's a lot of style over substance."

The problem for the video-game producers is that there is at least one significant difference from the movie industry: When a movie fails at the box office, the studios can often recoup their investment with subsequent DVD or video sales. But there's no analog for the DVD market in the game industry.

"Either you get it right or you don't. There's no fallback," says Gartner's Baker. "The risk is significantly higher in the gaming segment."

And as predictable -- some might say boring -- as the game industry has become, the formula has been working. Game sales and company profits have grown with each new successive generation of consoles and are expected to grow again with the new console coming to the market.

But not everyone has shared in that growth. Indeed, as development costs have jumped with each generation, a growing number of companies have been unable to compete. In the past several years, 3DO and Acclaim both closed shop and Eidos' assets were sold to a rival. Atari (ATAR Quote), Midway Games(MWY Quote) and Majesco (COOL Quote) all look like they could suffer similar fates.

"You're seeing a lot of smaller players really getting hurt," says Spiegel. "People are dying on the vine because ... they're spending a lot of money to play catch-up with me-too products."

And the industry faces a bigger, if longer-term, risk that it won't be able to lure new customers -- or, worse yet, won't be able to lure back older ones -- because there's nothing new or interesting to play.

"People are getting a little tired of getting sequel-ized to death," says the industry executive.

Nintendogs could offer a way of preventing that fate. Just don't expect the pack to follow.