Microsoft has shared an interesting observation about how gamers see AAA games and smaller games to the EU.
On paragraphs 45 to 46 of the EU decision on the Microsoft Activision deal, found on page 14 of the document, the EU shares this:
“As regards game types, the Notifying Party submits that there is some evidence of a low degree of demand-side substitution between AAA games and non-AAA games. This is because AAA games offer more complex gameplay features and mechanics, as well as a longer play time. Moreover, there may be also low supply-side substitution from non-AAA games to AAA games, based on the budget and technological innovation that the development of AAA games requires. This would make it burdensome for small studios to switch from non-AAA to AAA games.
However, the Notifying Party also puts forward that boundaries between AAA and non-AAA games are blurred and subjective. Gamers may play various game types according to their preferences and regardless of the status of the game. Furthermore, certain games initially developed as non-AAA games have become successful and highly regarded over time, involving an increasingly higher budget and larger development teams. At the same time, some games developed on an AAA budget were not considered as such by gamers.”
The Notifying Party described in the document refers to Microsoft itself.
When the EU refers to demand-side substitution, they refer to gamers switching between AAA and non-AAA games. Gamers aren’t likely to replace AAA with non-AAA games, because they see the games at a completely different level.
On the other hand, supply-side substitution refers to the likelihood that the game developers and studios themselves switch from making smaller games to AAA games. This would be like, say, if Battlebit Remastered’s devs, which are three people, got hired to make the next Call of Duty game.
That kind of move isn’t impossible – look at how Kunos Simulazioni has updated their Assetto Corsa series – but generally uncommon. If you want an idea of how difficult such a transition is, consider Larian Studios’ struggles to get their work completed on the Xbox Series S version of Baldur’s Gate III, a situation bigger studios like Ubisoft and Bioware don’t end up in.
But then again, when you consider games like Assetto Corsa and Baldur’s Gate III, you see how Microsoft may have a point. When they refer to non-AAA games that later get considered as if they are AAA games, these are the games that they are talking about.
Of course, Microsoft knows all about AAA games that don’t get AAA game reputations, since they recently published one such game themselves, in Redfall. To be fair to Microsoft, other studios have also faltered with recent AAA outings, such as Cyberpunk 2077.
But today, the market for games is such that many games made at a lower scale than AAA, which includes indie games, but also AA and A scale games, can be more popular and well regarded than those AAA games. Hollow Knight and Shantae, while not huge enough to be system sellers, are well known and popular enough that they do get attention from the press, and even the console companies help promote those games.
And then there are the likes of Sifu and Life Is Strange, which fall somewhere between indie and AAA. Those 3D graphics require more than a small studio to make them, but they aren’t made to be console showcases either.
And even now, the big studios experiment with producing smaller games from within. Ubisoft had a try on this cycle with games like Trials and Valiant Hearts, and more recently, Obsidian and Xbox published Pentiment.
All of this suggests that video games have become healthy again in making games across different budgets and scales. It’s certainly fun for gamers, but it’s also great for the developers themselves.
