This is very similar to what the 'indie' games market is doing now. Small teams (1 to 10 guys), a dream and limited resources, but they producing some very fun games making not just successful 'casual' game titles for online portals and the AppStore, but also awesome AAA like games that get rid of the fluff and clutter that perpetuates today's realm of sequel releases and just returns to what made a game fun to play. Much like your article says, its not hard to get a great Return on Investment going with even 1000 or 2000 sales producing enough to make the next title viable and in the process creating a fanbase and name for yourself.
As an example my team is completing an open-beta of a MechWarrior like game called Lore Aftermath (which is electronicly distributed and played through the browser on instantaction.com) , we are all huge fans of mech games and don't necessarily think that the genre deserves the cold-shoulder that the AAA market is giving it. There are plenty of other games on the site like this as well. Another great example is a company called Flashbang studios who produce about 5 or 6 great AAA type games a year for their site.
So there are lots of examples of this business model working and succeeding. Its successfully employed me for the past 7 years and I have no complaints about it (and of course we rely on Autodesk based software to do our work).
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