70% of Games Lose Money, Says Ex-Sony Exec; Gambling to Help Fund Future Development

Only three in ten games make enough money to recover development costs, former Sony executive Chris Deering stated in a Edinburgh Interactive Festival keynote.

Prior to his appointment as president of Sony Europe, Deering served as the head of Sony Computer Entertainment Europe during the launch of the original PlayStation, PlayStation 2 and PSP, which gave him significant knowledge of Sony's internal and external development strategies. He resigned from Sony in 2005.

By 2011, Deering estimates that there will be 2.5 billion potential gamers across the world with cable and internet providers being a part of the "competitive array," according to Develop.

With more competitors coming in and publishers rarely breaking even, he said "something is going to have to be there to make up the difference," such as "creative use of hybrid online/offline advertising revenue models" and in-game gambling.

"Gambling will become a source of development funding," noted Deering. "Perhaps not directly, but this area can provide some sources of income which eventually be directed back to the developer."

Another potential source of revenue is online microtransactions, with Microsoft stating that paid downloadable content can help retail games bring in an extra $21 million.

Other companies are exploring the arena of free-to-play PC games. EA DICE is currently prepping Battlefield Heroes, which will be supported by microtransactions and web-based advertising, while id's Quake Live is centered around in-game advertising.