Just a couple side notes before I get into a recent case study;
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New IPs can be profitable. Ultimately consumers are looking for quality. This has never really changed. Inception, for example, was a new movie IP and it did incredibly well. It was simple, just a well told story, and the movie looked great, which of course helped. People also seem to forget that at one point, every game was a new IP. You have to start somewhere. Beating an IP into the ground will only result in stagnation.
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Ultimately, yes, business has degraded into a profit-loss/profit-gained venture. There are example where a turd is a turd, but the company keeps trying. Case in point, the Hulk and Superman movies. Two Hulk reboots (for all intents and purposes) released closely together, because it wouldn't be possible to create avengers otherwise. Superman is in the same boat. And for those reasons I pray and hope it fails miserably (again). The game industry can't necessarily operate in this fashion, because even the largest game houses don't have this amount of money to throw around. A game has to recoup it's costs, at least, with little wiggle room. This has had the latent effect of increasing the rise to stagnation and mediocrity.
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A big problem in the industry is simply the emphasis on visual technology. At what point do we say, enough is enough? When is it TOO HD? When are there TOO many polygons? Because investment and development of this visual technology comes with astronomical associated costs. I wouldn't be surprised if within the next couple decades we see a crash of sorts, with a resurface of major game developers creating games in style to 16, 32, 64 etc. consoles.
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Piracy does not hurt the industry. A person who would not have bought the product in the first place, whether because they had the money or otherwise, is not a potential loss of profit. Those potential profits didn't exist in the first place. Who are the primary pirates? Poor ass people, yo. People with money tend to spend it (I know there are exceptions, but they are a grave minority). I want to add that I think at some point, old technology should naturally enter the realm of the public domain. How many times should Square be "allowed" to release and profit from Chrono Trigger? There's obviously no answer, but in other media, such as literature, work does eventually enter the public domain, free for all to enjoy. I believe that games should be handled in the same manner. This forces companies, up to a point, to foster and develop newer ideas, instead of constantly treading back to old ones.
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The only way to stop corporate greed: boycott. We live in a free democracy. Don't like something. Boycott. What happened after Rosa Parks refused to move to the back of the bus? Society, largely white, was unmoved by this solemn act of defiance. The true change came when large numbers of working black people (and possible other minorities) boycotted the bus service. She made a stand, and there was an identifiable action that affected the offending parties. If you don't like a game, or game company because of their practices, boycott. Companies will always do whatever they want. Don't delude yourself into thinking otherwise. Hit them where it hurts.
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Which brings me to a recent case study. FF: All the Bravest. What is this I don't even? Even though I stopped being a fan around the Parasite Eve era (and hated any FF post VI), I at least thought they were a company that cared about their fans and were held in high regard. But this game, proves to me (as did FFXIV to an extent), that they, like many others, no longer care about honesty, respect or accountability. It's sickening, really. Arrogant, even. It occurs to me that Square largely feels they can "get away" with this kind of abhorrent penny-pinching under the guise of a quick and easy on-the-go hand held product. But that doesn't excuse it. If you're unfamiliar with the game, please read one (of many) scathing review(s), and I urge you all to boycott the shit out of FF: ATB.
http://ca.ign.com/articles/2013/01/18/final-fantasy-all-the-bravest-review