With the weak economy still holding a vice-like grip on business, many companies are looking for new revenue streams to help keep the bottom line in the black. Book publisher Random House is expanding into games.

According to a story in The Wall Street Journal, Random House wants to use its storytelling expertise in the videogame field. The publishers wants to tap into its stable of authors to start creating game storylines. One deal is already in place to work with Stardock on its upcioming strategy game Elemental: War of Magic.

From the story:

"There is increasing emphasis on storytelling in the videogame business, on building new worlds from the ground up," said Keith Clayton, Random House's director of creative development, who is heading the unit with Mikita Labanok, director of business development.

Around 15 employees are involved in the new venture. Several, including Mr. Clayton, have been involved in adapting videogames into books, and were responsible for building the "Star Wars" book franchise in partnership with Lucasfilm Ltd.

Stardock has welcomed the input from Random House:

"Poor dialogue ruins the experience." said Brad Wardell, Stardock's chief executive, who added that amateurish writing is one of the most common complaints in gaming.

I've always been a fan of good stories in videogames, so I'm all for this if it means I get more substance with my game play.

(Image, from the Wall Street Journal article, shows an illustration from a propsed Random House adventure game)

Nielsen has issued results of a study into the entertainment spending habits of U.S. consumers and the amount spent on videogames may come as a bit of a surprise.

The company queried over 3,000 consumers in all for their check on spending habits and found that 4.9% of all household funds allocated for entertainment were spent on videogame content. Nielsen defines videogame content as new and used games, downloadable content, rentals and peripherals. Videogame content had the sixth highest percentage, trailing activities (dining out etc…), TV packages, hobbies, live events, out of home movies and cell-phone related entertainment. The latter category garnered 5.3 percent.

Among households deemed “active buyers” in the videogame category, the monthly percentage of dollars spent on videogame content almost doubled, to 9.3 percent. Entrants in this category also spent less on magazines, books and newspapers (3.4 percent to 4.2 percent of the full group), but were more likely to buy or rent movies, purchase music and—perhaps surprisingly—to participate in sports activities.

Dollars spent on sporting activities among the “active buyer” of videogames segment was 4.1 percent, versus 3.1 percent from the whole group. The  category comprised 24.0 percent of all U.S. households.

Nielsen is prepping a full report on gaming, dubbed Nielsen 360° Gaming Report: United States Market, which will be released in March.

(Shared from our ECA sister site, GamePolitics)

You just plunked down $60 for game, grumbling at the cost of maintaining your hobby, especially when you plunk $60 down at a regular rate to keep playing. Did you ever wonder where that $60 goes?

An interesting graphic from the LA Times, courtesy of Steve Perlman of Onlive, breaks it down for us:

Another way to look at it is to say publishers such as Activision and Electronic Arts receive $45 after retailers take a $15 cut. Publishers turn around and pay a $7 licensing fee to console manufacturers such as Microsoft, Sony and Nintendo. The cost of making, packaging and shipping game discs to stores carves up another $4. Finally, not all games sell, so the expense of returning unsold inventory eats up another $7.

That leaves publishers with about $27 per disc sold for development, marketing and other expenses. These are, of course, back-of-the-envelope averages. Each of these numbers can vary. For instance, a publisher could negotiate a smaller licensing fee with console manufacturers. And by deploying the Goldilocks method of inventory (not too much, not too little), they can also minimize returns. Tinkering with the margins in these ways lets companies tune their bottom lines.

Can I just send the publisher $27 and be done with it?

The life of a startup in the video game industry can be full of many potholes and pitfalls. There will be mistakes and second-guessing. But through it all, the hope is that the effort will bring success and a return on investment for the owners trying to build a dream.

In the case of Curt Schilling, former Red Sox starting pitcher, the road for his gaming startup 38 Studios has had its share of ups and downs. Schilling funded the studio himself and so far has been unable to entice other investors into his company, despite having some prominent members of a development team creating a massively multiplayer online game codenamed Copernicus, and purchasing startegy gaming studio Big Huge Games from THQ last year.

Schilling and 38 Studios are part of a recently published case study by Harvard Business School professor Noam Wasserman, who teaches the class Founders' Dilemmas at the school. The study reveals many of the issues that Schilling has faced since 38 Studios was founded in 2006, according to an article on Boston.com.

Some points from the study:

It became a punchline for the decade: Where's Duke Nukem Forever? The "game" won so many vaporware awards that it became old the third time. But why did 3D Realms ever let it get to that point and how did the game that seemed to have such promise finally spell the demise for its prominent developer?

Wired Magazine took an in-depth look at 3D Realms and their franchise face to find out what went wrong. Co-founders George Broussard and Scott Miller refused to talk for the story because of a pending lawsuit against 3D Realms for failure to deliver the game. But Wired was able to piece together on-the-record and anonymous chats with former employees to get a pretty detailed look at the game and the inner workings of the company, and a virtual timeline leading up to the implosion.

From the article:

Ironically, the end was within reach, even if Broussard couldn’t see it. Raphael van Lierop, who was hired in 2007 as a creative director, was given several pieces of the game to play. It took him about five hours. Broussard was stunned; he’d thought those levels would take half that time to get through. “You could see the gears turning, with him thinking, ‘Oh wow — maybe we’ve got more game than we think,’” says van Lierop. Broussard had been staring at the game for so long, he’d lost perspective.

Van Lierop was excited: From what he’d seen of it, Duke Nukem Forever was so well developed — and so graphically superior to any other game in production — that if 3D Realms pushed hard for a year, they could release it and “blow everyone out of the water.” No, no, Broussard replied. It was two years out. Van Lierop was stunned. “I thought, ‘Wow, how many times have you been here, near the finish line, and you thought you were way out?’”

The story is incredibly well researched and offers a better picture of what happened. The ending offers some speculation on the future of the franchise:

Many observers think Take-Two is attempting to bleed 3D Realms dry until it has no more cash, then convince a judge to force Broussard and Miller to hand over intellectual-property rights to the Duke Nukem franchise to repay the $2.5 million advance. “It’s an IP grab,” says one Dallas-area developer. If Take-Two actually secured the rights to Duke Nukem, it might likely throw out the by-then-aging Duke Nukem Forever and simply hire new developers to produce new Duke games. But even without the suit, there is only a short window for Duke Nukem Forever to come out in its current form before it will have to be revised yet again, to keep pace with changing technology.

With Take-Two facing many of its own financial woes, the conclusion may not be far-fetched.

(Image courtesy Wired Magazine and Olly Moss)